When the presidential campaign of the All Progressives Congress, APC, was formally inaugurated in January 2015, then candidate Muhammadu Buhari promised to tackle corruption and insecurity, and develop the economy.
Mr Buhari, a former military head of state, told members of the party at the Adokiye Amasiemeka Stadium in Port Harcourt, capital of Rivers State, that he would pick competent hands to run the nation’s economy, which he said was in poor shape.
“The fundamental issue facing this country is insecurity and the problem of economy which was being made worse by corruption. I assure you that we are going to finally assemble a competent team of Nigerians to efficiently manage the country,” he said.
“I am appealing to you, the damage done to this country is great. The level of unemployment, level of insecurity is intolerable. The journey has begun. It will take time, it will take patience, it will take support from you to make sure that we succeed.
“Let us make sure that our votes count. The problem we are facing today is the problem of security and economy. We have gathered competent hands to manage the economy and tackle insecurity.”
Saturday, May 29, marked six years since Mr Buhari took power as Nigeria’s president, after defeating former president Goodluck Jonathan in 2015 and winning re-election in 2019. He has just two years left to complete two maximum four-year terms.
His six-year reign as president has seen the nation wriggle through numerous economic challenges, with inflation and unemployment at worse levels than he met them. On a comprehensive note, how has the economy performed under this administration?
Prior to 2015, the nation inflation rates remained at single digit––even as analysts opined at the time that it was high. For instance, in the whole of 2014, the nation’s rate of inflation moved between 7.7%, which was the lowest, to the highest point of 8.5%.
In 2015 when Mr Buhari took over power, inflation rate averaged 9%.
In recent years, the nation has seen a persistent surge in inflation rates, reaching the highest levels in four years. Data released by the statistics bureau has shown that Nigeria’s inflation rate has since skyrocketed amid increase in food prices and poor purchasing power.
In March 2021, inflation rose to 18.17% from 17.33% recorded in February 2021. This represented 0.82% points higher than the February figures, according to the Consumer Price Index report released by the National Bureau of Statistics (NBS).
In April, however, the bureau said inflation rate stood at 18.12 per cent.
A key element of inflation in Nigeria in recent years is the skyrocketed prices of food and related goods and services.
In February, this newspaper reported that Nigeria’s food inflation rose to the highest level since 2008, a sombre illustration of the crisis the nation’s food sector has faced, with millions of poor citizens struggling daily to buy food at exorbitant rates.
Food inflation climbed to 20.57 percent year-on-year in January 2021, according to data released by the Bureau of Statistics, making it the highest in over 11 years.
Nigeria has seen one of its longest inflationary streaks in recent months, amid border closures and a blockade of southern Nigeria.
Analysts blame the rise in food prices on COVID-19 pandemic disruptions, dollar shortages, and lingering restrictions on imports of certain food items even after the nation reopened its borders. Another factor is the incessant attacks on farmers, which has caused shortages of goods.
A key element of the Buhari-Osinbajo campaign mantra in 2015 was job creation.
When the administration took over power in the second quarter of 2015, unemployment rate rose to 9.9% in the third quarter of that year from 8.2% in the second quarter, according to the National Bureau of Statistics (NBS).
Since then, unemployment, poverty and economic disempowerment have remained a disturbing feature of the Nigerian life.
Between May 2015 and May 2021, Nigeria’s unemployment rate has more than tripled.
In March, the nation’s statistics bureau reported that Nigeria’s unemployment rate rose to 33.3 per cent, translating to some 23.2 million people, the highest in at least 13 years and the second-highest rate in the world.
The figure jumped from 27.1 per cent recorded in the second quarter amidst Nigeria’s lingering economic crisis made worse by the coronavirus pandemic.
Unemployment rate in the country has more than quadrupled since the economy slipped into recessions, first, in 2015, and later in 2020.
The federal government in its Economic Sustainability Plan had predicted that the rate of unemployment would rise to 33.6 per cent at the end of 2020 if urgent steps were not taken.
GDP and Recession
Between May 2015 and now, the Nigerian economy has fallen into recession, twice.
