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The four-year Buharinomics: So much, so little


Finance Minister, Zainab Shamsuna Ahmed

The four-year-old administration of President Muhammadu Buhari, at its outset in May 29, 2015, came with high hopes. It rode under the mantra of “Change”.

Reports also had it that there were promises of improving the fortunes of the local currency to appreciable exchange value of $1 to N1. Generally speaking, it was a hope tilted towards a brand new welfare state.

But a reality check shows that the promises were by far, different from unfolded events. These outcomes, may not have been intended, but by hindsight now, they were, surely, more of political statements.


That the nation’s economy has been in tailspin since 2015 is stating the obvious. But the dilemma has been more about who takes responsibility for the economic challenges.

The other part of the dilemma is about policy initiation and observed tardiness in implementation. In any case, the economy, in the period under review, has been managing to exist “one day at a time.”

Two months leading up to Buhari’s inauguration, the exchange rates across all segment were naturally converging; all oil sector actors were voluntarily cooperating; and foreign investors who had earlier fled in fear of election crisis were returning.

Conversely, few months after the inauguration, things took a dramatic turn. Investors and financial market players, domestic and foreign, had waited for about six months before the inauguration of a cabinet, whose absence denoted a lack of direction and uncertainty, stoking speculations.

Minister of Budget and National Planning, Udo Udoma

It was a dark moment, as there was fiscal policy pronouncement to kick-start activities. The development led to investments’ reversals, while potential inflows were kept on the sidelines against perceived uncertainties.

Coupled with declining fortunes of oil, leading to shortfall in foreign exchange supply, JP Morgan delisted the country from its Government Bond Index-Emerging Market in September 2015, which affected half of the country’s bonds in its coverage. This development created a risk tag on the economy, with attendant high cost of borrowing in international market.


The Central Bank of Nigeria (CBN) was “all-in-all” as the only prominent agency, but excessively burdened with extra job of the fiscal authorities in efforts to recue the freezing system. Perhaps, this was the earlier priming of the apex bank’s unconventional policies.

But the president said he was aware of the “anxiety and impatience” exercised by Nigerians, describing those feelings as unfounded, because he intended to do things “methodically and properly.”

The Chief Executive Officer of Cowry Asset Management Limited, Johnson Chukwu, said the “hiatus, in already high speed growing economy,” was a significant part of the basis for the level of economic headwinds that culminated in recession.

Indeed, a whole six months of near inactivity- lack of clear direction, speculations, cautious investments and huge withdrawal of investments, including institutional sanctions, cannot be totally absolved of blame for a recession that followed six months after.

Policy direction
One of the earliest noble initiatives of this administration was the implementation of the Treasury Single Account (TSA). The scheme consolidated government’s financial position at a glance, against the usual tradition of multiple accounts, which entrenched poor public finance management, stealing and non-transparency. The full take-off of TSA was a bold step that saved the country in the dire times of 2016 and 2017 fiscal crisis.

The Accountant-General of the Federation (AGF), Idris Ahmed, recently, said TSA has recorded N30 trillion turnover for the Federal Government, in its seven years of existence. As a fluid account, it records what comes in and goes out.


The former Minister of Finance, Mrs. Kemi Adeosun, said that the Federal Government saved N68 billion on personnel cost in 2017 through the TSA, being funds that would have otherwise gone unaccounted for, but were recouped for the government to fund capital projects.

She said the savings were achieved despite increased in personnel, including the employment of 10,000 by the Nigeria Police, adding that of the 511 Ministries, Departments and Agencies (MDAs) captured under the Integrated Payroll and Personnel Information System (IPPIS) as at 2017, there is staff count of 607,843.

Former Finance Minister, Kemi Adeosun

“As at 20th March, 2018 the number of MDAs on IPPIS Payroll is 469 with 316,158 Staff Count with gross salary of N43.97 billion and 42 Police Commands and Formations paid on IPPIS Platform in February, 2018 with Staff Count of 291,685 and gross salary of N22.28 billion.

“Staff of Para-Military Agencies (Nigeria Immigration Service, Nigeria Prison Service and Nigeria Security and Civil Defence Corps) enrolled to date is 100,822 for which a trial payroll of N11.45 billion was sent for review and update for April 2018 payroll,” she said.

The IPPIS, she noted, resulted in the reduction of ghost worker syndrome, enforcement of compliance with due process on employment of staff in MDAs, and prompt and timely payment of salaries and remittances of third parties payments.


