PRESENTED with an opportunity to undertake an honest review of his regime’s economic performance, the President, Major General Muhammadu Buhari (retd.), relapsed into his default mode of living in denial, and eerie self-congratulation. In an interview with Bloomberg, he made unfounded claims and amid the rubble of a collapsing polity, insisted that he would “leave Nigeria in a far better place than we found it.” The verdict of the populace, the domestic and international community is however unsparing: Buhari’s management of Nigeria’s economy, like virtually other areas of national life, has been disastrous.
Most Nigerians can hardly wait for his term to end. But as usual, Buhari was in a world of his own, claiming successes despite the overwhelming evidence of failure. He stated that the economy was on course “for sustainable and equitable growth,” and that Boko Haram no longer occupied large territories.For good measure, he added that Nigerians were now freely “empowered to report corruption.” These unfounded claims graphically capture his detachment from the harsh reality.
All through his seven-year Presidency so far, only Buhari, and his officials rate his performance favourably. For most Nigerians, the wretchedness of the economy is a bitter, lived experience and the consensus is that as president, his incompetence has been unparalleled.
Bizarrely, Buhari continues to claim superior performance compared to his predecessors. He argues that the economy is better now than in 2015 when he took over. He defended the Central Bank of Nigeria’s chaotic exchange rate policy. Everyone else views these policies as catastrophic.
He also spoke glowingly of his regime’s efforts in infrastructure: that over 800 federal roads are under construction or rehabilitation and 650 kilometres of rail lines laid, helping to “alleviate food inflation.” However, Nigerians are suffering immense hardship on the roads as most of these projects never seem to be completed.
His claim that Islamist insurgents have been degraded and no longer occupied any territory in Nigeria is false; the governors of Borno, Katsina, Kaduna, Niger and Zamfara have confirmed the control of some local government areas. He stated that corruption had reduced under him. He blamed the electricity crisis on the slow legislative framework. “Initiatives such as the Anchor Borrower’s Programme; helping farmers compete against artificially lowered imports have boosted rice production to nine million metric tonnes in 2021 from around 5.4MMT in 2015,” he told the news agency.
To be fair, he made initial successes in degrading the insurgency, implementing the rice production programme to major success, and rolled out a slew of executive orders to facilitate investment and trade. But all these early gains have given way to all-round misery: insecurity has emptied the farms and disrupted supply chains. Corruption and cronyism have degraded the naira and ABP. Islamists, Fulani militants, bandits are terrorising the country and road works are unending, the rail projects are expensive and funded by unsustainable debt levels.
With the unmitigated misery confronting a majority of Nigeria’s 216 million people therefore, his averments do not stand up to scrutiny. He had promised much but delivered little. The economy is on a cliff, afflicted on all fronts, complete with power and fuel shortages.
Take infrastructure; the 800 highways he cited are permanently under construction. The Lagos-Ibadan Expressway – the country’s busiest – has been under rehabilitation since 2013, including the seven years under the Buhari regime. Timelines have been shifted on several occasions, causing commuters much pain. In the same traits are the Second Niger Bridge, Sagamu-Benin Expressway, East-West Road, Ibadan-Ilorin Expressway, Ilesa-Akure Expressway, and Lagos-Abeokuta Expressway. The Oshodi-Apapa Expressway has been a no-go area for long; the only change there was undertaken by the private sector, but the gridlock persists. Buhari’s boast is empty because roads are the most significant social investment in an economy.
His claim that without the 650km rail tracks laid, food security would have been imperilled, is exaggerated. Food is still very expensive. The composite food index rose to 19.50 percent in May.The United Nations Food and Agricultural Organisation says 19.4 million Nigerians in 21 states and the Federal Capital Territory would face food insecurity between June and August 2022.
The World Bank says Nigeria requires $10 billion annually for at least 10 consecutive years to fix its dilapidated infrastructure. Borrowing, which is the regime’s favoured funding source, is unwise. Currently, Nigeria spends 96 percent of its income to service debt, which jumped to N41.6 trillion in the first quarter of 2022. In 2015, total national debt stock was N8.8 trillion. The IMF projects that by 2026, debt servicing would gulp 100 percent of federal income. Nigeria’s debt-to-GDP ratio rose from 29.10 percent in 2019 to 34.98 percent in 2020. In 2015, it was 20.3 percent.
