President Muhammadu Buhari recently met with his economic team following which he expressed satisfaction on the progress made in the economy. It is however imperative for government to make the people and businesses feel the impact of the improving economy, writes Kunle Aderinokun
Since the advent of the current administration in May 2015, the economy has been navigating a stormy weather. There had been accusations and counter-accusations of who was responsible for the state of the economy as it were. Specifically, the President Muhammadu Buhari-led administration had blamed the erstwhile administration of the former President Goodluck Jonathan of plundering the economy. In its usual manner, the previous government, which was in the opposition Peoples Democratic Party swiftly responded, negating every condemnation and insinuation of the government of the day. Tried as they could, the economic managers in this dispensation could not avoid the economy plunging into crisis since the fortunes of oil, the lifeline of the economy and literally its mainstay, were at their low ebb. So, for an economy that is subject to the dictates and vagaries of commodity prices, oil revenue dwindled and the economy was adversely affected. Things came to a head in the second quarter of 2016, when the economy slipped into a recession after two quarters of negative growth. Consequently, the economy has been under heavy criticism from both local and international analysts and observers, with diverse opinions and projections on the way out of the doldrums.
Notwithstanding the narratives, Buhari, who recently returned to the country after 103-day medical vacation, said he was pleased with the progress in the economy.
The president expressed his satisfaction when he met with the key managers of the economy, namely the Minister of Finance, Mrs. Kemi Adeosun; Minister of Budget and National Planning, Senator Udoma Udo Udoma; and the Governor of Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, at the State House, Abuja.
The Special Adviser on Media and Publicity to the President, Mr. Femi Adesina, who disclosed this in a statement, noted that the economic managers gave Buhari updates on the economy, implementation of the 2017 budget, preparation for 2018 budget, revenue strategies, combined cost reduction and debt management.
According to him, “For almost two hours, President Muhammadu Buhari Monday received briefing from the minister of budget and national planning, Senator Udoma Udo Udoma, the minister of finance, Mrs. Kemi Adeosun, and Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, after which a delighted President declared that he was pleased with the progress being made on different fronts,” the statement read.
“The ministers and CBN governor updated the president on the improving state of the economy, implementation of the 2017 budget, preparation for the 2018 budget, revenue strategies, combined cost reduction and debt management.
“Also discussed were monetary policy strategies and their economic impact, among others.
“President Buhari, while reminding the ministers and CBN governor that reviving the economy was one of the major planks on which the campaign of his party, the All Progressives Congress (APC), was based, expressed gladness that things were looking up after two years of yeoman’s job.”
The President advised the key government officials to “keep at it”, as the “main aim of government was to bring succour to Nigerians across all walks of life”.
Before and when Buhari was away on medical leave, the government instituted some policies, which appear to be impacting on the economy. Such policies include the Economic Recovery and Growth Plan, series of CBN’s interventions in the forex market, especially opening of the Investors and Exporters’ (I &E) window to banks, three executive orders on Ease of Doing Business and another executive order on Voluntary Asset and Income Declaration scheme (VAIDS).
Following this, the value of the naira has stabilised and the economy is gradually moving out of the negative territory of growth.
According to the National Bureau of Statistics, in the first quarter of this year, the economy contracted by 0.52 per cent, an improvement by 121 basis points over the -1.73 per cent negative growth in the preceding quarter. Similarly, the NBS in its latest inflation report revealed that the rate of inflation declined by 0.05 per cent in the month of July to 16.05 per cent, from 16.10 per cent in June.
The decline, which was the sixth consecutive decline since January 2017, was despite the food index, which soared to 20.28 per cent in July, the highest in eight years.
However, economic analysts and market watchers have reacted to Buhari’s position on the economy and expressed their views on the current state of things.
While most of the analysts are in consonant with the president on the economy, one described as unfortunate his comment considering the fact that the economy is in a painful situation with nothing much changed since it entered recession.