But despite the noble ideas, there were obvious failures on fiscal transparency and lack of will by government to enforce rules, as it recently that admitted N2.81 trillion is being held back by its revenue generating agencies. The development shows the shallow coverage of TSA and sustained leakages in government’s revenue stream, as well as lack of will to strictly enforce fiscal rules.

The Director-General of Budget Office of the Federation, Ben Akabueze, told The Guardian that over the years, some agencies have either failed to comply or transfer less than the actual value of revenue.

“This is not a behaviour to be condoned. If government had done that before, maybe, that would have been the cause of the rise, but I don’t think any ego is being massaged now, otherwise the matter will not be made public now.”

The Director-General of the Debt Management Office, Patience Oniha, also told The Guardian that non-compliance to TSA rules by some agencies has been behind the endless shortage of funds, leading to further borrowings.

“So far, some of these agencies, after an audit, have agreed to pay. In fact, some have started paying after the audit, but a lot is still behind,” she said.

An Abuja-based development consultant, Jide Ojo, alleged that there is double standard in the application of TSA under this administration.

The payment of subsidy, which the Nigerian National Petroleum Corporation called “under-recovery” from the revenue of Nigerian Liquefied Natural Gas earlier in the year, is a case in point.


“There’s need for clarification from the Presidency whether Government-Owned Enterprises are exempted from TSA. Otherwise there should be severe punishment for this infraction,” he said.

The Lead Director of the Centre for Social Justice (CSJ), Eze Onyekpere, said it is an indication of a government that is not properly working, explaining that the loopholes are the things a government with proper Fiscal Responsibility Commission should have been plugging.

“If people employed to manage government revenues are not remitting them to the source, then what is the essence of the TSA? What is the essence of the Fiscal Responsibility Act? I continue to say it that we are not yet serious as a country and when we eventually become serious, we will recover our monies,” he said.

Fiscal activities
The House of Representatives’ Committee on Public Accounts recently alleged that reckless spending is still prevalent under the administration, despite the corruption war and TSA, alleging that there is yet to be a difference between the current government and previous ones.

The Chairman of the committee, Kingsley Chinda, said: “Generally, what we have observed is that not much has changed from the reckless system that we have operated in Nigeria. Not much has changed. Public spending is still not very responsible and so, we need to begin to change.


“We have institutions that are very weak and not strengthened and the government is not making deliberate efforts to strengthen the institutions and therefore, when you talk about the fight against corruption, you find out that it might not be sustained because the institutions that ought to fight corruption are weak.”

Till date, the issues around budget and its implementations, debt deals and the proceeds and financial reports for capital projects, remain controvertible. In the last four years, the states of the federation have had it rough, either unfolding domestic and international events or by mismanagement of the available resources.

The recent misrepresentation of the leaked audio recording among CBN officials attests to what went wrong with the states and how much they have been indebted, given their fiscal crises.

CBN in the explanation noted that external auditors in their Draft Account of the bank’s 2018 financials, erroneously classified about N150 billion of the Conditional Budget Support to states as bad, which negatively affected its balance sheet and shareholders fund.

“As publicly known, the CBN was approached in 2015 by the National Economic Management Team and the National Economic Council (NEC), chaired by the Vice President, to assist state governments with Conditional Budget Support, in the aftermath of the significant nose-dive in global oil prices and associated Federal Accounts Allocation Committee’s allocations.

“In order to ensure that ordinary Nigerian workers got their salaries, pensions and gratuities, and that the economy continued to recover from recession, the bank provided about N650 billion in loans at nine per cent with a two-year grace period to 35 states of the federation.


“These monies were distributed to the states monthly with documented approval of the Federal Ministry of Finance and the Presidency,” the statement noted.

Indeed, both federal and state governments have been with questionable credential on the use of the public resources in their possessions, but with unsatisfactory responses.

Ojo, who is the Executive Director of OJA Development Consult, added: “For so long, we have been talking of diversification, but this has to be taken seriously and pursued vigorously. Government at all levels still sponsor people on pilgrimages and have a high running cost for entertainment and welfare. Yet, we borrow yearly.

“Even governors still charter flights when they should be on commercial flights. There is still needless appointment of high number of aides and unnecessary trips around the world in the name of searching for foreign investors, which do not materialise.

