Some three years to the end of his second term at the helm of affairs in Africa’s largest economy, Nigerian President Muhammadu Buhari doesn’t have the numbers on his side if he hopes to be remembered as either an anti-corruption hero, the one who finally diversified an ailing oil economy, or as an economic messiah who paved the way for the majority of households and businesses.
Under Buhari’s watch, the country dropped two points in the Corruption Perceptions Index, a leading global indicator of public sector corruption, becoming the second most corrupt country in West Africa.
Official data also show that after the oil price shock of 2014, Nigeria has moved at a snail’s pace in weaning the economy off oil, analysts say.
These analysts make their case with data on crude oil exports as a percentage of total exports. In the first nine months of 2019, crude oil exports as a percentage of exports came to 76 percent, according to the National Bureau of Statistics.
The economy hasn’t fared better as well, with GDP per capita declining every year since 2016, a sign that the economy is unable to provide sufficient opportunities for a rapidly growing population.
Unemployment levels have also shot up to a six-year high of 23 percent and poverty is growing, with Nigeria the new poverty capital of the world, according to a Brookings Institution report.
Buhari’s promise to lift 100 million people out of poverty in the next 10 years will require lifting 10 million each year and that looks untenable in a country where economic growth is weak and the private sector is struggling.
About 108 million Nigerians lived in extreme poverty in 2019, 16 million more than in 2015 when Buhari was elected president for the first time and 37 million more than in 2003.
On the country’s current trajectory, close to 130 million Nigerians are expected to live in extreme poverty in the next decade, according to the International Futures system (IFs), an integrated modelling platform housed at the University of Denver. This is 22 million more than today and implies that Nigeria is not on track to meet Goal 1 of the SDGs by 2030.
Countries that have achieved a drastic reduction in poverty have done so in periods of robust economic growth whether it’s China or India. But Nigeria has been stuck in a low growth cycle of around 2 percent for the most of the last five years and things could stay that way for a longer period.
Ahead of the fourth quarter GDP report to be published by the NBS today, the expectation is that 2019 was yet another year of negative per capita GDP growth where economic growth was too slow to match population growth.
Nigeria probably expanded 2.1 percent in 2019, according to consensus analysts’ estimate. Of the top five largest economies in Africa, only the second largest economy, South Africa, was tipped to grow slower than that, with third place Egypt expected to grow 5.8 percent.
For 2020, the IMF recently cut its growth forecast for Nigeria to 2 percent from 2.5 percent, citing lower oil prices and fragile fiscal buffers.
“The economy is at one of its lowest points when you examine major economic indicators,” said a senior business leader who did not want to be quoted criticising Buhari.
“He risks having a dented legacy, one of bad economic data all round. We hope the thought of that forces him to change something,” the person said.
Buhari needs to change many things fast if he is to redeem himself and reverse the fortunes of a flailing economy. Buhari has about 38 months before his second four-year term at the helm ends.
That timeframe may be too short, some analysts say, but sources close to the government say the president has some reforms lined up to save the economy and perhaps forge himself a legacy.
The fragile state of the economy hasn’t given the 76-year-old much of a choice, said Egie Akpata, a director at Lagos-based Union Capital Markets plc.
“Most economic indicators are worse off today, yet we are borrowing with nothing to show for it,” Akpata said. “The government needs to show more commitment to infrastructural projects with multiplier effects.”
For Nigerians, the cost of a flailing economy is pinching harder.
Inflation, which had started to cool, is on its way up on the back of higher food prices in a country where average incomes can’t stop shrinking.
The Central Bank has thrown a raft of monetary policies at the economy to revive it. The most recent of such policies is a lending-to-deposit ratio policy that sought to boost loans to the private sector. But the economy has remained bogged by the absence of fiscal policies, according to Wale Okunrinboye, head of investment at pension fund manager, Sigma Pensions Ltd.
“There are problems only fiscal reforms can solve that are still hanging and that will undermine whatever efforts the CBN makes,” Okunrinboye added.
The IMF, at the conclusion of its Article IV consultation in Nigeria, said the pace of economic recovery remains slow, as declining real incomes and weak investment continue to weigh on economic activity.
“External vulnerabilities are increasing, reflecting a higher current account deficit and declining reserves that remain highly vulnerable to capital flow reversals,” said Amine Mati, senior resident representative and mission chief for Nigeria at the IMF.
The Washington-based Fund expects inflation to pick up, while deteriorating terms of trade and capital outflows will weaken the country’s external position.
It says major policy adjustments remain necessary to contain short-term vulnerabilities, build resilience, and unlock growth potential.
LOLADE AKINMURELE
