Experts task Buhari, govs on how to rescue ailing economy
• Inflation rate ballooned by 170% under Buhari in seven years
• Why govt must embark on urgent sweeping reforms
• President, govs must agree on PMS subsidy removal timelines
• Focus more on agric sector, insecurity to stem food inflation, FG told
A high-level meeting of the 36 state governors with President Muhammadu Buhari on Wednesday, primed to draw out some far-reaching and drastic measures to tackle the economic hardship that has afflicted Nigerians under this administration, turned out to be an anti-climax.
While the President was absent at the meeting, which held at the State House Banquet Hall of the Presidential Villa in Abuja, the governors in attendance set aside deliberations on the 33 ideas they earlier suggested for the President to implement in salvaging the nation’s economy, to rather respond to the Attorney General of the Federation and Minister of Justice, Abubakar Malami (SAN), over controversy trailing the proposed deductions of the $418 million Paris Club Refund from the Federation Account.
This is as Nigeria’s consumer price index (CPI), which is used to measure the level of inflation in the country, has risen by 170.2 per cent under President Buhari’s administration between June 2015 and July 2022.
During the period, CPI rose from 171.6 index points recorded in May 2015 to 463.6 points in July 2022, indicating an increase of 170.2 per cent. In the same period, the food index rose by 209.5 per cent, while core inflation spiked by 132.2 per cent. The year-on-year inflation rate accelerated to a 17-year high in July 2022, following significant rise in the cost of energy and staple food items. The National Bureau of Statistics (NBS) reported that inflation rate rose to 19.64 per cent in July 2022 from 18.6 per cent recorded in the previous month.
Many had expected that the first in-person meeting of the Nigeria Governors’ Forum (NGF) with President Buhari since the COVID-19 outbreak will address the slew of economic challenges – growing sovereign debts, falling revenues, spiraling inflation rate, worsening energy crisis, exchange rate problem, rising cost of production, among others. Added to the frustration is the growing sense that politicians have left ordinary citizens to their fate.
Coming barely 10 months to the end of the administration, stakeholders think the intervention was coming too late to make a significant impact on the economy.
Yet, a few analysts think otherwise. They admitted that the government should have been more proactive in its approach but argued that efforts had better come late than never.
Experts say the price crisis is worse than the country’s CPI, a computation that has not been updated since 2009.
A leading economist, Bismarck Rewane, said the inflation rate could be as high as 50 per cent if the CPI is updated to reflect changing consumption patterns.
And with election spending expected to rise exponentially, with huge consequences for liquidity amid an unabating foreign exchange crisis, experts have argued that the inflation trouble could be worse in the coming months.
They also called for immediate reduction in the cost of governance, right sizing of government workers across states and Federal Government, as well as improvement in revenue net.
A professor of economics at Babcock University and Past President, Chartered Institute of Bankers of Nigeria, Segun Ajibola, said there is nothing as “too late” to act to save a failing economy as every administration should be conscious of the fact that “it owes the duty of re-sharpening the economy by bringing to bear the right policies and implementing them conscientiously for better results up till the last hour of its departure.”
According to Ajibola, reworking the economy is a round-the-clock task, hence, it does not matter whether the government has four years or four days left in office. Justifying the meeting, he pointed out that governors are critical operators and stakeholders in the day-to-day management of the national economy as they are closer to the people than the President.
He urged the government to focus on the agricultural sector to stem the tide of food inflation and enhance food security.
“Governors can help both the subsistence and commercial farmers in their domain through the provision of agric inputs, herbicides, fertilisers, rural roads among others, and off-takers for harvested products.
“Governors can do a lot to improve on the ease of doing business index in their respective domains. They can help confront the security challenges in their states. State Governments can embrace the PPP model to improve the performance of commercial enterprises in their domain.
“Also, Nigerians must immediately embrace some entrepreneurship spirit, away from paid jobs as the real purchasing power, albeit value of the disposable income, continues to tumble. There is still need to rework the ease of doing business at the state level, provide incentives and solidify the infrastructural base to draw people into self-employment.
