• Friday, March 29, 2024
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BusinessDay

Buhari vs. Atiku: It’s still the economy, stupid

Buhari-Atiku

Whether it is a worsening misery index, sluggish growth and poorer economic conditions compared to 2015, Nigerians are going into Saturday’s presidential elections with one of the world’s most dismal records for an incumbent in human capital, measured by income, health and education.

In societies where performance determines election outcomes, many of Nigeria’s today’s political leaders won’t get close to political offices again.

Following Operation Desert Storm in the spring of 1991, American President George H.W. Bush looked unstoppable as his approval rating hit 89 percent, the highest ever recorded by Gallup.
Yet, that wasn’t enough. What did Bush in, as Clinton adviser James Carville famously quipped, was “the economy, stupid”.

Team Clinton wagered that the sluggish recovery from the 1990-1991 recession would loom largest in the minds of voters. They were right.

The same scenario may be set to play out in Nigeria as an incumbent President Buhari, with all the advantages that power at the centre conveys, looks increasingly vulnerable to charges that he has mishandled the economy during his tenure at the helm.

“People are still worse off after four years in power,” said Charles Robertson, chief economist at Renaissance Capital.

Nigeria’s GDP per capita has contracted every year since 2015 when it peaked at $2,693 per head. In 2016, it fell to $2,171 and $1,828 in 2017, according to Renaissance Capital and World Bank data.

About 8,000 citizens are falling into extreme poverty on a daily basis, according to the Brookings Institution.

With 87 million Nigerians living below the $1.90 poverty baseline, almost one out every two nationals (44 percent) lives in extreme poverty. Incidentally, India, which is second in the poverty scale, has 57 million people that are extremely poor, representing just 4.4 percent of its 1.3 billion population.

Access to capital by entrepreneurs remains a problem.

Only 23 percent of businesses can get needed financing, according to the Manufacturers Association of Nigeria (MAN).

For those businesses that manage to get bank credit, it is often expensive, with the benchmark monetary policy rate sitting at 14 percent for almost two years.

The central bank’s lending rate to commercial banks in South Africa is 6.5 percent, while the prime lending rate (lending rate to customers) is 10 percent. Kenya’s determining and lending rates are 9.5 percent and 13.5 percent, respectively, while Ethiopia’s is 5 percent.

Inflation has been in double digits for the last three years, rising to a seven-month high of 11.4 percent in December.

Meanwhile, the unemployment rate has more than tripled to 23.1 percent, up from 6.7 percent in the third quarter of 2014.

Nigeria’s economy expanded by 6.31 percent in 2014, slowed to 2.70 percent in 2015 (the year Buhari took over as president), turned negative at -1.6 percent in 2016, barely registered growth of 0.8 percent in 2017, and remained sluggish at 1.9 percent for 2018.

“Nigeria has to grow at 10 percent or more and sustain it for 15 years to reduce poverty,” Akpan Ekpo, professor of Economics and Public Policy and immediate past director general, West African Institute for Financial and Economic Management, said at a breakfast meeting in Lagos.
The unemployment rate is 7.4 percent in Kenya; 11.8 percent in Egypt; 5.2 percent in Ethiopia, and 2.4 percent in Ghana. Only South Africa is worse, with 26.6 percent.

“The unemployment problem is a time bomb,” said Simeon Okolo, former national president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) in Aba.

“Unless we move fast to curb it by promoting small businesses, we are in big trouble,” he added.
Buhari’s main rival, businessman and former Vice President Atiku Abubakar, sensing an opening, has adopted an economic message.

“Get Nigeria working again” is his campaign slogan.

Atiku has vowed to double the size of the Nigerian economy to $900 billion by 2025, mainly by giving a larger role to the private sector.

Social indices like health care and literacy levels, which Robertson of Renaissance Capital argues are vital for industrialisation, are also not much better under Buhari.

In terms of education, the number of out-of-school children has risen from 10.5 million in 2010 to 13.2 million in 2015, according to Demographic Health Survey conducted by the United Nations Children Fund (UNICEF) and the Nigerian government.

Seventy-five million Nigerians (38 percent) were illiterate in 2018, according to the National Commission for Mass Literacy, Adult and Non-Formal Education. This number was 35 million in 2013, the then minister of education had said that year.

Only 39.4 percent of Nigerian children of primary school age are currently enrolled in school, according to a Multiple Indicator Cluster Survey (MICs) 5 of 2016 and 2017 conducted by NBS and UNICEF.

The United Nations Educational, Scientific and Cultural Organisation (UNESCO) estimates that the number of Nigerians studying abroad hovered around 75,000 per year in 2015 and 2016.
“The Nigerian government’s Economic Recovery and Growth Plan identifies ‘investing in our people’ as one of three strategic objectives. But the ‘execution priorities’ don’t fully reflect people’s needs, prioritising physical capital over human capital,” Bill Gates, one of the world’s richest men, said at the expanded National Economic Council (NEC) meeting chaired by Vice President Yemi Osinbajo last year.

“To anchor the economy over the long term, investments in infrastructure and competitiveness must go hand in hand with investments in people,” he added.

In health, Nigeria has the worst life expectancy record in West Africa at 54.5 years, according to the latest World Health Organisation (WHO) data.

The report shows that influenza and pneumonia kill 305,460 Nigerians each year, while diarrhoea sends 186,218 annually to their early graves. The country has seven chemotherapy machines for cancer patients, but only two are functioning.

“Before you go to a Nigerian general hospital, write your will,” said a Nigerian-based foreign national.

Over $1 billion is spent annually on foreign medical tourism by the few rich, including President Buhari, who regularly visits the United Kingdom for medical treatment and check-up.

Private expenditure on health as a percentage of total health expenditure is 74.85 percent in Nigeria, 2.2 percent in Kenya, and 3.49 percent in Egypt. Federal Government records show only 3 million Nigerians have insurance cover, representing just 1.5 percent of the population.
According to World Bank estimates, Nigeria’s maternal mortality rate is still as high as 821 per 100,000 live births as against Kenya’s 540.

Poverty-stricken citizens cannot buy drugs again as they often resort to pastors and Imams for healing.

“People also buy cheap brands because they do not have money,” said Chidi Okoro, founder of Drugs and Medicaments Nigeria Limited, with about 14 retail outlets across Nigeria.

“Again, they are going to alternative medicines – herbal and to pastors,” he said.

To get better long-term growth for Nigeria, Renaissance Capital’s chief economist Robertson says an adult literacy campaign is needed to pave the way for industrialisation and diversification post 2025.

“A tripling of electricity consumption (not just generation, it has to be distributed too) is also essential for industrialisation and diversification, so is a doubling of investment to GDP, as well as a more competitive currency – the market rate today is overvalued by about 20 percent,” Robertson says.

ODINAKA ANUDU & GBEMI FAMINU