It has been convenient for the governing All Progressives Congress (APC) to blame past administrations, revenue shortage due to fall in global oil prices and insurgency as humbling challenges in growing the nation’s economy in the last two years. COBHAM NSA and CHINYERE OBIORA capture experts’ views on the recession and Nigeria’s economic performance under the Buhari presidency.
Many are not challenged describing the Nigerian economy as ‘struggling and tottering’ in the last two years. This apparent fumbling status has led some to suggest, with mischief, that President Muhammadu Buhari should return the economy to the perceived favourable position where the administration took over governance in May 2015.
Positive projections from various government agencies, including the National Bureau of Statistics (NBS), Central Bank of Nigeria (CBN) and Federal Ministry of Finance, have done little to impact the economy, particularly with the biting revenue shortfall from the oil sector. Current developments have not diminished the fact that the 2017 first quarter growth rate presents an improvement over the revised negative 1.73 per cent GDP growth rate recorded in December 2016.
NBS report showed that, “In the first quarter of 2017, the nation’s GDP contracted by 0.52 per cent (year-on-year) in real terms, representing the fifth consecutive quarter of contraction since Q1 2016.” Accordingly, NBS said, “This is higher than the rate recorded in the corresponding quarter of 2016 and higher by 1.21 percentage points from the rate recorded in the preceding quarter.”
Conflicting signals notwithstanding, Presidential Adviser on Economic Matters, Dr Adeyemi Dipeolu, says growth continued in the agric sector during the quarter under review, while noticeable positive turnarounds were equally recorded in the manufacturing and non-oil sectors.
Reacting to NBS GDP report, Dipeolu said the contraction recorded in Q1 showed a deceleration in several sectors. “This outlook is reinforced by positive trends in other indicators such as improved oil prices and increased production, rising foreign exchange reserves, increased capital spending by the federal government as well as improved perceptions reflected in various purchasing and sales managers’ indices”, Economic Adviser said, adding, “Barring major economic shocks, it should still be possible to restore growth this year as projected in the Economic Recovery and Growth Plan.”
But with the contentious 2017 budget meant to mitigate the recession, Minister of Finance, Kemi Adeosun has given pep to arguments that huge spending on infrastructure will boost the economy. She said releasing about N350 billion as the first tranche to jump-start the 2017 budget implementation is part of the process.
At the public presentation of 2017 Appropriation Act in Abuja, Mrs Adeosun assured that the Federal Government has adequate cash to commence immediate execution of key projects and initiatives slated for this fiscal year. Hear her, “We are ready, we are having a cash-plan meeting very soon and after that, N350 billion will be released as first tranche of capital releases for the 2017 budget.’’
Endorsement of this good news came from her Budget and National Planning counterpart, Senator Udoma Udoma, who explained that government is introducing new financing method of Project-Based Release System to curb waste of public funds by Ministries, Departments and Agencies (MDAs).
Highlighting evidence of compliance with the Bureau of Public Procurement (BPP) Act as part of criteria aimed at making capital releases produce desired results, Udoma also said henceforth, no MDA is allowed to sign any foreign denominated contract without approval from both Ministers of Finance and Budget and National Planning.
Optimism expressed by both Ministers aside, financial experts are cautious given that recent data by NBS capture a negative growth rate of 0.52 per cent, an indication the economy is still in recession. They believe the measured decline in real output is due to improved performance in non-oil sectors especially, agriculture, which grew by 3.36 per cent, information & communications went up by 2.74 per cent and manufacturing by 1.36 per cent. The current report shows that non-oil sector grew year-on-year by 0.7 per cent as against a decline of 0.33 per cent in fourth quarter of 2016 to partly offset the year-on-year decline in the oil and gas sector by 11.6 per cent, slower than negative 17.7 per cent in fourth quarter of 2016.
The Agricultural sector remained the dominant, accounting for 21.35 per cent of total output, followed by trade with 17.78 per cent, and information & communications – 12.41 per cent, Manufacturing – 9.73 per cent, Mining & Quarrying -8.95 per cent, Real Estate – 6.3 per cent, and Construction – 4.17 per cent.
Also reviewing the 2016 Budget performance, Senator Udoma said reasonable progress was made in the implementation and achievement of set targets, though aggregate revenues was less than projections, mainly due to disruptions in oil production in the Niger Delta region. “As at year-end, FGN’s 2016 actual revenue was N2.95 trillion (76.4% of the N3.85 trillion budgeted). Oil revenue was N697.8 billion (97.2% of budget); Company Income Tax (CIT) and Value Added Tax (VAT) collections were N457.91 billion and 108.72 billion respectively, representing 52.8% and 54.8% of amounts budgeted; while Customs collections of N247.42 billion implied a 63.6% performance”, he said.
