The new president and Nigeria’s economy
When and if he is eventually sworn in as the next president of Nigeria, Mr. Bola Ahmed Tinubu, the candidate of the ruling All Progressives Congress (APC) who has been declared winner by the Independent National Electoral Commission (INEC), will have his work cut out for him. This much is clear particularly in relation to the revamping of the Nigerian economy. The new President would need to focus on a number of critical issues if the economy would receive a boost during his tenure. It is now common knowledge that under the Muhammadu Buhari administration, the state of the economy became worse than what it was in 2015 when he assumed office.
This cuts across virtually all the economic indicators namely, poverty incidence, exchange rate, level of inflation, growth rate of the Gross Domestic Product (GDP), debt burden, fiscal sustainability and indeed the overall living standards of the average Nigerian. As a matter of fact, the economic scorecard of the Buhari administration was very woeful. The new President must avoid the path taken by the outgoing administration. It must put in place programmes and structures to turn the corner and guarantee a future for the bulging youth population who appear hopeless in the current scheme of things
First, the new President must put together a crack economic team akin to those of the Obasanjo and Goodluck Jonathan administrations where well-tested technocrats such as Ngozi Okonjo-Iweala, Akinwunmi Adesina and others with sound pedigree as well as global credibility were engaged to manage the Nigerian economy. Irrespective of any contrary view, it is on record that the Nigerian economy recorded tremendous growth over those periods. Credible members of professional bodies such as the Nigerian Economic Society among others should be brought on board to help chart the way forward for the Nigerian economy. The economic team will assist to ensure that there is harmonisation of fiscal and monetary policies and that the economy is made productive in the pursuit of sustainable growth. Currently the economy is largely based on consumption and rent-seeking.
Second, the incoming administration should frontally address the fiscal sustainability challenge the Nigerian economy is going through. This is at the heart of the current economic problem. The Buhari administration inherited an average annual budget size of about N4.5 trillion in 2015 but has successively increased this to over N20 trillion in 2023. Not much has been seen in the growth of the Nigerian economy to justify this increase. What has become very obvious has been the increase in the level of the country’s public debt burden from about N12.5 trillion in 2015 to over N48 trillion given the latest figures of the country’s Debt Management Office (DMO). This is not accounting for the deficits of the 2022 budget as well as the over N20 trillion Ways and Means advance from the Central Bank of Nigeria (CBN).
The new President must frontally address the public debt issue. It is so devastating that the debt service payment is even in excess of the revenue receipts thus prompting the country to continually borrowing more. This may require the need to seek for a rescheduling of the entire debt portfolio and the need to adopt a more pragmatic debt management strategy where borrowing is strictly tied to projects that can repay the loan on its own. The expenditure side has to be addressed also and this is an area where the new President would have to engage the other arms of government in ensuring that there is a drastic reduction in the cost of governance. This is very critical. Revenue management is also important. Serious leakages such as the seemingly perennial oil theft have to be addressed. It is sad and shameful that Nigeria has not been able to meet up with its OPEC quota and has thus not benefited maximally from the Russia /Ukraine war which has boosted the revenue inflow of many oil exporting countries through the reasonably high price of crude oil on the international oil market. Tax revenue would need to be boosted through the inclusion of the informal sector into the tax net, as much as is possible. Multiple taxes would however need to be avoided, as much as possible.
Third, the issue of fuel subsidy should be confronted headlong. This will have a serious impact in the enhancement of the country’s fiscal sustainability as well as flow in line with the dictates of the Petroleum Industry Act which allows for a deregulation of activities in the oil and gas industry. Despite the public outcry that may follow with this move, government should not relent but instead proceed accordingly although necessary palliatives would need to be provided to cushion the likely inflationary effects of the policy. This issue needs to be addressed.
Next, the need to address the poverty problem in Nigeria is very important. Many Nigerians have lost hope in the ability of the Nigerian economy to guarantee their sustenance and means of survival. That is why many persons particularly the youth are leaving the country in droves. Virtually everyone is getting poorer in Nigeria since the inception of the Buhari administration in 2015. Inflation has increased drastically from single digit in 2015 to about 22 % in 2023. Real wages have fallen. The exchange rate has depreciated from about N197 to a US dollar in 2015 to N750 presently. All these have fuelled inflation. The cost push factors of poor infrastructure, insecurity and low level of public energy supply have hindered production and thus fuelled inflation also. All these have to be addressed in order to make life worth living for the average Nigerian.
Finally, the new government should pursue a balanced development strategy, in making effort to open up the country and enhance decentralisation of economic activities away from the already congested parts of the country. Lagos for example, is getting increasingly populated following regular influx of Nigerians from other regions. The ensuing pressure, against limited infrastructure, is making living difficult; there is the great need to open up other economic centres across the country. One of the ways of doing this is to expand the operations of the Warri and Port Harcourt ports and consequently divert cargo to them to help decongest Lagos and enhance development in the hinterland. That does not deter Lagos from being the country’s economic capital but will stem the tide of the continual influx of people to Lagos in search of economic opportunities. That should be addressed if the new government plans to enhance economic inclusion across the geopolitical zones. The adoption of a balanced development approach would also involve the development of sustainable infrastructure in these regions.
The Presidential election has come and gone and what is required now is governance; indeed good governance. Though the task is herculean, the new President must hit the ground running. By and large, what the people are looking for is good governance. Many will largely forget any grievances they may have concerning the outcome of the elections or any bias they nursed against the APC or the president-elect, if they can experience improved living standards and better national cohesion under the new administration.