The economy fell into recession, first, in 2016 when the economy contracted 2.06% between April and June. The country saw two consecutive quarters of declining growth, the usual definition of recession, when its vital oil industry was hit by weaker global prices. Among other concerns, analysts blamed Mr Buhari’s failure to initiate an economic roadmap and constitute a cabinet for the economic recession.
Again in 2020, Nigeria slipped into a recession after its gross domestic product contracted for the second consecutive quarter, according to data released by the nation’s statistics bureau. The data also showed the impact of the COVID-19 pandemic and low oil prices on economic output.
Meanwhile, the GDP growth rate put at 2.3% before 2015 has since slowed, now averaging 1.01%.
In November 2015, six months after Mr Buhari took over as president, the naira sold against the dollar at N197.
Between then and now, the Nigerian unit has gone through ceaseless devaluation, with two of such exercises occurring in 2020 alone.
Last week, the Central Bank of Nigeria adopted the Nafex rate as the government’s official exchange rate for the naira, effectively devaluing the currency yet again by 7.6 per cent.
The naira had official been placed at a fixed rate of 379.
The currency exchanged 410.25 for a dollar on the relatively flexible Nafex or Investors and Exporters window, almost two weeks after the CBN erased from its website the exchange rate that for about a year was seen as the government’s official rate.
In March, the CBN had denied devaluing the naira after the Minister of Finance, Zainab Ahmed, said the government had adopted the Nafex rate used by investors and exporters.
The move was part of the government’s resolve to harmonise the nation’s multiple exchange rates.
The reduced value of the local unit has had effect on investment as much as it has impacted local businesses and manufacturing outfits.
Earlier on Sunday, Garba Shehu, presidential spokesperson, said the naira is in the “best possible health it can be, given the circumstances we are in”. Mr Shehu explained that the COVID-19 pandemic has negatively affected the global economy, and “only the Nigerian economy is recording ‘positive growth’ in Africa”.
Foreign Exchange Policy
The nation’s foreign exchange policy has been riddled with uncertainties, especially in recent months, largely due to the incoherence in policy appreciation on the parts of the Central Bank of Nigeria (CBN) and the Ministry of Finance.
For instance in March, Nigeria’s finance minister, Zainab Ahmed, stirred controversies when she said that Nigeria had adopted a new flexible exchange rate policy for official transactions, a claim the Central Bank of Nigeria swiftly denied.
The development raised concerns among investors and analysts, with many opining that the uncertainties could undermine investment.
In the same vein, people have mixed feelings about the nation’s foreign exchange management policy, with many flaying the government over its numerous restrictions and other transparency concerns in forex allocation to Bureau de change operators and other high-profile individuals by the CBN.
The nation’s debt profile has risen considerably since Mr Buhari took over power, as budgetary proposals have been designed considerably around debts.
According to the Debt Management Office (DMO), Nigeria’s debt profile stood at N12.12 trillion as of June 2015, shortly after Mr Buhari took office.
In March, the Debt Management Office (DMO) said Nigeria’s total public debt as at December 31, 2020 was N32.915 Trillion. The figures include the Debt Stock of the Federal and State Governments, as well as, the Federal Capital Territory.
DMO said after Nigeria exited recession in 2017, the level of new borrowing by the Nigerian government had been declining as part of the government’s measures to moderate the rate of growth in the public debt stock in order to ensure debt sustainability. It added that new borrowing to part finance budget deficits “had declined steadily from N2.36 Trillion in 2017 to: N2.01 Trillion in 2018, N1.61 Trillion in 2019 and N1.59 Trillion in the first 2020 Appropriation Act.”
However, the DMO admitted that the trend was reversed in 2020 due to the economic and social impact of the COVID-19 Pandemic as new borrowing in the revised 2020 Appropriation Act was N4.20 Trillion. It argued that “many countries including the advanced countries also increased their level of borrowing as a result of COVID-19.”
Analysts have however argued that the level of borrowing could prove unsustainable, especially if premium is placed not only on the nation’s debt-to-GDP ratio, but its worrisome debt-to-revenue ratio.
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