The economy under Buhari: Half Way To What?
By Dele Sobowale
“In the first quarter of 2017, the nation’s GDP contracted by 0.52 per cent.” National Bureau of Statistics, (NBS), May 23, 2017.
After suspected deliberate delay in releasing the actual results for the first quarter’s bad news, the NBS couldn’t hold it no longer.
Meanwhile, Mr Godwin Emefiele, Governor of the Central Bank of Nigeria, (CBN), has been leading the chorus of government officials singing that the economy will get out of recession in June this year.
It’s an old trick often played by managers of companies having to render financial reports to the public.
When the current period under review is not favourable you point to a rosy future to divert attention from the failure now.
Granted, 0.5 per cent decline is a lot better than the 1.73 per cent recorded in the last quarter of 2016, but, that was partly on account of the late passage of the 2016 budget – a mistake that is being repeated this year as the budget is again experiencing worse delay.
Most of the economic problems of the Buhari administration are often self-inflicted by the leadership of the All Progressive Congress, (APC).
The party came into power seven months after most economists were already predicting that the economy was heading for decline in 2015.
In an article published in the VANGUARD, on August 25, 2014, titled “Nigerian Economy: Driving Furiously into sunset”, slower growth was predicted for 2015 and likely recession in 2016, irrespective of who won the coming presidential election.
Elsewhere, a party out of power but hoping to succeed would have prepared a plan of action to reduce the rate of economic downturn. But, the APC came into power with no plan and no programme – other than the unproductive slogans about free benefits. It was an economic programme anchored on sharing cakes not baked.
Buhari certainly had no idea that the economy required urgent attention – probably operating under the assumption that he could decide when to attend to it. Unfortunately, the dynamics of the global economy don’t wait for any President. So, when he erroneously wasted five months before appointing the Ministers, he set in motion a chain of reactions which have partly produced the results we are experiencing.
Even the Economic Recovery Growth Programme, (ERGP), should have been announced in May 2015 not March 2017. Two months after launching it, the ERGP remains just another promise instead of a programme. Those to implement it are still uncertain what exactly they are supposed to do to achieve the desired results.
Buhari’s appointees would have us dancing in the streets because the rate of decline has decelerated. That is negative self-congratulations. They forgot, or chose to forget, that with last year’s minus 1.73 growth added to the first quarter’s 0.5 per cent, the nation is actually 2.23 per cent worse in 2017 than in 2016. Furthermore, they again forget that Nigerians were promised 2.7 per cent positive growth in 2016 instead of the negative 1.73 per cent. The variance from budget is actually 4.43 per cent down.
That is not all. The Federal government’s forecast has been wrong on all the economic indices since the first quarter of last year till now. Revenue estimates, interest rates, exchange rates, capital expenditure, GDP, internal and external debt estimates and recurrent expenditure were all worse than predicted.
On no single variable were they able to report better than expected results after announcing self-delusional forecasts. Nigerians still need to be reminded that the current year’s budget promised 2.6 per cent GDP growth for the year. Stumbling to 0.5 per cent growth in the first quarter means that the remaining three quarters will have to yield more than 2.6 per cent on the average.
The governor of the CBN who is predicting exit from recession in June forgets that the results for the second quarter will not be released by the NBS until at least mid-August. So, how can that statement be substantiated any time in June – except by another self-deceptive announcement from the CBN; whose job does not include making such pronouncements.
Most likely nothing will be heard about the promised exit when June ends, a mere thirty three days away, and everybody’s mind off the first quarter failure. It is risky for anyone to depend on a bunch of people who seem not to be able to get projections right.
The reasons for tempered optimism are not hard to discover. The economy continued on mild recession in quarter 1 because of setbacks in our two main sectors – oil and agriculture. Despite the often misleading announcements by the Minister of State for Petroleum, Dr Kachikwu, oil production per day was well below 2.2 million barrels per day. According to the NNPC figures which are different from those of the Organisation of Petroleum Exporting Countries, OPEC, the country averaged 1.83 million barrels per day. But, exports were something else and only the relatively high price of crude prevented a steeper GDP decline. Still, the result was 11.64 per cent worse than 2016 same period.
Agriculture also contributed less in percentage terms than in previous quarters. Only a reversal in those trends can guarantee an exit from recession in the second quarter. Unlike government officials who view everything through rose-coloured glasses all the time, more realistic forecasts point to a third quarter exit. Even that projection is based on some assumptions. The most important are still related to the price and volume of crude oil to be exported in those periods. Persistence of glut in the global market resulting in lower prices and volumes could postpone the recovery indefinitely. Any further delay in getting the budget passed will certainly cause havoc