On May 29,2019, President Muhammadu Buhari will be sworn in for the second term in office. An inquisitive mind will ask: what land mark achievements did he record in the last four years? TELIAT SULE examines the impact of the policies of the Buhari-led administration in the last four years and suggests ways to further consolidate on the gains the Nigerian economy has recorded.
Signs that the Nigerian economy was heading for recession emerged in the second quarter of 2015 when the nation managed to record 2.35 percent GDP growth rate. That was just about a month after President Buhari was sworn in. The following quarter witnessed a marginal increase in economic performance at 2.84 percent. But shortly after that, the real status of the Nigerian economy became apparent. The fourth quarter of 2015 recorded 2.11 percent GDP growth rate. And throughout 2016, the economic was in a recession. The GDP growth rate was -0.67 percent in Q1 2016; -1.49 percent in Q2 2016; -2.34 percent in Q3 and -1.73 in Q4 2016. For full year 2016, GDP growth rate was -1.73 percent. The negative growth rate extended to the first quarter of 2017 when GDP performance was -0.91 percent.
At that point the story changed for the better. The Nigerian economy picked up marginally at 0.72 percent which was the GDP growth rate in Q2 2017. It was 1.40 percent in Q3 and 1.92 percent in Q4. For full year 2017, the Nigerian economy grew at 0.83 percent. Throughout 2018, economic performance, measured by GDP growth rate, was between 1.89 percent in the first quarter to 2.38 percent in the fourth quarter. For full year 2018, GDP was at 1.93 percent. The first quarter of 2019 was better at 2.01 percent.
The pertinent question is: what were the policies of this administration, either directly or indirectly through its MDAs that returned Nigeria to the part of growth? We shall examine these policies and programs one after the other. An economy in a recession requires that the demand side be propped up so that individuals, households and businesses can buy more goods and services. When demand increases, firms will have money to pay workers, expand and the effects will trickle down to other sectors. President Muhammadu Buhari realised this. Inheriting a nation where state workers were not paid was in contradistinction to his ethos and values. Consequently, he embarked on bailout programs through which he gave state governments’ lifeline to be able to pay backlog of salaries they owed civil servants. Some states owed workers for as many as 22 months.
Nineteen states benefited from the first bailout packages, which amounted to N338 billion. On the list of these states were Abia, Adamawa, Bauchi, Bayelsa, Benue, Borno, Cross River, Delta, Ebonyi, Edo, Ekiti, Enugu, Gombe, Imo, Katsina, Kebbi, Kogi and Kwara. Others included Nasarawa, Niger, Ogun, Ondo, osun, Oyo, Plateau, Sokoto and Zamfara. All the states have up to 20 years to repay the loans except Ogun State which opted for 10 years.
Another well-coordinated program by the current federal government was the disbursement of the Paris Club refund. The first tranche of that fund involved the disbursement of N516.38 billion to the 36 states of the federation and FCT Abuja. The latest tranche of N691.56 billion was disbursed to states in March 2019.
Measuring the effects of bailout, Paris club refunds
If the President is this committed to the nation, then how have these support programs impacted the nation? The major challenge states were having was their inability to carry out the basic function of governance, which was the payment of workers’ salaries. For the majority of the states, this is now a bygone issue. The prompt payment of salaries and other emoluments reflected in PAYE segment of the states’ internally generated revenue of states.
In 2016, the PAYE segment of IGR of the states in the federation stood at N407 billion and that rose to N448.12 billion in 2017. It further increased to N669.2 billion in 2018. In other words, between 2016 and 2018, the Pay As You Earn(PAYE) component of IGR of states rose by 64.4 percent. While the private sector also contributed to this, majority of this payment came from workers with different government establishments. Since workers salaries and other emoluments were promptly paid, it follows that industrial actions were greatly minimized.
By diversifying financing options, infrastructure projects received a facelift
The President diversified the financing options available to Nigeria when he opted for Sukuk as one of the means to finance road projects in Nigeria. One of the immediate benefits this generated for the nation was to bring into the financial system ethical investors who ordinarily wouldn’t have invested their money within the western-oriented financial system. Apart from that, adopting Sukuk to finance infrastructure means that the money will not go down the drains as investors will demand for the projects before putting down their money. The first N100 billion Sukuk was used to finance 25 roads across the six geopolitical zones in the country. It was oversubscribed by 132.2 percent.
Some of the roads financed with Sukuk included Abuja-Abaji-Lokoja Road, Obajana-Okene Road, Suleja-Minna Road,Ibadan-Ilorin Road, Kolo-Otuoke-Bayelsa-Palm Road, Enugu-P/Harcourt Road, Kaduna Eastern By-Pass, Kano-Maiduguri Road as well as the Loko-Oweto Bridge over River Benue.
