Buharimeter flags economy as sore point in president’s record

The best efforts of government spin doctors to paint a different picture notwithstanding; there is universal agreement that the administration of President Muhammadu Buhari has fared very poorly in the management of the economy. Already, the biting reality of an economy reeling from the lacerating blows of recession, has triggered an admission from the government that Nigeria is in dire straits. The nexus between the crisis in the economy and the electoral promises made in 2015, form the kernel of the recently released first year Buharimeter report. This is further buttressed by the recent reports of the National Bureau of Statistics, which documented how inflation has climbed to an 11 year high on the watch of the President with the consequence that basic goods and services have gone beyond the reach of ordinary Nigerians. Buharimeter, the innovative governance-tracking tool, which assesses the President’s performance against the background of the many promises he made during the 2015 poll, has therefore aggregated these indices to provide a detailed and nuanced analysis of the state of the economy under Buhari.

In terms of the growth figures, which previous governments have waved in the face of Nigerians as evidence of an economy performing well, the Nigerian economy in the last one-year has instead decelerated. According to the Buharimeter one-year report, the economy decelerated to its lowest rate since the return to democracy in 1999.
Quoting from data released by the National Bureau of Statistics (NBS), the report paints a picture of how Nigeria’s Gross Domestic Product (GDP) in the first quarter of 2016 slid to a 25-year low of -0.36% from 2.11% and 3.96% in the fourth and first quarters of 2015 respectively.

“It is essential to note that the downward trend in Nigeria’s GDP started from 2014 when the country experienced a decrease in its GDP growth rate from 6.54% in Q2 to 5.94% in Q4, according to figures from NBS,” the report added.

The gloomy outlook of the economy is further accentuated by the data showing how inflation is galloping out of the control of policy makers. The report therefore notes that the inflation rate continues to maintain an upward trend with inflation rate on food items consistently growing higher until March 2016. As captured in the Buharimeter first year report, “the current reality in the country is that hitherto affordable food items have become costly and unstable, while the personal income of Nigerians remains stable. This development is propelled by a combination of factors of which fuel shortage, increased transportation fare and electricity tariff, and volatility of the Naira, are noteworthy.”

Added to the problematic realities of GDP deceleration and out of control inflation, is the problem posed by the volatility of the Naira. The Buharimeter one-year report observed that the continuous slide of the national currency against the green back in parallel market has been unprecedented, despite the CBN regulated exchange rate of N197–N199 to a dollar. “The Naira has continued to downswing on the parallel market as it fell sharply to more than N370 to a dollar, as against N270 at the beginning of 2016. The current forex regime was introduced in June 2015 as part of a long term plan by the current administration to cushion the effect of the slump in oil prices – by curtailing the unfounded pressure on the Naira, preserving external reserves, encouraging local manufacturing and diversifying the economy. The report adds “Since the first quarter of 2015, CBN restricted supply of foreign exchange to importers, limited products that can be bought using dollars to a list of 41 items and cancelled the sale of dollars to Bureau De Change (BDC) operators.”

Although a much more flexible foreign exchange regime has been introduced by the CBN, it has not stopped the Naira from sliding further in the parallel market. All of these have severely constrained the Buhari administration with respect to its many promises in the area of job creation. It would be recalled that on the campaign trail in 2015, between the President and his party, the All Progressives Congress (APC), there were bold promises on job creation. Among others, the Nigerian electorate were told by the President and his party that new job opportunities would be created through a massive public works programme, especially the building of a national railway system of interstate roads and ports. Consequently, the President and his party set a target to create 3 million new jobs a year through industrialisation, public work and agricultural expansion. The Buharimeter first year report concludes that it is clear that the administration is yet to get on the path towards creating the number of promised jobs. The report however acknowledges that a few efforts have been recorded with programmes like the entrepreneurship-driven Youth Employment Scheme (YES).

On the whole, the report captures the quagmire of the Nigerian economy within the context of the collapse of GDP growth, inflation rate, and less than friendly monetary policy.

“With the fall of the country’s GDP and the growing inflation rate, Nigeria’s economic woes are exacerbated by loss of confidence in the business environment, as profit of foreign investors are trapped by the new monetary regime. The contribution of the manufacturing sector slowed by 2.98%. The slow pace of growth in the real sector and unstable business environment has resulted to loss of many jobs.”

Another important promise made, which millions of Nigerians eagerly await its fulfilment has to do with diversifying Nigeria’s oil dependent economy, which is now reeling from the aftershocks caused by the decline in crude oil prices. The Buhari administration made the specific promise to diversify the economy through a national industrial policy and innovative private sector incentives that “will move Nigeria away from over reliance on oil – into value-added production, especially manufacturing.” The Buharimeter one-year report documents a number of “ongoing” steps being taken in such areas as agriculture and solid minerals.