Buhari’s economic scorecard is dire
Presented with the opportunity to undertake an honest review of his regime’s economic performance, the President, Major General Muhammadu Buhari (Retired), has fallen back into his default lifestyle of denial and complacency. worrying. In an interview with Bloomberg, he made unsubstantiated claims and amid the rubble of a crumbling political regime, insisted he would “leave Nigeria in a much better place than where we found him”. The verdict of the people, the national and international community is, however, ruthless: Buhari’s management of the Nigerian economy, like virtually other areas of national life, has been disastrous.
Most Nigerians can barely wait for his term to end. But as usual, Buhari was in a world of his own, claiming success despite the overwhelming evidence of failure. He said the economy was on track “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 speak out against corruption”. These unsubstantiated claims graphically capture his detachment from harsh reality.
Throughout his seven-year presidency so far, only Buhari and his officials rate his performance favorably. For most Nigerians, the misery of the economy is a bitter, lived experience and the consensus is that as President his incompetence has been unparalleled.
Oddly, Buhari continues to claim superior performance over its predecessors. He argues that the economy is better now than in 2015, when he took over. He defended the chaotic exchange rate policy of the Central Bank of Nigeria. Everyone regards these policies as catastrophic.
He also spoke enthusiastically of his regime’s efforts in infrastructure: more than 800 federal roads are under construction or rehabilitation and 650 kilometers of railways laid, helping to “mitigate food inflation”. However, Nigerians suffer immense hardship on the roads as most of these projects never seem to be completed.
His assertion that the Islamist insurgents have been degraded and no longer occupy any territory in Nigeria is false; the governors of Borno, Katsina, Kaduna, Niger and Zamfara confirmed control of some local government areas. He said corruption had diminished under him. He blamed the electricity crisis on the slowness of the legislative framework. “Initiatives such as the Principal Borrower Program; helping farmers compete with artificially reduced imports has boosted rice production to nine million metric tons in 2021 from around 5.4 MMT in 2015,” he told the news agency.
To be fair, he scored initial successes by degrading the insurgency, implementing the rice production program with major success, and rolling out a series of executive orders to facilitate investment and trade. But all those early gains have given way to widespread misery: insecurity has emptied farms and disrupted supply chains. Corruption and cronyism have degraded the naira and the ABP. Islamists, Fulani militants, bandits terrorize the country and road works never end, rail projects are expensive and financed by unsustainable levels of debt.
With the utter misery faced by the majority of Nigeria’s 216 million people, his claims do not stand up to scrutiny. He promised a lot but delivered little. The economy is on a cliff, distressed on all fronts, with power and fuel shortages.
Take infrastructure; the 800 highways he cited are constantly under construction. The Lagos-Ibadan highway – the busiest in the country – has been undergoing rehabilitation since 2013, including the seven years under Buhari’s rule. Deadlines have been pushed back several times, causing a lot of pain for commuters. Along the same lines are the Second Niger Bridge, Sagamu-Benin Highway, East-West Highway, Ibadan-Ilorin Highway, Ilesa-Akure Highway, and Lagos-Abeokuta Highway. The Oshodi-Apapa highway has been a no-go zone for a long time; the only change there has been undertaken by the private sector, but the impasse persists. Buhari’s boast is in vain because roads are the single most important social investment in an economy.
His assertion that without the 650 km of railways laid, food security would have been in jeopardy, is exaggerated. Food is still very expensive. The composite food index rose to 19.50% in May. The Food and Agriculture Organization of the United Nations 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 needs $10 billion a year for at least 10 consecutive years to fix its dilapidated infrastructure. Borrowing, which is the plan’s preferred source of funding, is imprudent. Currently, Nigeria spends 96% of its revenue on servicing debt, which jumped to N41.6 trillion in the first quarter of 2022. In 2015, the total stock of national debt was N8.8 trillion. The IMF predicts that by 2026, debt service will eat up 100% of federal revenues. Nigeria’s debt to GDP ratio increased from 29.10% in 2019 to 34.98% in 2020. In 2015, it was 20.3%.
Really, there is nothing to cheer about. While he had encountered inflation of 9.01% in 2015, it rose to 16.82% in April and 17.71% in May. Since 2012, the US Federal Reserve had set a maximum annual inflation target of 2.0%, in line with other major Western economies.
Inflation is driven by dependence on imports, particularly food products, petroleum products, medicines, automobiles (new and used) and raw materials for industry. Without visible economic impulse, inflation merges with the currency crisis. The naira has fallen precipitously over the past seven years, trading between 600 and 610 naira against 1 dollar on the parallel market and 425.05 naira (June 30) at the counter of importers and exporters against 198 naira/$ in May 2015 .
In Buhari’s Nigeria, things could get worse. Instead of privatizing the four moribund refineries, Buhari is keeping them at the expense of the economy. He has no excuse for this. In 2022, gasoline subsidies alone swallow 4 trillion naira and could reach 5 trillion naira by December. Prices for diesel, kerosene, aviation fuel and lubricants soared, forcing production and job cuts by manufacturers.
Tax policy is chaotic; multiple taxation is developing. The National Assembly is working on a bill that will require companies to contribute 1.0% of their profits to the NYSC Trust Fund. This is apart from tax on profits of TETFund and others. All of this discourages economic growth.
The OECD reports that the highest tax-to-GDP ratio in Nigeria was 9.6% in 2011, with the lowest being 5.3% in 2016, Buhari’s second year in office. The tax-to-GDP ratio fell to 6.0% in 2019 from 6.3 in 2018. Over the same period, 30 African economies recorded an average of 16.6%. The IMF recommends a tax-to-GDP ratio of 15% and above to stimulate economic growth.
In the power sector, Buhari’s failure is monumental. On May 29, 2015, electricity production was 2,948 megawatts. In January 2019, the average national electricity production was 4,056 MW, an increase of 1,108 MW. In the five months to May 2022, the national grid alone collapsed 15 times. These days, many businesses and homes run on generators. The Manufacturers Association of Nigeria, which rejected Buhari’s claims, says power shortages add another 45% to costs.
In the 2021 Misery Index, Nigeria ranked 11th. Unemployment is at a staggering 33.3%. Many state governments are struggling to pay salaries and the minimum wage of 30,000 naira per month.
Unsurprisingly, Nigeria obnoxiously became the extreme poverty capital of the world in 2018 with 86.9 million citizens living below the $1.90 a day threshold. Seven million more are earmarked for this miserable category by December 2022, according to 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 that, he had completely mismanaged the economy.
He does not even fight corruption, one of his main campaign promises. His celebration of recovering 152 billion naira in 2021 alone becomes meaningless when juxtaposed with the 171 billion naira stolen by one official. Indeed, he has long given in to corruption, appointing known corrupt people to high office, pardoning two convicted ex-governors and powerless to stop massive looting by his close aides.
Foreign direct investment has declined. From $3.06 billion in 2015, it rose to $3.45 billion in 2016, but decreased to $2.41 billion in 2017, $0.78 billion in 2018, and $2.31 billion. dollars in 2019, reported Macrotrends, a global research firm.
He virtually halted the privatization program, recording no asset sales since coming to power. To salvage his disastrous legacy, Buhari should focus on solving the electricity crisis and privatizing refineries, railways, airports and seaports. Nigeria is a poverty-stricken country with a miserable GDP of $432.3 billion. Therefore, it should significantly reduce ostentation in the executive and legislative branches of government. It should move mountains in the electricity sector as Egypt and South Africa have done.
Buhari should act decisively against the Islamic insurgents, bandits, Fulani herdsmen and gunmen ravaging southeastern Nigeria in 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 focus on doing better in the little time he has left.