The majority, however, believed that, while the economy is inching forward, its impact is yet to be noticeable on the people and businesses.
President, Manufacturers Association of Nigeria (MAN), Frank Jacobs, said he agreed with Buhari’s assessment of the economy “because the economy today is definitely better than what it was last year.”
According to him, “The quarter we are in now is better than the second quarter, it’s better than the first quarter, so there is an improvement. So his assessment is accurate.”
Jacobs, who acknowledged the 0.05 per cent drop in inflation in July, lamented that there was increase in inflation rate for food items. “So we cannot start jumping to access the economy on the basis of that average because food affects everybody because for inflation for food to increase, it’s not really good. That doesn’t take away the fact that the economy is progressing but we can’t say that we have fully recovered.”
On the way forward for the economy, the MAN president suggested that the federal government should fully implement its array of policies that it introduced recently. “Those policies should be implemented judiciously. The ERGP, ease of doing business policy, patronage of Nigerian products policy, executive orders recently signed into law by the then acting president, should be implemented judiciously, because that would help drive the economy to recovery and growth,” he pointed out.
Likewise, Executive Director, Corporate Finance, BGL Capital Ltd, Femi Ademola, noted that, “Literally speaking, it is apt for President Buhari to be pleased with the state of the economy considering where we are coming from.”
According to him, “The consistent decline in inflation for about 6 months now (although significantly due to the base effect) is a sign of good turn for the economy. The stable exchange rate that we have been experiencing over the past months, arguably due to the improved oil production and the higher and stable oil price, is positive development. The slightly moderating yield on fixed income instruments and strong uptick in stock prices are all parts of the economic progress.
“All these developments are summed up in the economic contraction by only 0.52 per cent in the first quarter of 2017 compared to growths of -1.73 per cent and -2.54 per cent in the fourth and third quarters of 2016 which indicates that we might have reached an inflexion point and may even experience a positive growth in the second or third quarter of 2017.”
Ademola, however, added that, “It terms of expectations of the people and the targets set for the economy by the government itself, the state of the economy is not pleasing. Inflation is still high at 16.05 per cent and the exchange rate and the operating mechanism, although somewhat stable is not business friendly. Credit to the private sector is still very low (where it exists), productivity is below optimal and unemployment and poverty are still high.”
“Therefore while the President may term the current state of the economy as pleasing, it is still below expectation and more need to be done to meet expectations and targets,” he submitted.
For the Director, Union Capital Ltd, Egie Akpata, “I am yet to see an explicit statement from the President giving the economy a pass mark. What he did comment on was the direction the economy was going.”
Akpata pointed out: “ Most indicators and the outlook are better now than over 3 months ago when the President traveled on medical leave. Considering that the economy has been in a recession for over a year, it is a positive sign that many key indicators like inflation and dollar liquidity have improved this year.”
However, the Chief Executive Officer, Global Analytics Consulting, Tope Fasua, who vehemently disagreed with Buhari on the state of the economy, said, “I believe it’s unfortunate for the president to give this economy a pass mark except that we are used to such faux pas from the government.”
“In the first place we entered a needless recession, which is painful and prolonged bordering on a depression. Not much has changed in the area of fiscal responsibility and we are basically digging a hole for the economy by tanking on debt – local and foreign. No affirmative action has been proclaimed over the 20 million little children, who walk all over the country, uneducated and disconnected from modernity.”
Fasua continued: “It’s impossible to teach an old horse new tricks but the president should kindly save us from these agonies. Inflation at 16.05 per cent is still devastating on the economy and its people. The problem may be that within the circles of government things are effervescent for them. When everyone is smiling because they have managed to sort themselves out being closest to the releases of funds, then we can forgive the president for saying that he is pleased. But when you look at this economy from an honest perspective and with a feeling heart, the picture is more than scary. We haven’t even started the journey yet, and the world is supersonic years ahead.”
As it stands, the challenge before government is to ensure the economy is lifted out of recession, achieve growth and stability to the benefit of all.