At the inception of the Buhari-led government, economic indices were somewhat stable. Inflation was single digit, fuel price was below the N100 mark, consumer price index was responsible and capacity utilization was bearable. But the dark clouds loomed. The massive pillage of oil receipts occasioned by the ballooning petrol subsidy, drop in global oil prices, gross inefficiency in the execution of government policy, seeming confusion as to government position in key areas occasioned by the looming elections and the groundswell of opposition exacerbated by the Boko Haram insurgency in the Northwest and the militants in the Niger Delta pushing defence spending and adding more pressure on the treasury, all contributed in painting a very dark picture of the economy.
All these prepared the stage for the new government which had won the elections on a platform of change. The new people had talked about blocking leakages in government revenues, immediately stopping the sinful fuel subscription regime, diversifying the economy and waging a corrosive war against corruption. Nigerians fell in love with this new wave and despite the fact that they had some level of distrust for the new helmsman, going by his pedigree of being a military dictator, were willing to give him the benefit of the doubt.
However, the regime jumped into the fray with cold feet, finding it difficult to assemble a team. This was kind of expected, especially if you take into consideration the fact that a massive coalition had to be built to unseat a sitting government and as such all interest must be taken care of, and in cases like this you try to balance a reward system with competence. It took the new administration over six months to come up with a cabinet that eventually looked at best recycled.
The markets did not take this kindly and it responded appropriately. Inflation rampaged, hitting double digit in less than a month, the value of the Naira crashed moving from the 150/160 range that the Jonathanadministration had held it for over 3years and hitting the all-time high of N550 before coming down to the present 350 plus. This wiped out whole industries and threw over 8m Nigerians out of job. The Car industry, Banking and Finance, Luxury goods all suffered tremendously and, in all this, the government looked weak kneed and did not give investors or watchers the confidence that it was ready or even had the capacity to handle the economy.
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Nigerians were left to their own devices and self-help initiatives, triggering key retail-backed industries started to emerge. The entertainment industry, buoyed by tremendous creativity, received a boost with its valuation crossing the N3trillion mark. Agriculture also witnessed spurts of growth during this period and services also grew and remained stable. But the Petroleum sector which contributed significantly to the GDP was in a free fall, carrying with it the country’s global rating and throwing our bonds into junk status. The stock exchange, being the market barometer, reacted accordingly, wiping off trillions from valuations. Credit dried up and the real sector became starved of funds. Gloom loomed and the government was none the wiser.
To worsen the situation, its anti-corruption drive further tightened the noose on the economy as it led to hoarding and cash being physically removed from the economy and stowed in cesspits and rooftops of dilapidated buildings. Those who had cash and who could assist in reflating the economy hid the funds for fear of the EFCC which was and is still rampaging without real guidance.
The TSA policy further worsened the situation as it led to further withdrawal of liquidity from the system and markets. So, government revenue which is the main source of liquidity in the economy was reined in and sent to a central point with adequate control and monitoring. While this solved to a very large extent the issue of corruption and rent seeking, the general economy suffered as it was starved of much needed fund and this further overheated the economy. To make things worse, the oil prices continued its downward spiral.
Nigerians were beginning to regret voting in the administration whose leader, Buhari, by this time had begun to show signs of ill health and had taken his first medical vacation abroad. Hopelessness became our lot and the cry to tighten our belts was like that lone voice in the wilderness. It was beginning to look like 1983 all over again. That generation had queued up for essential commodities in the face of harsh scarcity.
We hunkered down and, as Nigerians are wont to do, began to look for alternatives. Agriculture began to show signs that it could lead us out of this mess. The local production of rice, a staple began to increase. Huge businesses started acquiring large farmlands to go into rice and maize cultivation. The climate was right and then vegetation was rife. The entertainment industry continued to grow, employing thousands of Nigerians and emerging the second largest employer of labour after Agriculture and slowly the Naira started firming up with the effective blockage of the leakages and an effective anti corruption battle which by this time had started yielding some economic fruits.
Why am I looking at the economy today? It is because I have seen that the foreign reserves are inching close to the $40b mark once again, thereby throwing more confidence on Nigeria in the international markets as witnessed with the over subscription of the Bond we issued. The recent success recorded in the Sukuk bond and also the receding in the rate of inflation all show that we may have really turned around the corner. We have officially come out of recession and may begin to witness the beginning of growth.
But my people it is not yet uhuru. What we are witnessing today is an automated recovery leading to a growth, not really guided by any deliberate government policy drive but from factors almost outside of its control. So the resurgence of oil prices taking it to an almost 12month high is driven by global international factors. This has led to the swelling of the external reserve thereby buoying confidence in our markets as can be seen by the resurgence in FDI and the All share index. Liquidity is slowly creeping back into the system and we have even seen the NNPc reduce pump price of petrol albeit negligible.
The difference in this renaissance this time would most likely be in the stance on corruption which would ensure judicious use of receipts eliminating wastage and pillage.
But then again, where is the proactive ability to build next generation initiatives that will further lock us up to emerging global economic trends. The international markets are getting ready for a near future without oil, moving to higher levels of technology. How are we responding to this? Are we preparing ourselves for that eventuality which I hear is less than 10years from now. Meaning that this our generation will see a global market place not driven by oil. I do not see any serious government push towards this but instead we are now having officials wallowing in a resurgent economy pushed by global forces and internal markets with little or no government support or backing.
Let me attempt a small suggestion. We must begin to take much more seriously the retail-backed sectors of agriculture, services, technology and entertainment as our canon fodder against the inevitability of a non-oil based economy. The government must build structures that would support this areas and grow them so that they would form the bulwark of our fundamental economic renaissance.
The figures are astounding and the size is phenomenal. This is the real political economy of change. A change in our economic expectations. A privately-driven economic resurgence which would see government in the background providing an enabling environment and international guarantees to these businesses. The possibilities embedded in these areas are humongous and we have the deep markets to ensure their sustainable growth.
Nigeria in the next five years would be a different Nigeria if we get it right. A Nigeria where economic power would rest in the hands of private initiative, thereby reducing the concentration of economic power in government which would itself solve the issues of political strife that is currently tearing us apart simply because there is a survivalist need to be at the epicentre of power or near it for purely epicurean reasons.
RipplesNigeria… without borders, without fears