• Friday, March 29, 2024
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Buhari has laid a solid economic foundation

New minimum wage

For all the presidential candidates in this week’s elections, it is the time to convince the voters of what they will do if elected. But for MuhammaduBuhari, President and presidential aspirant, it is also a time to tell the electorate what he has done since May 2015 when they gave him the exalted position. And he has a lot to say.

The economic wellbeing of the citizenry is one of the principal functions of the state and it is perhaps the first plank on which any government is judged. However well a government has done for the social welfare of the people, it would still be adjudged a failure if the economic welfare of the people is in a poor state.

With crude oil prices at less than half of its average for the preceding 24 months, MuhammaduBuharihad his work cut out when he swept into office with his All Progressives Congress (APC) party in May 2015. And nearly four years later, he can beat his chest and announce that he has laid a solid foundation for the Nigerian economy.

Macroeconomic stability

For starters, the macroeconomic indices are much better than they have been for years. Foreign reserves hit a five-year high of US$48 billion in April 2018, up from US$23 billion in 2015 when this government came in. At US$43 billion presently, it provides very comfortable import cover.

The country was steered out of the recession into which it was driven by oil price shocks in 2016, within five quarters, and is on the upward swing again. This speedy recovery iswell ahead of contemporaries like South Africa and Brazil which went the same road at about the same time and are still stuck there.

Foreign exchange which had hit a high of N525/US$ at the bureau de change at the height of the recession, has since stabilized at about N360/US$. Inflation which had risen to a high of 18.7% amidst the recession has since started heading towards the single unit, hitting 11.1% in July 2018 before being driven a bit higher to 11.25 at the end of the year by food prices.

Perhaps the greatest testament to the macro-economic stability that the Buhari government has achieved, is gleaned from the unusual resilience that the stock market is showing right into the election week. Right through the week preceding the elections, the bulls remained on rampage! Most unusual!

The Nigerian economy had been running on four-year cycles coinciding with the elections. It was a system well-known to institutional investors, especially foreign investors. And it had ensured constant rebooting without growth for Nigeria.

Speaking last week, Canada-based investment analyst, Dr Pat Okaro, explained how the system worked and how it is playing out this time:

“In Africa or the developing world, foreign investors sell off before any presidential election to avoid heightened risks of anarchy and breakout of violence post-election. And so, if you’re into the Nigerian Stock Exchange (NSE), you’ll notice that the market crashed every four years.

“Now, enter Acting President Osinbajo who set up a special forex window for foreign investors. This window guarantees them to take out their dollars at the same rate they brought them in. So that removes the panic because in every election cycle when they sell off, not only does the stock market crash, but the naira also crashes as a result of oversupply. So with this guarantee, the foreigners are a bit relaxed.

“At this time in the last election cycle, GT Bank was N17. Today, it is N33.50. At this time in the last election cycle, Zenith Bank was N17. Today, it is N22.50. Some of us have keyed into this predictable market response pre-election and have played it successfully in the last election cycles…this time, the returns obviously won’t be as usual”

Laying a solid foundation

For decades, successive Nigerian governments had chanted the mantra of laying a solid foundation for the economy only to leave it same or worse than they met it. It was as if the nation was jinxed and moored to the shores of under-development while we watched other nations that started with us sail over to the prosperous shores. Thankfully, Buhari has finally got the job done, and Nigeria has set sail towards real economic development.

With about half the population of the nation living below the poverty line, President Buhari knew that he had to start with food. A hungry man is an angry man, we say. He knew that platitudes and exhortations would not do.

The previous government knew also that the population had to eat before any other thing too. But it had chosen the easy way – importation. The bill of the top four food imports – rice, wheat, fish and sugar – amounted to N1.4 trillion per annum. This was more than 30% of the national budget!

This was clearly unwise and unsustainable. The viable way out was to produce what Nigerians eat, at home. It was a tough task. But Buhari was ready. Feeding the nation with homegrown food required solid planning and dedicated execution. And he was ready.

With a carefully selected hands-on agricultural technocrat, AuduOgbeh, serving as his minister of agriculture, Buhari set out to touch Nigerian agriculture like it had never been touched before. And he has not only succeeded in terms of output, but has set agriculture on a trajectory of quantum leaps.

The anchor borrowers programme

Central to President Buhari’s agricultural drive is his Anchor Borrowers Programme (ABP) which is designed as a foolproof system of credit delivery to targeted farmers.

It had to be so, given the failure of the agricultural credit delivery schemes of the previous governments. These schemes had either by deliberate fraudulent design or shoddy implementation, ended up delivering credit to politicians and their hangers-on who had no farms.

Conceptualised as a micro-credit scheme and targeted at Nigerian small scale farmers, President MuhammaduBuhari personally launched the Anchor Borrowers Programme (ABP) on November 17, 2015 in Kebbi State.

Mindful of the failures of other programmes under previous governments, the Buhari government deployed modern technology in the form of biometric data of real farmers for the running of the ABP. In this way, the fund gets into the hands of the persons for whom they are intended, without fail.

