• Wednesday, February 28, 2024
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BusinessDay

The Nigerian economy five years under Buhari

Nigerian economy

Five years ago, President Buhari became the first challenger to unseat an incumbent president in Nigeria’s history and was sworn-in amid great hope and enormous good will. Following his inauguration, the country was awash with optimism that his government would reignite a fading economy. More pertinently, it was hoped that President Buhari would lay the foundation for a long overdue implementation of fiscal federalism and further diversify the national economy, as promised in the APC manifesto.

Half a decade under his governance, the Buhari administration has fallen short of expectations vis-à-vis his electoral promises will be an understatement. Poverty, corruption and social injustice remain characteristics of the Nigerian state while stagnation best describes the current state of the nation’s economy.

That President Buhari inherited a frail economy is not in doubt. Prior to President Buhari’s inauguration, the economic headwinds were apparent, especially in Nigeria’s banking system, as a result of the crash in global crude oil prices in the summer of 2014. Crude oil, whose exports accounted for 90 percent of Nigeria’s federal revenues, sold for $122 per barrel in June 2014. At his swearing-in ceremony in May 2015, the price of a barrel had crashed to $65. Nevertheless, Nigerian remained hopeful.

Unfortunately, their hopes have been all but dashed. Five years into the Buhari administration, the state of poverty in Nigeria attained multidimensional levels as the nation overtook India to claim the ignoble position of being home to the highest number of poor people globally.  Unemployment has also attained unprecedented levels, with the unemployment rate in Africa’s largest economy rising from 8.2 percent in 2015 to 23.1 percent in the third quarter of 2018.

For young people aged 15 to 35, the figures are even worse as 55 percent of the youth population are unemployed or underemployed. In addition to these galling figures, the nation continues to fail to prepare future generations for a fast-changing world, with over 10 million children currently out of school.

The nation is also straining under the weight of its debt, as the national debt stock has soared in the last four years to over N27 trillion. Currently, debt servicing consumes over 60 percent of the nation’s revenue. In clearer terms, this implies that for every Naira the government generated as income in 2019, more than 60 kobo went to servicing the nation’s debts, leaving little to build badly needed infrastructure and fulfil other developmental obligations.

Furthermore, Nigeria under President Buhari has adopted protectionist economic policies, exemplified by the doubling down on unfruitful policies geared towards maintaining a strong Naira; as well as the government’s decision to close the country’s land borders to all good in October 2015.

The dire state of Nigeria’s economic performance under President Buhari comes to the fore when examined in numbers. The nation’s GDP growth rate for 2019 was a meagre 2.1 percent, a rate below those of Uganda, Benin and even war-torn Syria. Furthermore, the nation’s inflation rate remained high at over 12 percent.  Overall, there is no doubt that President Buhari’s management of the Nigerian economy has been nothing but abysmal.

It is not all doom, however. The Buhari administration has made significant progress in some areas; the implementation of the Treasury Single Account, increased budgetary allocations for capital expenditure, etc. However, these smatterings of progress are insufficient to compensate for the self-inflicted damages to the economy resulting from woeful economic policies.

Such is the state of the Nigerian economy five years into the Buhari administration. Despite coming into government with promise, there has been little or no significant economic progress, and with less than three years to go, there might be insufficient time to make any significant progress.

Nevertheless, President Buhari can help lay the foundation for a better economic future, perhaps by focusing on addressing some key issues in the last three years of his administration.  First, there must be an urgent will to address pressing issues such as the nation’s reliance on oil earnings, the archaic land use act and the non-practice of fiscal federalism, all of which combine to hinder the nation from realising its potential.

In addition, the nation’s ticking time bomb of youth unemployment must be resolved through the enactment of viable job creation policies and enhancement of labour productivity. This however will not be possible without sustainable investments in education and infrastructure development. Investments in education, particularly STEM education, are critical in order to prepare the young generations for the jobs of the future. Thus, there is a need for the prioritisation of sustained investment in education in the remaining years of the Buhari administration

Subsequently, Nigeria’s ballooning debt problem must be swiftly addressed. If left unchecked, the national debt stock might soon reach the level last attained prior to the debt relief in 2005. We only need to look at countries like Venezuela, Greece, and Zimbabwe to see how dangerous a public debt crisis can be. Therefore, the rising national debt volume must be tackled with urgency, perhaps starting with reducing government spending on recurrent expenditure.

Overall, President Buhari’s economic achievements thus far have been all but noteworthy. However, he still has an opportunity to shape Nigeria’s economic future and salvage whatever is left of his economic legacy in the last three years of his administration by focusing on fiscal prudence and addressing youth unemployment. Will he seize this opportunity?