“These are all part of the drain. There is the need to plug these revenue leakages and make the people’s money work for them. For now, much is borrowed and wasted,” he said.

Besides, government has been hunting for revenue without barriers, using tax. Of course, everybody owes it as a duty to pay tax. But till now, the same government is yet to make clear or conduct inquest into the tax compliance statuses of thousands of politically exposed persons around the corridors of power- from council level to federal. It is also yet to pursue tax on luxury goods to logical point.

However, it wants to raise more revenue from tax to shore up the internationally acclaimed revenue crisis that has eaten deep into its sovereign rating, with previous arrangements that have fallen below expectations.


Living in denial of the nation’s ongoing fiscal crisis and the soon to come escalation of headwinds against the economy, for whatever reason, cannot erase the ugly realities nor spur the long-sought growth fundamentals, that have been altered since 2016.

CBN, under the necessity to support the ailing economy, has in the last four years, embarked on series of intervention to enhance the fiscal stability of the country. However, it has not been without misgivings in some sections, even in government cycles. At a point under this administration, CBN’s autonomy was called to question against international best practices and guidelines.

Currently, the economy remains hostage to external shocks, even as the latest report of Gross Domestic Product (GDP), showed a reverse from its major leap in fourth quarter (Q4) of 2018 from 2.39 per cent to 2.01 in the first quarter (Q1) of 2019, representing a decline by -0.38 per cent points.

An economist, Bismarck Rewane, said: “We need investments to move on. Of course, there are signs, but what we need more now is not the signs, but tangibles. In the near term, everything will continue this way, unless something else happens,” he said.

Of course, at the peak of the ongoing economic challenges, the apex bank increased its use of conventional and unconventional policies to stabilise the economy, stepped up initiatives to stem rising distortions to price stability (inflation) and assumed some roles in fiscal management at various times to stimulate the real sector.

The establishment of Secured Transaction and National Collateral Registry and the National Credit Scoring System were aimed at improving access to the information on borrowers and assist lenders to make good credit decision. Now the registry has generated N1.264 trillion loans to MSMEs and individuals in the nation’s economy within two years, its Registrar, Mohammed Mainasara, said.


Anchor Borrowers’ Programme (ABP) had so far achieved tremendous success in terms of outreach and coverage, making the scheme one of the most successful CBN Development Finance initiatives to date, adding that about N80 billion had been disbursed to over 358,000 small holder farmers in 34 states, cultivating eight commodities.

To complement existing interventions, CBN unveiled a N300 billion Real Sector Support Fund (RSSF), as part of the efforts to unlock the potential of the productive sector and output growth, value added productivity and job creation. So far, N152 billion has been approved.

Also scripted was N213 billion for Nigerian Electricity Market Stabilisation Facility (NEMSF) to settle outstanding debts in the Nigerian Electricity Supply Industry (NESI), which has recorded N56.68 billion disbursements to five generating companies and five distribution companies.

The latest of the bank’s intervention to ease access to finance in the midst of economic challenges and assessed high risk environment, is the emergence of N5billion capitalised NIRSAL Microfinance Bank.

The Lead Director of CSJ, Eze Onyekpere, said: “The fact that SMEs will access credit without necessarily providing a collateral as the business itself can act as collateral and will be registered in the National Collateral Registry as security for the loan, is a wonderful innovation.

“The recognition of securities, which the conventional money deposit banks have rejected as collateral, is a welcome development, a step in the right direction. This should be deepened to support entrepreneurship and the blossoming of creative ideas.”


Debts deals
The nation’s debt stock has not only risen to alarming proportion when compared with figure as at June 30, 2015, but also worrisome the way government officials go about telling Nigerians that there is nothing to be afraid of.

With the mounting evidence of incremental stock of obligations, now at N24.4 trillion as at December 31, 2018 and tardy implementation issues, along with huge service bill and the concomitant effects on the national revenue, the questions of leadership sincerity, capacity to save the country from imminent pre-2005 debt dilemma and next generation’s future have become apt.

Nigeria’s Minister of Finance, Mrs. Zainab Ahmed, who led the contradictory debt narrative of “No Debt Crisis, But Revenue Crisis”, which is a mere approach to fend off fearful realities that confound the economy, has influenced other officials to chorus it, irrespective of the inherent distortion.

