President Muhammadu Buhari is known to be a man of action, thanks to the aggressive reforms that characterised his initial rule of Nigeria as military head of state in the early 1980s.
Expectations were high when election results confirmed in April last year that Buhari was coming to rule the country the second time, now as a civilian leader.
Nigerians’ hopes were rekindled that finally a man of action, unlike former President Goodluck Jonathan, would eliminate corruption, inefficiencies in the public service and the resultant economic challenges that had become a strain on the country.
However, the fast deteriorating state of the economy and the way all key macro-economic indices have been falling in the last one year have been of utmost concern to a lot of Nigerians, especially notable economists and financial analysts.
With many Nigerians complaining of hardship, a look at the key economic indicators in the past one year, as revealed by the Nigerian Bureau of Statistics, shows that the economy is truly on a downward trajectory.
For instance, inflation rate, which is a measure of the purchasing power of the citizens and, to a great extent, the determinant of the extent that workers’ wages can take them home, has moved to double digits under Buhari.
Inflation rate, which was nine per cent in May when the President took over, was 13.7 per cent as of April 2016, according the NBS report released two weeks ago.
According to the NBS data, the inflation rate has been rising consistently from nine per cent in May 2015, hitting 9.6 per cent in January before moving up to a double-digit in February. It has since been rising, hitting 12.4 per cent in March before moving up to 13.7 per cent in April.
Similarly, the Gross Domestic Product rate, which measures the output of the nation and a key determinant of the rate at which the economy is growing, has been falling consistently in the last one year.
According to the NBS statistics, the GDP growth rate fell year-on-year from 3.96 in the fourth quarter of 2014 to 2.11 per cent in the fourth quarter 2015, before crashing to a negative growth of 0.36 per cent in the first quarter of this year.
Under Buhari, the GDP contracted in the first quarter of 2016, meaning the economy recorded a negative growth for the first time in over a decade. World Bank data showed that the -0.36 growth recorded by the economy was a 21-year low. The nation had recorded a growth of -0.3 under the late dictator, Sanni Abacha, in 1995.
The exchange rate, a key economic indicator, especially for an import-dependent economy like that of Nigeria, has also been on the downward trajectory.
While the CBN has pegged the naira-dollar official rate at between 197 and 199 since February 2015, the local currency has fallen consistently at the parallel market.
The naira fell at the parallel market from around 210 in May 2015 to 345 a year later.
The Central Bank of Nigeria, in a bid to save the naira from further decline against the dollar, has introduced several forex policies, which have brought the economy to its knees, according to analysts.
Many economists believe that the nation may not have recorded the negative growth in the first quarter if the CBN under Buhari had adopted a better exchange rate policy.
An Associate Professor of Economics at the Ekiti State University, Abel Awe, said he was not sure that Buhari’s economic management team, as presently constituted, could drive the economy forward.
He said, “In terms of living standard, the quality of life of Nigerians has been worse off compared to what it was a year ago. Macroeconomic indicators have been on the downward trend. Capacity utilisation in the industrial sector is down. Joblessness and poverty are rising and the average Nigerian is living in hardship.
“I am not a politician, but I doubt if this economic management team will drive the economy out of the situation we are now.”
An analyst at Meristem, a research and investment advisory firm, Mr. Taiwo Yusuf, said it had been an average performance for the President’s economic management team in the last one year.
He said events in the global economy like the fall in global oil prices had affected Nigeria. According to him, some of the events are outside the control of the economic management team. He, however, said that much of the blame for the not-too-encouraging performance of the economy could be put on the doorstep of the team.
An economic analyst at Agusto and Co, a rating agency and research firm, Mr. Jimi Ogbobine, said Buhari had “performed behind the curve in the last one year.”
According to him, data on unemployment rate, inflation, foreign direct investment into Nigeria and others have shown that the government has not done well in the last one year.
Ogbobine, however, said Buhari had taken some good decisions in recent times and must be credited for this.
The Chief Executive Officer, Renaissance Capital, a London-based investment bank and research firm, Mr. Temi Popoola, said although the new administration had a strong team, the policy response to the challenges facing the economy was initially not effective.
He wished the decision taken in recent times could have been taken earlier.
An economist and Chief Executive Officer, Cowry Assets Management Limited, Mr. Johnson Chukwu, said the economy had been on the downward trend in the last one year, adding that the policy response to the challenges facing it had been poor.
However, an analyst at BGL, an investment firm, Mr. Femi Ademola, believes the economic management team has been constrained by the global fall in oil prices and the inability of the Federal Government to get the 2016 budget passed on time.
“The economic management team has not done much in the last one year. It has been a time of planning and anti-corruption. The instrument of fiscal policy is the budget. I believe with the budget passed now, next year will be better for us. The rest of this year may be more of trial and error,” he explained.
The Lagos Chamber of Commerce and Industry had last week said the absence of a well-structured, broad-based and synergised economic blueprint with clearly stated goals, plans, policies and strategies to drive the economy was largely responsible for the current challenges and policy ambiguity the nation was experiencing.
The LCCI, in its one-year economic review of the Buhari administration, noted that the global economic reality, fall in global oil prices, policy shortcomings and insurgency all played a very critical role in the weak economic performance of the country.
The LCCI stated, “The economic policy space remains unclear. Policy conception is faulty, hence, policy coordination and implementation suffer serious setback. There is, therefore, an urgent need for central policy strategy with detailed and well-designed policy direction. This is critical for effective and efficient coordination and implementation of policies.”
It said while the policy goal of eliminating corruption was laudable, the need for concerted efforts on the side of the government with respect to policy, legal and regulatory environments to boost private sector participation was highly desirable.
The group said it was imperative to make very strong moves to resolve the weakening oil revenue and find creative ways of incentivising foreign exchange inflow into Nigeria so as to boost liquidity and ease access to forex through alternative sources such as foreign direct investment in critical sectors of the economy and Diaspora remittances.
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