14 days to anniversary: Buhari’s slow response to economy frustrating Nigerians

The optimistic outbursts that greeted the swearing-in of President Muhammadu Buhari on May 29, 2015 are fizzling out, and fast, as the business climate in Nigeria’s $492 billion economy has brought the nation to its knees.
The country’s 180-million citizens were looking up to the former military ruler to reverse decades of economic mismanagement and inertia, but Buhari’s economic policies have only succeeded in worsening their standard of living.
The Central Bank of Nigeria (CBN), supported by President Buhari, has until now refused to heed the economic counsel for a more flexible naira which reflects its true value from a motley crew ranging from the International Monetary Fund to portfolio investors and manufacturers in Africa’s largest economy.
Meanwhile, the supposed upside from fixed exchange rate policy of lower consumer prices is not happening as inflation hit a four-year high of 12.8 percent in March from 11.4 percent in February, defeating the CBN’s stated goals of single-digit inflation.
The economic policies of Buhari have continued to irk the average Nigerians, prompting a good number to clamour for a return of the old order if the new order cannot deliver the change it promised.
“Everything from cost of doing business to cost of feeding has spiked, the economic climate is draining life out of me gradually I must confess,” Juwon Oshinowo, a dry-cleaning service operator, said.
“There are constraints on the average Nigerian’s disposable income, and this has translated to drawing a scale of preference which is intolerant of goods and services with elastic demands,” he added.
The CBN has clearly indicated that it will rather address inflation at the expense of inducing economic growth. The last time inflation soared in March, the Monetary Policy Committee (MPC) raised interest rates and Cash Reserve Ratio (CRR) to 12 percent and 22.5 percent, respectively.
Although the move was to address soaring inflation rates by mopping excess liquidity, it has had a negative impact on the economy, as the growth of Small and Medium-scale Enterprises (SMEs) which contribute about 90 percent of jobs in any economy has been stifled.
“I had concluded plans to commence operations in 2016, and I intended to utilise a deposit money bank (DMB) loan as capital, but the interest rates were too high and unattractive,” said Tunji Faseun to BDSUNDAY.
“I resorted to venture capital, but my request was turned down as an overvalued naira against the green back scared venture capitalists off,” he said.
Charles Robertson, global chief economist and head of macro strategy at Renaissance Capital, says although devaluation is a tough pill to swallow, it has been employed in other oil embattled nations for a quick recovery from slashed crude receipts.
“Devaluation will hurt any economy, and even crimp its GDP. However, it is not the fault of devaluation that the economy is hurt,” says Robertson.
“The crude price volatility has curtailed exports of oil rich nations, and this has adversely affected their currencies. Policy makers ought to let the market determine the value of the naira if the economy is to recover,” he says.
Foreign direct inflows to Nigeria slumped to $3.4 billion in 2015 from $4.7 billion in 2014. Portfolio flows into the stock market have also fallen sharply, as investors shun the country on heightened currency and macro risks.
A good number of firms started shutting down in 2015, while others have ditched plans of expansion into the country as importation curbs and forex restrictions have left firms gasping for breath, leading to staff retrenchment and salary cuts.
Nigeria’s unemployment rate soared to 10.4 percent in Q4 2015 from 9.9 percent in Q3 2015 and from 8.2 percent in Q2 2015; a trend analysts have said will ensue in 2016 as challenges intensify.
A report by the National Bureau of Statistics (NBS) had stated that the country’s labour productivity declined by 8 percent in the fourth quarter of 2015, the first quarter in the period under review to experience a drop in labour productivity, attributing the decline to prevalent petrol scarcity, low investment and government spending, and the decline in power generation during the quarter.
“We rely on generators now than ever because the power situation has worsened. However, with the fuel scarcity, we have to manage the fuel at our disposal. The generator now runs between 12:00 pm and 4:00 pm, this has marred our labour productivity,” an SME operator told BDSUNDAY.
Nigerians are clearly bearing the brunt of these internal and external shocks as massive job losses and crimped productivity level are the domino effects of the shocks.
Victor Nwanne of the Lagos Chamber of Commerce and Industry (LCCI) had told BDSUNDAY in February that 800,000 manufacturing jobs were at risk as a result of the government’s fixed foreign exchange rates.
However, with the manufacturing sector contracting at 46.5 percent, as captured in the Purchasing Managers Index (PMI) headline reading in April by FBN Quest, 800,000 job cuts may be overly conservative going by latest trends.
Nigeria on Wednesday announced an increase of the pump price of Premium Motor Spirit to N145 from N86.50 a price modulation that signalled removal of petroleum subsidy.
Many have said this has compounded their woes but a few insist that the long-term benefit of the move will result in a lower pump price.
Although a rash of anger had greeted the government’s action last Wednesday, some analysts urged Nigerians to be calm as according to them the benefits in the long run would outclass whatever inconveniences that may be experienced in the immediate.
Speaking with BDSUNDAY, a former presidential aspiant, Birma Dauda, said it was the best thing to happen to Nigeria since May last year.
“Let me tell you, that’s the best decision this adminiatration has taken aince its inauguration last year. What the media need to do now is to rightly educate the people on the huge benefits therein. It is long overdue,” Birma said.
Lai Mohammed, minister of information, in a recent press conference had said the petroleum sector may be in line with replicating the telecommunications sector feat.
“A number of years back, sim cards cost about N40,000 but now they are free. This is the impact of a competitive market, and since private players will be attracted to the downstream petroleum sector following the price modulation, same can be anticipated in the sector,” said Mohammed.