The mindset adopted by the officials only sees debt crisis as a situation where government cannot pay anymore, but that is fundamentally wrong, especially when the cost of the debt has significantly impaired the running of the economy, particularly its fiscal space.

Nigeria may not be the only one in Africa with debt exposure, as the continent’s eurobond debt exceeded a $100 billion mark. But just as Yinka Adegoke of Quartz Africa noted, the “unsettling” rapid rate of increase in debt, the rising debt servicing costs and the nature of the debt structure are the real issues.

The country’s total debt stock, according to the Debt Management Office (DMO), rose to N24.387 trillion ($79. 437 billion) at the end of 2018, representing N2.7 trillion increase from N21.725 trillion at end of 2017.


The path to the new profile has been consistently upward since 2014, when the debt stock was N12.1 trillion. It moved to N12.6 trillion in 2015 and a quantum leap of more than N4trillion to N17.36 trillion in 2016. Also, in 2017, it took another significant leap of N5trillion to settle at N22.37 trillion.

It has been an unsavoury trend for debt service bill too. An economist and research analyst, Ayodele Akinwunmi, noted that except in 2015, when domestic debt service bill relative to revenue was 38 per cent, other years have consumed more than half of government’s earnings- 2016, 58 per cent; 2017, 57 per cent; and 2018, 52 per cent.

The worse was that government’s earning power has flattened significantly during these years, with 2016 topping the poor records. The retained revenue plan for 2017 fiscal year performed less too, at about 52.27 per cent at N2.65 trillion.

In 2018, the retained revenue target of N7.17 trillion returned less than N4trillion, representing about 55 per cent. Given these, are the country’s debt plan and the economy not seriously challenged?

An economist, Ucha Nwagbo, said: “It’s surprising that the so-called economic managers have held on to the ‘theoretical’ international debt threshold to deceive those that are not aware. Threshold does not pay debt nor does it determine ability.

“When you use more than half of your revenue to service debts and borrow more to meet up your normal activities, you are only increasing the debt stock, as well as the service bill. The provision in 2018 budget was N2.01 trillion and in 2019, it is over N2.3 trillion. What is not worrisome here?”


Also, an economist at the Abuja-based CSJ, Fidelis Onyejegbu, said his problem with Nigeria’s debt is only about sustainability, as it seems to be increasing with no clear thoughts on how the debts would be repaid.

“The proposed 2019 federal budget represents the first time that debt service (both servicing and sinking fund) would be higher than the capital expenditure at the proposal level; while the former is 25.65 per cent, the latter is 23.02 per cent, 2.63 per cent being the margin.

“Instead of growing the debt profile, government should focus on increasing public private partnerships through well prepared projects, involving the MDAs, the Infrastructure Concession Regulatory Commission and the private sector,” he said.

The nation’s budget processes have severally been assessed as below performance and in 2017, ranked 94 out of 120 countries in the index, while falling behind more than 20 countries in Africa, including Rwanda, Zimbabwe and Liberia, while South Africa, Uganda and Senegal. Like the previous administrations, there was not much to celebrate and differentiate, if any.

The assessment by a global agency that tracks comprehensiveness and timeliness of budget information, regarding its formulation, participation and implementation, tagged Open Budget Index, described the development as backwardness for the country.


Yearly fiscal governance experts raise issues with the feasibility of national appropriation plans, which outcome, expectedly, have not been engendering economic growth.

Concerns have cut across capital expenditure vote, debt service provision and rising recurrent non-debt expenditure, assessed as conduit to fritter public funds, deprive the poor rural masses and favour the one per cent elite group.

BudgIT said it is unfortunate that the Federal Government provides citizens with insufficient budget information, making it difficult for taxpayers to understand how elected officials are utilising available resources.

“Nigeria’s budget process takes very little feedback from the public, and the final budget document does not reveal how the meager feedbacks are used. The Medium Term Expenditure Framework (MTEF) and the Budget Implementation Reports are usually belated.

“Still, the content of all budget documents produced in Nigeria falls short on the minimum acceptable global standards as itemised in the Global Initiative for Fiscal Transparency Framework,” the Communications Lead at BudgIT, Abiola Afolabi, said.

Onyekpere of CSJ added that there is persistent contradiction in government’s mantra of cutting down waste, improving efficiencies and removal of ghost workers from the payroll, while there remains rising recurrent non-debt expenditure every year.

