- The failure list
Contrary to its 2015 presidential election campaign promises on the state of the Nigerian economy then and how it planned to revive and turn it around for the overall betterment of the nation if it got the mandate of the people, Nigerian Pilot investigations over the weekend revealed that the ruling All Progressives Congress, APC and its government, led by President Muhammadu Buhari, are yet to have full grasp of the country’s economy. Accordingly, our findings show that a huge compromise of the economy which could complicate any envisaged growth in the short and middle term may be compromised.
An Economist and Managing Director of Financial Derivatives Company Limited, Bismarck Rewane weekend raised alarm that CBN must ensure that the country’s economy does not go comatose. He thus urged the apex bank to take measures to avert looming economic failure.
He appraised the naira exchange rate vis-vis low crude oil prices and retorted that “if you don’t do the right thing at the right time, you will have to do more before long.”
The economist said, sooner or later the currency will adjust itself “because you cannot creat a synthetic situation and expect to prosper,” adding “if you know you have enough money why are you locking the door?” He then described government’s economic policy as inconsistent in signal and price.
Nigeria Bureau of Statistics
For instance, growth in the economy, slowed in the second quarter due to the slump in oil prices, Nigeria Bureau of Statistics, NBS said last week.
Gross Domestic Product expanded 2.35 percent on an annual basis, compared with 3.96 percent a quarter earlier, the head of the NBS, Yemi Kale, said on his Twitter account. The oil industry contracted 6.8 percent, Kale said.
Economist, Alan Cameron
Alan Cameron, a London-based economist atExotix Partners LLP, reportedly reacted in e-mailed comments: “This is not a good result for Nigeria,” “Moreover, with policy rates stuck at high levels, and fiscal policy being tightened automatically through lower statutory oil disbursements, it is hard to see any catalyst for improvement.”
The central bank raised its key interest rate to a record high of 13 percent in November, since when inflation has accelerated beyond the bank’s target band of 6 to 9 percent.
The government “can no longer pretend that this is just business as usual with a minor or temporary slowdown,” Cameron said.
The oil-price slump has forced Africa’s top crude producer to cut its budget and deplete foreign-currency reserves to stem depreciation in the currency, which has declined 7.8 percent against the dollar this year. The Nigerian Stock Exchange All Share Index fell to the lowest in six months on Tuesday on concern that oil prices near a six-year low will deepen the country’s economic challenges.
Manufacturing contracted by 3.8 percent during the quarter, compared with growth of 14 percent a year ago, Kale said.
Maritime expert, Asu Beks
For Asu Beks, a maritime expert, there are doubts over “any real growth in the economy this far.” He queried the non-existence of investment in the capital sector of the economy which he added, should engender spiral thrust in other sectors.
According to him, “though the APC went to the campaigns to promise a lot to the Nigerian people about how they would turn things around for good, “there is a yawning gap between their promises and what is on ground today. We have a situation whereby, JP Morgan has told us the home truth. Nigerian Bureau of Statistics has told us how low the economy is in the second quarter and now the banks are set to sack thousands of workers while Nigerians hope and pray that the sevral promises made before the presidential election will be delivered on.”
Against the backdrop of the raging differences between the federal government’s economic managers and highly respected US-based global investment bank, JP Morgan over the nation’s economy, many Nigerians, it was learnt, have continued to hold the APC government at the centre responsible for not delivering on its several campaign promises, especially on the economic front. They easily point to the development as an indicator that Nigeria’s economy is on the downward slide.
Penultimate week, Reuters reported that JP Morgan will by the end of October 2015 phase out Nigeria from its bond index. The bank warned that over-regulation of the exchange value of the Naira by the Central Bank of Nigeria over the past months were making bond market transactions too complex to meet its rules.
JP Morgan’s decision to phase Nigeria out of its index which many investors track, marked the conclusion of a process initiated in January, Reuters reported.
Some bonds will be removed by the end of September and the rest by the end of October, JP Morgan said. The index provider added that Nigeria would not be eligible for re-inclusion in the index for a minimum of 12 months.
The development has continued to cause investors and potential ones to hurry out of any related business dealings with Nigeria. Watchers now fear that the country’s economy is in for a done for.
In a joint reaction to the decision by US investment bank, JP Morgan to phase out Federal Government of Nigeria (FGN) Bonds from its Government Bond Index for Emerging Markets (GBI-EM) by the end of October, the Federal Ministry of Finance, Central Bank of Nigeria (CBN) and Debt Management Office (DMO) said Nigeria and the interest of Nigerians were paramount, and will continue to take economic decisions that will impact positively on the lives of all citizens.
However, many underscore the foregoing as a key failure on the part of the government and urge a reversal of certain decisions taken by the country’s economic managers in line with JP Morgan’s position that the country must establish a consistent record of satisfying the index inclusion criteria, such as a liquid currency market.
“They promised to revive the economy; but they have not. We hear the economy will fail with this JP Morgan problem. When will the economic stability come?” asked a senior manager in an Abuja-based commercial bank, yesterday.
Other failed promises
Other campaign promises made by the APC for which Nigerians still hold its central government liable, especially as they affect the economy include:
. No cabinet of ministers in place close to four months after assuming office. By their job specifications, ministers man portfolios that in the aggregate pilot an administration’s agenda for economic development. But with none appointed for now, the economy suffers.
. Making the economy one of the fastest-growing emerging economies in the world, with a real GDP growth averaging 10 percent annually. No policies are on ground for now to fulfill this promise.
. Establishment of crime squad to combat terrorism, kidnapping, armed robbery, militants, ethno-religious and communal clashes nationwide.
. All political office holders earn only the salaries and emoluments determined and approved by the Revenue Mobilisation and Fiscal Commission (RMFAC).
. Making Information Technology, Manufacturing, Agriculture and Entertainment key drivers of our economy
. Targeting up to 20 percent of our annual budget for this critical sector whilst making substantial investments in training quality teachers at all levels of the educational system (some other APC policy documents had 15 percent).
. Balancing the economy across regions by the creation of six new Regional Economic Development Agencies (REDAs) to act as champions of sub-regional competitiveness and putting in place a N300 billion regional growth fund (average of N50 billion in each geo-political region) to be managed by the REDAs.
. Creating additional middle-class of at least two million new home owners in the first year in government and one million annually thereafter.
. Generating 720,000 jobs in the 36 states nationwide yearly, that is, 20,000 per state and three million Jobs per year
. Ending gas flaring and ensuring sales of at least half of gas produce, within Nigeria.
. Speedily passing the much-delayed Petroleum Industry Bill (PIB) and ensuring that local content issues are fully addressed.
. Establishing at least six new universities of science and technology with satellite campuses in various states.
. Establishing a new special relationship with the leading emerging markets like Brazil, Russia, India and China (BRIC) and other strategic partners around the world.
. Diversification of the Nigerian Economy. Nigerians are canvassing for a non-dependent oil economy so that Nigeria can make money from other sources apart from oil.
. End of Boko Haram insurgency and ensuring security of lives and property.
These and several others, including those with indirect significance to the nation’s economy worry most Nigerians as lengthening the failure list of the APC and its administration.