By Pius Mordi
Finally, it is official – Nigeria is almost in recession. “Imminent” was the word Godwin Emefiele and the wise men in Monetary Policy Committee (MPC) used in warning of an inevitable recession. The Central Bank governor may have opted to soften the communication to Nigerians the depth our economy is in. When GDP (Gross Domestic Product) growth for first quarter of 2016 is at just 0.36; when the inflow of foreign capital into Nigeria was $711 million in the first quarter of 2016 – a whopping 74 percent drop from the corresponding period last year; when Nigeria was ejected from a widely-tracked JPMorgan EM bond index in the third quarter of 2015 over what was seen as complex foreign exchange restrictions that have deterred potential investors who worry about repatriating earnings and it is dismissed by the government as inconsequential, you worry that the economy could be on a cliff hanger.
Even though the election that brought General Muhammadu Buhari into power was quite divisive, there was a collective sigh of relief when he was eventually declared winner. And for good reasons too. On three previous occasions, he had sought, albeit unsuccessfully, to be president. Earlier, he had been Nigeria’s ruler via a military coup. So when he promised change and to hit the ground running, there was every reason to believe him.
Goodwill was sky high and this translated into a huge bounce that comes with a new regime. As in a footbal club that appoints a new coach and every player puts in extra effort to impress him, the bounce came with a marked improvement in services in almost all spheres. Electricity supply, availability of fuel and the exchange rate of the naira all went positive. Unfortunately and tragically, Buhari’s minders labelled it the product of the new president’s body language. “Body language” was elevated to an art in governance. From what Buhari’s media men sold to us, a new sheriff, a no-nosense one at that, is in town. With that, all will continue to be well.
Goodwill was sky high and this translated into a huge bounce that comes with a new regime. As in a footbal club that appoints a new coach and every player puts in extra effort to impress him, the bounce came with a marked improvement in services in almost all spheres. Electricity supply, availability of fuel and the exchange rate of the naira all went positive. Unfortunately and tragically, Buhari’s minders labelled it the product of the new president’s body language. “Body language” was elevated to an art in governance. From what Buhari’s media men sold to us, a new sheriff, a no-nosense one at that, is in town. With that, all will continue to be well.
This mentality was aptly demonstrated in Buhari’s characterisation of ministers as noise makers whose necessity is just for political patronage. He duly delivered on this. It took about six months into his administration for him to appoint his “noise makers”. During the period, the international business community, power companies, banks, oil companies and importers waited for a policy direction on the economy. You have to feel for the CBN governor who tried to fill the void by using the limited monetary policy instrument available to him to stabilise the economy.
An economy, a troubled economy, is not run on the basis of body language of a new sheriff however untainted he may be perceived to be.
Buhari certainly has good intentions for the country. He desires to instill discipline in the management of state resources. He wants Nigeria to be great. But as he marks one year in office, he has failed to match his much vaunted experience with planning. He has rather created an outlet for this deficiency in only talking about corruption and the shortcomings of the administration he succeeded. True to his body language, his men and those seeking to draw his attention have been trying to do out each other in bandying figures, some fantastically outlandish, puportedly lost through corruption by the previous administration. Professor Chukwuma Soludo, erstwhile CBN governor, said N30 trillion was unaccounted for while Dr. Ngozi Okonjo-Iweala was Minister of Finance while Vice President Yemi Osinbajo revised the amount allegedly lost through the office of the National Security Adviser, Sambo Dasuki, from $2.1 billion to $15 billion. What is the strength of Nigeria’s economy and the depth of her income that such stupendous amounts will be siphoned and the country still had anything left in federation account to share?
Buhari certainly has good intentions for the country. He desires to instill discipline in the management of state resources. He wants Nigeria to be great. But as he marks one year in office, he has failed to match his much vaunted experience with planning. He has rather created an outlet for this deficiency in only talking about corruption and the shortcomings of the administration he succeeded. True to his body language, his men and those seeking to draw his attention have been trying to do out each other in bandying figures, some fantastically outlandish, puportedly lost through corruption by the previous administration. Professor Chukwuma Soludo, erstwhile CBN governor, said N30 trillion was unaccounted for while Dr. Ngozi Okonjo-Iweala was Minister of Finance while Vice President Yemi Osinbajo revised the amount allegedly lost through the office of the National Security Adviser, Sambo Dasuki, from $2.1 billion to $15 billion. What is the strength of Nigeria’s economy and the depth of her income that such stupendous amounts will be siphoned and the country still had anything left in federation account to share?
The fight against corruption is desirable and commendable. As has been repeatedly stated, if we do not kill corruption, corruption will kill us. However, making it the only item on the agenda of the government as has been the case in the past 365 days of the administration could be potentially damaging.
With no other message coming from Aso Rock save how deep corruption is, investors promptly heeded the call and are taking a walk. That is the message Emefiele’s MPC warning of imminent recession was passing across. The apparent absence of a discernible plan was shown when shortly after taking over power, the Federal Government reduced the price of petrol from N97 to N86.50 per litre at a time pressure was on the previous government to remove subsidy on petrol. Some six months later, the price was increased by nearly 70 percent to N145.
With no other message coming from Aso Rock save how deep corruption is, investors promptly heeded the call and are taking a walk. That is the message Emefiele’s MPC warning of imminent recession was passing across. The apparent absence of a discernible plan was shown when shortly after taking over power, the Federal Government reduced the price of petrol from N97 to N86.50 per litre at a time pressure was on the previous government to remove subsidy on petrol. Some six months later, the price was increased by nearly 70 percent to N145.
We cannot afford further flip flop in the management of the economy. By finally adopting the flexible exchange rate policy, the first crucial step may have been taken in restoring the confidence of investors. While we await CBN’s guidelines under the new flexible regime, we hope Emefiele’s decision to fund “critical transactions such as importation of vital machinery for production as well as essential basic raw materials that are critical for manufacturing which by their nature cannot be sourced locally” is respected. In the past, religious pilgrimages had been accorded preferential funding. This must never happen again.