“For example, recurrent non-debt expenditure got N2.59 trillion in 2015, moved up to N2.64 trillion in 2016 and got the sum of N2.990.92 trillion in 2017. In the 2018 proposal, it got a vote of N3.494 trillion; while the 2019 version is in excess of N4trillion.


“These increments cannot be the sign of a system that is taking steps to remove waste and inefficiencies. Personnel and overhead expenditure are projected to rise by 12 per cent respectively from the value of their 2017 projection.

“Besides, the information about government’s expenditure had to come with the invocation of Freedom of Information Act. The world is really watching us,” he said.

In the 2019 budget, controversies over several violations of Fiscal Responsibility Act, allegations of duplications, frivolities ambiguous allocations remain unresolved.

Specifically, no less than N74.16 billion was assessed as frivolous, inappropriate, unclear and wasteful, among the line items that dotted the 2019 appropriation bill, just assented to by the President on Monday.

The Centre for Social Justice (CSJ) and its partners, the Citizens Wealth Platform, in their yearly vetting of the national budget plan, had flagged 117 line items as questionable.

The proposals by the Public Complaints Commission; Independent National Electoral Commission; National Judicial Council; and Niger Delta Development Commission were alleged to have violated the rules of FRA.

Besides, virtually every Ministry, Department and Agency (MDA) got a vote for clothing and uniforms, with a total vote of N3.277 billion, even when most MDAs have no need for uniforms and clothing.

The Public Complaints Commission had a bulk sum of N4.2 billion, with no details, the same argument that now seeks to compel the National Assembly to disclose the details of its budget.

The Independent National Electoral Commission made a bulk sum of N45.5 billion; National Judicial Council- Abuja, N110 billion; and Niger Delta Development Commission, N95.19 billion.


The new task
The administration, certainly, promised so much, but it is now obvious that little was achieved, perhaps, it was a study period for the government. So, having spent four years studying the myriads of economic issues, the consequences of inaction and poor policy options, it must now tackle the challenges without dilly-dallying.

With the first task on the snail-paced growth of the Nigerian economy, which has left millions in extreme poverty, the renewed mandate on elections presents an opportunity for this government to choose between setting the country on the path to prosperity or sustaining poor policy choices with economic consequences of bleaker growth prospects.

Some of the current economic pressure points include weak disposable income in the country, riding on the back of inflation and low productivity, high unemployment rate in the country and weak infrastructure development in the economy that is not supportive of the growth ambition.

Others are poor policy options, that created “economic depression” in the real estate sector of the Nigerian economy, which otherwise, would have been a quick win for increased activity and employment generation; the fragile foreign exchange market; and persistent weak revenue generation that is sustaining the ongoing fiscal crisis. It is also time to peer into the country’s debt strategy, use of the proceeds and a sincere analysis of the effects of burgeoning debt service bill yearly.

Another economist, Ayodele Akinwunmi, said there is an urgent need for the removal of all administrative delays in obtaining business licences and approvals, devoid of political intrigues and mere claims, including titles to landed properties for building and agricultural purposes.

Besides, government should support the provision of long-term mortgage loans at concessionary terms for its workers to activate the economic activities in the real estate sector.


“There should be investment in infrastructure through partnership with the private sector, which will reduce the risks involved in agriculture and agro-allied industries. Investments in affordable public healthcare system to increase productivity of workers, reduce brain-drain and reduce foreign medical tourism with its associated drain on foreign exchange earnings, is highly encouraged,” he said.

According to him, while promises and plans are important, the strategy and implementations will determine the financial market’s response, especially on pending economic and social issues.

For the FXTM’s research analyst, Lukman Otunuga, now that the presidential elections are over, the key question on the mind of many investors is what this means for the economy in 2019 and beyond, with the focus on renewing efforts to diversify the economy away from oil reliance, not just proclamations or declarations.

“The market is still afraid his victory suggests continuity of policies. But it also offers the government an opportunity to build on what has already been achieved over the last four years. If infrastructure developments are worked upon and there is real diversification, especially in agriculture, coupled with strategies to mitigate external risks, Nigeria can still surprise the world this year.

“Otherwise, any volatility in oil prices will not only shave off government revenues, but also disrupt foreign exchange stability by complicating central bank’s efforts to defend the Naira. The quicker Nigeria is able to derive sustainable growth from non-oil sectors, the quicker there will be a change of sentiment and confidence towards the nation,” he said.

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