Really, there is nothing to cheer. While he met inflation at 9.01 percent in 2015, it rose to 16.82 percent in April, and 17.71 percent in May. Since 2012, the United States Federal Reserve had set an annual target of 2.0 percent maximum inflation rate, in line with other major Western economies.
Inflation is being driven by dependence on imports, especially food, petroleum products, drug, automobiles (new and used) and raw materials for industry. With no visible economic impetus, inflation conflates with the foreign exchange crisis. The naira has fallen precipitously in the past seven years, exchanging between N600 and N610 to $1 in the parallel market and N425.05 (June 30) at the Importers and Exporters Window as against N198/$ in May 2015.
In Buhari’s Nigeria, things might get worse. Instead of privatising the four moribund refineries, Buhari is holding on to them at the detriment of the economy. He has no excuse for this. In 2022, petrol subsidies alone will gulp N4 trillion, and could reach N5 trillion by December. Prices of diesel, kerosene, aviation fuel and lubricants have spiked, forcing production and jobs cutbacks by manufacturers.
The tax policy is chaotic; multiple taxation is expanding. The National Assembly is working on a bill that will make companies pay 1.0 percent of their profits to the NYSC Trust Fund. This is apart from the TETFund profit tax and others. All this discourages economic growth.
The OECD says the highest tax-to-GDP ratio in Nigeria was 9.6 percent in 2011, with the lowest being 5.3 percent in 2016, Buhari’s second year in office. Tax-to-GDP declined to 6.0 percent in 2019 from 6.3 in 2018. Over the same period, 30 African economies recorded an average of 16.6 percent. The IMF recommends a tax-to-GDP of 15 percent and above to drive economic growth.
In the power sector, Buhari’s failure is monumental. On May 29, 2015, power generation was 2,948 megawatts. In January 2019, the average national power generation was 4,056MW, an increase of 1,108MW. In the five months to May 2022, the sole national grid collapsed 15 times. These days, many businesses and homes run on generators. The Manufacturers Association of Nigeria, which has rejected Buhari’s assertions, says the electricity shortages add 45 percent extra to costs.
In the 2021 Misery Index, Nigeria placed 11th. Unemployment is at a staggering 33.3 percent. Many state governments struggle to pay salaries and the N30,000 per month minimum wage.
Not surprisingly, Nigeria odiously became the world’s global capital of extreme poverty in 2018 with 86.9 million citizens living below the $1.90 per day threshold. Seven million more are destined for that miserable category by December 2022, says the World Bank.
Buhari has found a ready excuse for his failures in the COVID-19 pandemic and Russia’s war on Ukraine. But long before these, he had thoroughly mismanaged the economy.
He does not even fight corruption, one of his principal campaign promises. His celebration of recovering N152 billion in 2021 alone pales into insignificance when juxtaposed with the N171 billion stolen by just one official. Indeed, he has long surrendered to corruption, appointing known corrupt persons into high office, pardoning two convicted ex-governors and helpless to stop the massive looting by his close associates.
Foreign direct investment has declined. From $3.06 billion in 2015, it climbed to $3.45 billion in 2016, but decreased to $2.41 billion in 2017, $0.78 billion in 2018, and $2.31 billion in 2019, reported Macrotrends, a global research firm.
He has practically shut down the privatisation programme, recording no single asset sale since coming to power.To salvage his disastrous legacy, Buhari should concentrate on resolving the power crisis, and privatisation of the refineries, the railways, the airports, and the seaports. Nigeria is a poverty ridden country with a measly GDP of $432.3 billion. Therefore, he should cut down drastically on the ostentation in the executive and legislative arms of government. He should move the mountains in the power sector as Egypt and South Africa have done.
Buhari should move decisively against Islamic insurgents, bandits, Fulani herdsmen and the gunmen ravaging South-East Nigeria in full force to renew the confidence of domestic and international investors in the economy. Above all, he should face the reality that he has not revived the economy. He should concentrate on doing better in the short time left.