“By so doing, the gainfully engaged will be able to pay tax/more tax to government’s purse. The vexed issue of borrowing to run the economy remains in the front burner. To lessen the debt service burden, there is need to prop up productive engagements, bring more to the tax net, plug all revenue leakages and encourage/compel members of the informal sector to fulfill their civic obligations,” Ajibola said.
An economist at the University of Ibadan, Prof. Adeola Adenikinju, said it remained very critical for the President and governors to arrive at a political consensus. “The stakes are currently very high, while political differences and ideologies must be put aside to address the country’s economic, social and security challenges,” he said.
PricewaterhouseCoopers’s Associate Director, Energy, Utilities, and Resources, Habeeb Jaiyeola, who noted that governance requires continuous re-evaluation of policies and practices for continuous improvement, said effective use of national resources should be a key conversation point.
“This includes reducing cost of governance and enabling a productive public sector work force. Productivity ensures value creation, which enables optimal usage of work force,” he said.
Energy lawyer, Madaki Ameh, is worried that there have been too many meetings held in the country without any meaningful outcomes, stressing that there appeared not to be anything to give Nigerians confidence that the current move would be productive.
He said: “Matters relating to the economy require much more than a knee-jerk approach through the instrumentality of meetings between the governors and the President. The economic management team ought to be up and doing at this time, when there are so many critical shortcomings to be addressed. But as always, they appear to be missing in action.”
Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka, said the gathering was not completely out of place as long as the participants understood the problems and are ready to discuss genuine solutions.
He, however, said a meeting is not enough to pull the nation’s economy out of the woods, given the array of difficulties the current administration has subjected the country to.
He underscored the need for the current administration to do everything within its powers to ensure that the next administration inherits a lighter suitcase of the country’s numerous economic challenges.
Also speaking, the Chief Executive Officer, Dairy Hills Limited, Kelvin Emmanuel, said the meeting could not yield any positive results as there was no political will to embark on radical economic reforms.
According to him, such difficult decisions include an agreement to collapse the Excess Crude Account (ECA) into the Consolidated Revenue Fund or the Sovereign Wealth Fund (SWF).
“Also, both state and Federal Government must agree to implement the white paper review that was done in 2013 to execute the most comprehensive set of reforms proposed for cutting down the size of governance, which takes 39.8 per cent of the 2022 budget.
“Both tiers of government must agree to a phased plan to remove petrol subsidy within 24 months as a means to cut down on a cost that is currently 23.3 per cent of the budget,” he said.
With debt servicing to government revenue at 119 per cent and government revenue to Gross Domestic Product (GDP) at 7.4 per cent, there is an urgent need to cut waste and pivot from a fiscal strategy that tends towards debt financing.
This quarter, the Debt Management Office (DMO) will raise N720 billion to increase the existing N41.6 trillion debt by 1.7 per cent. Besides the DMO captured debt, the government is indebted to the CBN via overdrafts to the tune of about N20 trillion.
An economist, Adefemi Iyiola, is looking beyond the current administration. He said promises by political office seekers ahead of the 2023 general elections must go beyond rhetoric to real economic issues. He added that Nigerians must demand detailed information from politicians.
“How will the new President tackle these challenges beyond the known rhetoric? There is an economic conundrum that must be attended to urgently. Nigeria needs a deep-thinking President. If Nigerians make a mistake of electing the wrong person, the years ahead will be bumpy,” he stated.
Comrade Emmanul Onwubiko, National Coordinator, Human Right Waters Association (HURIWA), said both the President and the governors are playing a political circuit game of hide and seek, adding that they are not committed to building any economy.
He said: “The President has been busy making appointments every other day. The office of the President has more than 1,000 assistants, the governors have the same issue, they borrow money to pay salaries of political appointees.
“If the President and the governors are committed to building a viable economy, they need to cut down on the cost of governance and the way to do that is for them to stop these frivolous appointments.”