But in their crystal ball, experts said government’s decision to sort out the worrying lapses in 2016 Budget implementation is quite cheering, even as they applaud efforts to strengthen government’s monitoring and evaluation framework to improve physical inspection and impact assessment of projects and programmes implemented by MDAs.
Udoma magnified this position with his explanation that government is disturbed about the huge number of abandoned capital projects inherited from past administrations scattered across the country in their thousands, adding, “We know that you can’t continue doing things the same way and expect different result, so we have to do things differently. We need to have more targeted releases. We have to look at the projects which are important and can easily be completed.
But would reviving these abandoned projects and spending on them impact on the nation’s economic recovery efforts? That sounds a tough call in the view of Malam Garba Kurfi, Managing Director, APT Securities and Funds Limited. According to him, “Considering where we are coming from, the nation’s economy will still be struggling for some time to regain itself and enjoy full recovery.”
Kurfi said, “If we look at where we are today, we have not restored ourselves to where we met the economy when the current government took over power. At that time, the GDP was above two per cent in positive direction. But as at today, we are still trying to get out of negative trend. The Naira which exchanged at N199.05 kobo to dollar by October 31, 2015, depreciated by N106.35 or 53.42 per cent to N305.40 kobo to a dollar as at May 24, 2017. Also, at the Bureaux De Change segment of foreign exchange market, the Naira fell by 68.2 per cent, from N224.83 kobo to a dollar traded on month of October, 2015 to N376 to a dollar in May 24. 2017.”
Kurfi, said it is only when the economy recovers to its previous buoyant state that the country would practically enjoy greater forward movement, but admitted that measures taken so far by government have given people confidence that the economy would soon pull through and possibly surpass the expected level in the nearest future.
In the agricultural sector, APT Securities boss said with CBN’s intervention and introduction of value chain, a lot of farmers have returned to the farm, adding that “as we increase productivity, the issue of smuggling of goods into the country would drastically reduced.”
Despite certain prevailing conditions, Kurfi says security, a basic requirement for investment in any country, has drastically improved compared to the situation about two years. He said government must still do more to boost investors’ confidence in the security and safety of their investments in Nigeria.
In similar fashion, a financial analyst, Mr Ifeanyi Nwankwo lamented that Nigeria’s economic performance in the last 24 months has been uninspiring. “The economy has moved from better to worse. The standard of living and the level of poverty have increased. Prices of goods in the market have skyrocketed with no commensurate cash in the hands of consumers while real income has dropped with the massive depreciation in Naira value.”
He said with the battered economy, the unemployment rate, occasioned by massive retrenchment, has risen, noting that the situation is worsened by the fact that, “prices of food stuff like garri, beans, rice, palm oil, and even pure water have increased by 100 per cent.”
He said Nigeria’s problem started the day we discovered oil and abandon agricultural production and other mineral resources that were bringing foreign exchange earnings to the country, stressing that the appetite for quick money and white collar job changed the entire system to become lazy and import dependent country.
“I’m not saying the discovery of oil in Nigeria was bad, but we became lazy that we could no longer produce anything. We import everything we are using in this country, including tooth picks, matches, cashew nuts and petroleum products from the oil that we produce. As long as we continue depending on imported products without exporting any, the nation’s economy will continue to go down. It does not matter who is in control of the economy,” Nwankwo added.
Though arguments have not been in short supply that delay in approving and signing as well as poor implementation of the annual budget are largely responsible for slump in business activities and stalled economic growth, Director-General, Budget Office of the Federation, Ben Akabueze says government is seriously addressing this nightmare for effective service delivery to Nigerians.
Detailing the efforts at tackling indentified lapses in the 2016 budget implementation, Akabueze, said a new system, tagged Citizen Portal, has been introduced by government to provide insights into the 2017 budget in a non-technical way for Nigerians.
He said the portal, visible on the Budget Office website, became imperative because, “It is important for citizens to understand the budget, especially its key deliverables and their role in its implementation.” According to him, when citizens do not properly understand the budget, “it significantly limits their ability to engage with the budget process and hold government accountable for the prudent management of financial resources entrusted to it.”
Amidst the recession, triggered by negative growth indices, Nigerians are hopeful on experts’ postulations that the country’s economy would be out of recession before this year ending.