When President Bola Tinubu wakes up in Aso Rock this morning, he will be forgiven for not bothering to ask for breakfast. Why should he? Sometimes we all wake to a frightening dream but take solace in knowing it was only a dream. In the case of Nigeria, the worries are real. Nigeria is in trouble and Tinubu should be worried.
When Africa’s most populous nation transited from having a finance minister like Ngozi Okonjo Iweala to the one who just vacated that position yesterday, it should have been clear that performance and, more importantly, the results will slump.
In truth, no one would have imagined the magnitude of the economic crisis Nigeria will face after years of the finance minister and her principal, President Muhammadu Buhari .
From a dysfunctional government plus the frightening levels of youth unemployment to failing revenues and unmatched corruption in government and then coupled with a senseless penchant for borrowing, the Buhari administration has taken the economy of Nigeria back into the dark ages.
A lot of these were foretold. After the nation almost rose in revolt with strident calls on Buhari to map out his economic agenda, his government responded with a poorly thought-out economic recovery and growth plan, ERGP that the president neither understood nor was honest about implementing.
Information available on the government’s own website said the ERPG “will help to engender sustained and inclusive growth, consolidate national cohesion; lead to structural economic transformation and improved efficiency in both public and private sectors while increasing national productivity through sustainable diversification of production so as to significantly grow the economy and achieve maximum welfare for the citizens by ensuring food and energy security.”
Yesterday, Buhari left Nigeria poorer, the people more divided and its economy in doldrums. When the ERPG was announced by the government in 2017, some Nigerians retained their hope in the government but, that confidence was misplaced.
The key driver for the ERPG was a set of basic economic reforms which Buhari never accepted, and which threatened the belly of henchmen and made them even richer. These included abrogating subsidies on fuel, electricity and foreign exchange and accepting the rather simple dictum that if you want to succeed as a leader you will need to put the right people in charge of government agencies.
While Buhari dithered, the economic slump worsened leaving crude oil thieves fully in charge in the Niger Delta and terrorists plus the so-called bandits controlling swathes of land across the country but mostly in the northern region of Nigeria. The mistakes made by the government are so elementary and the blame must rest squarely with the president, the former finance minister and the central bank governor.
With just a little rigour and honesty, Nigeria should be fairing better today. It is said that the last time the finance minister and the governor of the central bank had a real debate was during the tenure of the youthful Kemi Adeosun.
Since then, the central bank captured every space in sight while the finance minister sat and watched helplessly. A strong finance minister will at least have made a good attempt to stop the disastrous Naira redesign fiasco embarked on by the central bank and which brought economic activities to a halt and compounded an already very bad situation.
Even an official of the CBN recently said that “in a country where you have strong institutions, the central bank of that country cannot overstep its bounds.” And there is the absolute failure the national assembly to do anything in the face of this fiscal capture and the catastrophic ways and means scandal that have seen the balance sheet of the apex bank balloon from a mere N17trn in 2017 to near N70trn today.
A rigged foreign exchange market, a rigged money market means virtually all the markets critical to efficient resource allocation and economic growth have been broken. The FX market is disappointingly fragmented with near 65% arbitrage enjoyed by the few while the CBN 6-month forward rate and the flood of different exchange rates were used to deceive Nigerians and surely an aloof president who failed to ask the right questions.
Today, due to the delay in the settlement of retail SMIS transactions, backlog of settled trades is estimated in the range of $5bn-$6bn and not counting backlog of demand now said to be well over $2bn. The celebrated outcry on behalf of Unilever Nigeria Plc recently, has refocused attention on the farce called Nigeria’s FX market.
Industries are shrinking for lack of input; basic medicines are drying up in the stores as importers struggle to access foreign exchange to finance their operations and Nigeria’s oil production has been hobbled by a combination of a mindless meddling by the government’s NNPC and an aggressive divestment programme by the IOCs who are moving their funds elsewhere in Africa and the Caribbean.
A director of an independent oil producing firm bemoaned recently how the corrupt pressure from directors of NNPC’s oil exploration arm, NPDC led to the company being forced to hire a rig from which the business is losing cash every day. It should now have occurred to President Tinubu that only a complete clear out at NNPC and its bogus subsidiaries will cut the ice.
No government has borrowed as much as the out-going government and a brief value for money audit will demonstrate that all there is to show for the borrowing binge is corruption riddled infrastructure projects that contribute little or nothing to economic development.
Nothing Buhari has left us can pay the huge debt burden Nigeria is forced to carry while he sneaks back to Daura to care for his cattle. It is to the past government’s poor record that Nigerian youths are now being chased out from virtually every country of the world and countries are making rules specifically targeted at keeping Nigerians out.
Tinubu has a rare chance. Nigeria is beginning from such low level that any little good the new government accomplishes will become almost lick magic. It is for the interest of all of us that the new president gets to work quickly even if that means forgoing his breakfast this morning.