Rail projects upgraded
In 2017, President Muhammadu Buhari-led administration identified ten new standard rail gauge routes in its rail development plan. The routes are the Lagos-Sagamu-Ijebu Ode-Ore-Benin City East-West rail line(300km); Lagos-Ibadan-Osogbo-Baro-Abuja high speed line(615 km); Ajaokuta (Eganyin)-Obajana-Jakura-Baro-Siraj-Abuja rail; Ajaokuta to Otukpo (533km); Zaria-Kaura Namoda-Sokoto-Ileila-Birnin Koni in Niger Republic (520km); Benin-Agbor-Onitsha-Nnewi-Owerri-Aba rail with additional line from Onitsha-Enugu-Abakaliki, 500km; Eganyin-Lokoja-Abaji-Abuja(280km); and Benin-Sapele-Warri-Yenagoa-Port Harcourt-Aba-Uyo-Calabar-Akampa-Ikom-Obudu Cattle Ranch coastal rail line( 673km).
The others are Port Harcourt-Aba-Umuahia-Enugu-Makurdi-Lafia-Kuru-Bauchi-Gombe-Biu-Maiduguri line; Ikom-Obudu-Ogoja-Katsina Ala-Wukari-Jalingo-Yola-Maiduguri line as well as Kano-Nguru-Gusau-Damaturu-Maiduguri-Gamborugala rail line.
One of these rail lines, the Lagos-Ibadan rail line, being handled by the China Civil Engineering Construction Corporation (CCECC) has reached an advanced stage with 79 percent work done and is due to be completed by April 2020. Available records show that over 5,000 Nigerians are directly and indirectly employed by the Lagos-Ibadan rail project. That axis of the Nigerian economy generates about 50 percent of the IGR of the 36 states of the federation. In Lagos alone, over 60 percent of the nation’s value added tax (VAT) is generated; Lagos is home to the nation’s sea port complexes-Apapa and Tin can Island ports, and in addition, the state accounts for about 34 percent of the national IGR. Ogun and Oyo states are the industrial bases of the Nigerian economy. In one of the previous findings of BusinessDay Research and Intelligence Unit (BRIU), the Lagos port complex receives about 2,000 trucks on Mondays and Tuesdays, which are off-peak period while starting from Wednesdays to Fridays, the number of trucks, trailers and tankers that come to the port complexes rises to 4,000 daily. Upon completion in the second quarter of 2020, one of the immediate impacts the rail project will have is to bring down the cost of transporting goods from the ports in Lagos to different industrial estates within Lagos-Ibadan axis. It will also ensure the free flow of traffic within Lagos metropolis and along the Lagos-Ibadan axis.
Agriculture received huge boost
Even when the Nigerian economy was in a recession, the agricultural sector performed creditably well. Its average sectoral real GDP growth rate during the period was about 4 percent. Crop production and livestock were majorly responsible for the noticeable growth within the sector. The Central Bank of Nigeria (CBN) passionately supported the sector and the support still continues till the present moment. Through the CBN’s Anchor Borrowers’ Program(ABP), rice farming which was a no-go area has turned many Nigerian farmers to millionaires.
The ABP has created over 2.5 million direct and indirect jobs through 862,069 farmers who cultivated over 800,000 hectares of land for rice, cotton, soya-beans, wheat, cassava farming, among others. It is should noted that rice has been notable among the produce cultivated by farmers. In 2017, the Kebbi State economy was reported to have generated over N100 billion from the sale of rice by farmers. The LAKE rice which is between the Lagos and Kebbi state governments has equally produced fantastic result. In just a week in Lagos State, over 70,000 bags of LAKE rice were sold. The success of the rice program has reduced the nation’s food import bill significantly.
School feeding program boosts enrolment, creates jobs
The federal government, in conjunction with 31 state governments are presently implementing school feeding program. As at today, the nation’s school enrolment has risen by 20 percent. The scheme has employed 103,992 cooks, feeding 9,714,342 pupils in 53,715 government primary schools in 31 states. School pupils are fed for 200 days in a year. This has ensured there is ready market for small holder farmers, empowered cooks and communities. Everywhere across the globe, governments in some ways have programs to support farmers in the agricultural sector. For instance in the United States, due to the trade war between USA and China, President Donald Trump recently announced $16 billion in aid to American farmers who are affected by the trade dispute.
N-Power program reduces unemployment, depression
The Buhari-led federal government at the beginning rolled out N-power programs through which unemployed graduates were absorbed into the scheme. A participant is paid N30,000 monthly and the program is non-political nor religious as all the 774 local government areas benefited from the N-Power scheme. Participants were engaged to teach in public schools, support staff in primary care centres or serve as agricultural extension officers.
What Nigerians expect in the second term
While the government has done well in many areas, more still have to be done especially in the areas of job creation as unemployment is still high; reduce crime rate just as special programs should be designed for the manufacturing sector. The major need of the manufacturing sector is affordable loans, most importantly, at single digit. In addition, the federal government needs to give state governments improved access to items on the exclusive list. This can be done by true federalism.
