As the clock ticks down to the end of President Muhammadu Buhari’s eight-year tenure, the 79-year-old former military head of state needs the private sector now to salvage what is left of a legacy that could be defined by the worst economic performance since 1999.
Buhari is said to be concerned about the legacy he leaves behind and that has informed his last-gasp ordering of a wholesale audit of an economy that has failed to expand faster than the population since he assumed office in 2015.
According to people interviewed by BusinessDay, Buhari would need the private sector to play a starring role if he is to quickly move to rewrite part of his legacy before his tenure runs out mid-next year.
Buhari must focus on getting infrastructure projects involving the private sector off the ground, according to economists polled.
“The President should be committed to making sure that they finish the infrastructure projects that they started, not start new ones, but focus on the third Niger bridge and railroad projects and the road projects, which also, in fact, involves the private sector which I think is a very good policy,” says Andrew Nevin, chief economist at PriceWaterhouseCoopers (PwC) Nigeria, who thinks it is never too late for Buhari to improve the economy.
“I think the national development plan is very clear that 85% of the capital required to develop the nation during the plan period has to come from the private sector,” Nevin states.
“That means the government has to think about what it takes to get the private sector to come to the party, and I think if they think that through and stick to their plan, and are committed to attracting the private capital to complement their own 15%, we’ll see some good results,” he states.
Buhari’s administration has prioritised infrastructure projects, having spent the most on infrastructure of any president since 1999 but that does not fully account for inflation, the naira devaluation, and a bulging population that has higher infrastructure needs.
Despite his infrastructure spending, the economy has not responded as expected, with critics saying the amount spent has been too little and on non-priority projects.
The government’s lower revenues under Buhari also meant it could not afford to spend as much as it would like on infrastructure and that is why there have been calls for public-private partnerships that can help move the needle on an infrastructure deficit which the Africa Development Bank estimates would cost $100 billion annually for the next 30 years to address. That’s well over the amount Nigeria has spent on infrastructure in the last 10 years combined.
It is also why the same projects involving the private sector are being thrown up as low-hanging fruits to boost economic growth, create badly-needed jobs and salvage Buhari’s economic legacy.
“Buhari needs to look at projects pending with the private sector as these are the only low-hanging fruits he can leverage before his time is up,” according to Tajudeen Ibrahim, head of investment research at Lagos-based Chapel Hill Denham.
“Infraco (the infrastructure corporation of Nigeria) is one very good low-hanging fruit but disbursements should be accelerated and work should start on the infrastructure projects identified,” Ibrahim says. “The government should also look at other areas where there is private sector involvement, projects involving the private sector are the ones that can move fast at this time,” he adds.
Infraco is a privately-managed infrastructure and industrial vehicle that will harness opportunities for Nigeria’s infrastructure development by originating, structuring, executing, and managing end-to-end bankable projects in that space.
Buhari cleared the way for the launch of the infrastructure company with an initial seed capital of N1 trillion ($2.4bn) last year. Infraco, set up in partnership with the private sector, is expected to grow its capital and assets to N15 trillion over time to fund public projects like roads, rails, and power.
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Muda Yusuf, former director-general, Lagos Chamber of Commerce and Industry (LCCI), spoke of the need for Buhari to do away with curious economic policies – from petrol to FX subsidies – and continuous policies to improve the ease of doing business for the private sector.
“Fixing the port congestion crisis, cargo clearing constraints and traffic gridlocks along the Lagos ports corridor,” and the “institution of a market based foreign exchange policy framework to correct current distortions bedevilling the foreign exchange market,” were among the recommendations of Yusuf to Buhari.
The removal of the fuel subsidy was also highlighted as a key reform the President could implement before his time is up that would help tilt the balance in his pursuit of a favourable legacy.
The government has set a fresh deadline of June 2022 for the removal of petrol subsidy after several false starts.
“With the fuel subsidy, it’s taken some time and we’ve gone back and forth, we have always been in the group that believe that fuel subsidy is inefficient and a source of diversion of Nigeria’s resources. So, we’re glad to see that it’s moving in the right direction,” Nevin of PwC says.
The numbers make for ugly reading of Buhari’s performance
At no point in its 60-year history has Nigeria’s economy expanded slower than its population for a longer period than between 2015 and 2020 (with an average growth of 0.28% versus population growth of 2.6%), an indictment on President Buhari who led the country in that time.
Rising insecurity and a lame attempt at curbing corruption means Buhari, whose appointment in 2015 came with expectations that the new administration could potentially turn things around and deliver progressive change, has not lived up to the three main campaign promises he made.
Matthew Page, an associate fellow at the Africa Programme at Chatham House, in his piece, Nigeria’s New Military Chiefs Face Uphill Battle, even went as far as claiming that “Nigeria is perhaps more insecure now than at any time since its civil war raged in the late 1960s.”
His claim is backed by data that show violent incidents are trending upward.
The Council on Foreign Relations’ Nigeria Security Tracker shows that more than 80,000 people have died in Nigeria between 2011 and 2020, a record high, with deaths by Boko Haram and state actors being the highest at about 30,000 deaths.
Insecurity remains rife despite Nigeria spending N8.05 trillion on national security in the last six years, the most within any six-year period since at least 1999.
Buhari’s corruption fight has also had limited success. Data from the Transparency International Corruption Index, which offers an annual snapshot of the relative degree of corruption by ranking countries and territories from all over the globe, ranks Nigeria low.
The latest Corruption Perception Index (CPI) says Nigeria scored 25/100, which is by one point less than its 26 points in the previous year.
It ranks Nigeria as 149 out of 180 countries, a record that is three steps lower than its rank of 146 in 2019 and five steps lower than 2018’s level.
