President Muhammadu Buhari’s admission on the sidelines of the recently concluded India-Africa summit in New Delhi that Nigeria’s economy was in dire straits, with grave consequences for the fulfillment of recurrent expenditure obligations, was evidently no news to watchers of goings-on in the country.
The fallouts of the dropping revenue from crude exports alongside rising inflation, currently at 9.4% which has defied liquidity tightening measures, amid rising unemployment are clear indicators in the above respect. Besides, low industrial capacity utilization brought about by hydra-headed misapplied and/or wrong economic policies, (if any) has worsened; thus compounding the health status of Nigeria.
Inadvertently, there seem to be too many policy reversals and inconsistencies. Besides, non-release of the 2015 capital vote, expected to complement monetary policy measures and boost the economy, as well as non-activity in the Open Market Operations (OMO) may have sent a signal to the banks that tougher times are in the offing. Also as crude oil prices hit $44.3 per barrel, stakeholders in the oil and gas sector have expressed worry over its effect on national earnings, especially as the funding deficit has been put at $2 billion yearly.
The directive by President Buhari, which kicked off the full implementation of the Treasury Single Account, TSA, tightened liquidity in the financial system, jerking up interbank money market rates as it reached year highs of over 100%. The CBN at the last Monetary Policy Committee (MPC) meeting raised concerns over the slowing economic growth, which hit 2.35% amid weak consumer and investment spending, due to government’s non fiscal support.
Rescuing Nigeria from economic collapse demands implementation of new economic models, as the existing models have failed to generate sustainable development. The government must avoid embracing measures that end up impoverishing Nigerians, while satisfying donors like Paris Club, London Club, IMF/World Bank, among other global institutions. A case in point is the delisting of Nigeria from the Emerging Market Government Bond Index by the US financial institution, JP Morgan. To all intents and purposes, this is an orchestrated blackmail to force a third devaluation of the naira. The insistence on devaluation of the naira as a basis for economic development is a bogus tactics of pauperization and enslavement, and a re-echo of the infamous Structural Adjustment Programme (SAP) and the havoc it wreaked on the Nigerian economy. Nigerians must rally round the government in its efforts to save the naira, and thereby the nation’s economy.
If foreign investors are desirous of the well-being of Nigeria, they should focus on capital investments that facilitate socio-economic development. Unfortunately, the production, costing, marketing, control and regulation of Nigeria’s natural products are controlled by the west. As if this is not enough, China, the emerging world economic power, is also turning Nigeria into the junk-yard of its products and services. As a people who must take their destinies in their hands, Nigerians should think out models that consider the financial health of their economy rather than worry over an exploitative global world order built on the lopsided economic and financial relationship foisted by western financial institutions.
Nigeria must have short, medium and long-term developmental goals. Fortunately, vice president Yemi Osinbajo, who has responsibility for the economy as Chairman of the National Economic Council (NEC) is well aware of the nation’s challenges and the need to fix things quickly. At the 21st Nigerian Economic Summit Group (NESG), Osinbajo rightly acknowledged that the implementation of strategies that would pave the way for economic recovery would involve tough choices.
However, such tough choices must not involve what has not worked for Nigeria. Rather, tough choices should begin with appropriate planning. It is hard to explain for example, how in the entire 2015 financial year, no money has been released for capital projects across the federation. Construction companies have retrenched workers, suppliers are suffering loss in stock value and consumers cannot afford purchase prices. Given global conditions, oil price uncertainty will continue and the 75% dependence on oil revenue will soon vanish, leaving behind, dilapidated infrastructure, rising unemployment, illiquidity, and huge debt burdens.
Six months into his tenure, we posit that President Buhari has no more excuses for the failing and ailing economy. The Nigerian economy is big and the potentials are limitless. The challenge for the government is to recognize the urgency of articulating a blueprint and setting the machinery in motion to put the economy on the path of recovery.