By targeting smallholder farmers, the ABP not only had agricultural production in focus, but also mass employment. This was informed by the fact of massive unemployment which the government met on arrival. Three years later, the ABP has emerged as an unqualified success with study teams coming from multilateral institutions and other African countries to understudy the programme! Many of the farmers that joined the scheme have since graduated from subsistence smallholder farmers to commercial out-growers for larger industrial enterprises with resultant leaps in income, boosting the rural economy.

By the third anniversary of the ABP in November 2018, some 902,489 farmers had subscribed to the scheme and cultivated 935,862 hectares of land. And in the line of doing so, they have created some 2.5 million jobs for fellow Nigerians down the agricultural value chain.

Strategically, about 700,000 of these farmers are rice farmers who cultivated some 617,218 hectares. This directly addressed the high import bills for rice which this government met at inception. And the results have been fantastic. In three short years, Nigeria’s rice import bill dropped 90%! From over one billion dollars in 2014, the nation’s rice import bills dropped to just $18.5 million!

With the prodding of President Buhari through his programmes, the population of Nigerianrice farmers has grown from five million to 11 million over the period. The result is that the nation is at the threshold of achieving rice self-sufficiency which is benchmarked at six million metric tonnes of milled rice per annum.

 

Import Bill of Major Agricultural Products (US$) (2014 – 2018)
Product 2014 2015 2016 2017 2018
Sugar 462,902,256.53 337,894,861.06 398,507,529.04 255,497,036.75 244,468,182.26
Milk 961,138,252.98 583,857,586.97 182,146,479.35 296,705,342.66 314,457,367.81
Rice 1,052,332,549.67 590,265,251.69 134,192,626.54 18,961,624.79 18,503,136.69
Fish 921,477,281.13 590,265,251.69 133,836,974.44 18,961,624.79 17,311,238.96
Wheat 6,931,078.04 4,364,198.20 381,587.35 309,400.00 339,183.32
Total 3,404,781,418.35 2,106,647,149.61 849,065,196.72 590,435,028.99 595,079,109.04

Source: CBN

Tomato is coming in next, with a mix of both small and large scale farms. Dangote Group is setting up the biggest tomato processing plant in Africa, and a vast number of supported out-growers are on ground to contribute to the feedstock. Within the next 18 months, all these will kick in making Nigeria self-sufficient in tomato and making her a net supplier to the rest of West Africa.

Infrastructure

A major testifier to Nigeria’s under-development is the poor state of infrastructure. About half a decade ago, it was estimated that the infrastructure gap in Nigeria needed an annual injection of some US$10 billion per annum over a decade or more to bring it to par.

Buhari was unfazed by that, and has made significant progress on this count.

Perhaps the most irksome of these infrastructural challenges is power supply. For reasons of health, production, rest, leisure and much more, power supply is critical for modern living. But over the years, successive governments have failed to invest in this sector, neither have they created the necessary environment and legislation for private sector investment in the sector.

Again, President Buhari chose a tested hand known for delivery to head this crucial sector. BabatundeRajiFashola, the minister of Power, Works and Housing, had been widely acknowledged as a performer as the governor of Lagos State till 2015. And he has not disappointed his principal or Nigerians.

Within three and a half years, the Buhari government has ratcheted power production up from 2690mw to an all-time high of 7,000mw. Out of this, distributable power amounts to an unprecedented 5,000mw. On-going works are expected to deliver the remaining 2,000mw within the first quarter of 2019. These are outcomes of methodical planning and diligent execution.

A major step which was taken to achieve these landmarks was the N701 billion Payment Assurance Programme which this government put in place to remove liquidity bottlenecks in the power sector. With the privatization of the power sector, the entities generating power are different from those distributing power and often liquidity challenges arise between the gas suppliers and the generating companies or between the generating companies and the distribution companies. This pool of funds has largely taken care of this challenge.

Then, there is the Transmission Expansion and Rehabilitation Programme which has enhanced the evacuation capacity of generated power by 50% from the 5,000mw that this government met in 2015 to 7,125mw as at December 2017.

For the third critical leg which is the distribution, the Federal Executive Council (FEC) has approved a Distribution Expansion Programme which will work with the distribution companies to expand distribution capacity.

All said, Nigerians are ‘seeing more light’ than they’ve seen in the past three decades and it is still on the upward swing.

Besides power, transportation is a big issue, and the Buhari government is responding with a revolutionary rail transport system, the standard gauge rail. This is the high speed rail which can ensure that people live in one city and work in another, while moving thousands of people at a time. Before the presidential elections on Saturday, the trial run of the Lagos-Abeokuta standard gauge would have started. It is the first part of the Lagos-Ibadan standard gauge line. The government plans an east-west standard gauge rail line linking Lagos to Port Harcourt. The extant Lagos-Kano and the Port Harcourt – Maiduguri lines will also be transformed to standard gauge. Much earlier, President Buhari had commissioned the Abuja-Kaduna standard gauge rail.

All said, President Muhhammadu Buhari has touched the Nigerian economy in a very distinct way, putting it on the trajectory of real development.

 

 Ike Nwawelugo