At the inception of this Government, economic indices were somewhat stable: Inflation was single digit, fuel price was below the N100 mark, consumer price index was responsible and capacity utilization was bearable. But dark clouds loomed; there was massive pillage of oil receipts occasioned by the ballooning petrol subsidy and drop in global oil prices. The government’s unfocused stance on key issues led to gross inefficiency in the execution of policies. Occasioned by the then looming elections, an increased Boko Haram insurgency in the North West and the fighting Niger Delta Militants, defence spending increased thereby adding more pressure on the treasury. All of these contributed in painting a very dark picture of the economy.
They also prepared the stage for a new Government which had won the elections on a platform of change. The new people had talked about blocking leakages in government revenues, immediately stopping the sinful fuel subscription regiment, diversifying the economy and waging a corrosive war against corruption. Nigerians fell in love with this new wave and despite the fact that they had some level of distrust for the new helmsman going by his pedigree of being a military dictator, were willing to give him the benefit of the doubt.
However, the regime started the business of governance hesitantly, finding it difficult to assemble a team. This could be excused, especially if one took into consideration the fact that a massive coalition had to be built to unseat a sitting government and as such, all interests must be taken care of and there was the delicate balancing act of marrying a reward system with competence. But it took the new administration over six months to come up with a cabinet that eventually looked, at best, recycled.
This affected the markets badly as inflation rampaged, hitting double digits in less than a month, the Naira’s value crashed, moving from the 150/160 range that the Jonathan administration had held it in for over 3years and hitting an all-time high of N550 before coming down to the present N350 plus. This wiped out whole industries and threw over 8m Nigerians out of job. Businesses suffered tremendously and through all this, the Government looked weak causing investors and watchers to doubt its readiness in handling the economy.
To worsen the situation, its anti-corruption drive further tightened the noose on the economy as it led to hoarding; cash was physically removed from the economy and stowed in cesspits and rooftops of dilapidated buildings. Those who had cash and could assist in reflating the economy hid the funds for fear of the EFCC who was and is still rampaging without real guidance.
The TSA policy led to the further withdrawal of liquidity from the system and markets. So government revenue which is the main source of liquidity in the economy was reined in and sent to a central point with seemingly adequate control and monitoring. While this solved, to a very large extent, the issue of corruption and rent seeking, the general economy suffered as it was starved of much needed funds and this further overheated the economy.
At some point the president had begun to show signs of ill health and took his first of a series of medical vacations abroad causing Nigerians to question the county’s fate in the hands of an ever absent leader.
Nigerians were left to their own devices and self-help initiatives by key retail backed industries started to emerge.While some areas, like the entertainment industry and agricultural sector thrived, the petroleum industry, a significant contributor to the GDP, was in a free fall which further plummeted the country’s global rating and threw our bonds into junk status. The stock exchange being the market barometer, reacted accordingly wiping off trillions from valuations. Credit dried up and the real sector became starved of funds. Things were bleak and the Government was at a loss.
In the quest for survival, Nigerians sought alternatives. As mentioned earlier, Agriculture began to show signs that it could lead us out of this mess. The local production of rice, a staple began to increase. Huge businesses started acquiring large farmlands to go into rice and maize cultivation. The climate was right and then vegetation was rife. The entertainment industry continued to grow, employing thousands of Nigerians and emerging as the second largest employer of labour after agriculture and slowly the Naira started firming up with the effective blockage of leakages and an effective anti corruption battle which by this time had started yielding some economic fruits.
Why am I looking at the economy today? It is because I have seen that the foreign reserves are inching close to the $40b mark once again, thereby throwing more confidence on Nigeria in the international markets as witnessed with the over subscription of the Bond we issued. The recent success recorded in the Sukuk bond and also the receding in the rate of inflation all show that we may have really turned around the corner. We have officially come out of recession and may begin to witness the beginning of growth.
But it is not yet uhuru. What we are witnessing today is an automated recovery leading to a growth not really guided by any deliberate government policy drive, but from factors almost outside of its control. For example, the resurgence of oil prices taking it to an almost 12month high is driven by global international factors. This has led to the swelling of the external reserve thereby buoying confidence in our markets as can be seen by the resurgence in FDI and the All-Share index. Liquidity is slowly creeping back into the system and we have even seen the NNPC reduce pump price of petrol albeit negligible.
The difference in this renaissance this time around would most likely be in the stance on corruption which would ensure judicious use of receipts eliminating wastage and pillage.
But then again, where is the proactive ability to build next generation initiatives that will further lock us up to emerging global economic trends?. The international markets are getting ready for a near future without oil, moving to higher levels of technology. How are we responding to this?, Are we preparing ourselves for that eventuality which I hear is less than 10years from now?. Meaning that this our generation will see a global market place not driven by oil. I do not see any serious government push toward this. Rather, we are now having officials wallowing in a resurgent economy pushed by global forces and internal markets with little or no government support or backing.
Let me attempt a small suggestion. We must begin to take much more seriously, the retail backed sectors of Agriculture, services, technology and entertainment as our our main sources of economic growth against the inevitability of a non-oil based economy. The government must build structures that would support these areas and grow them so that they would form the bulwark of our fundamental economic renaissance.
The figures are astounding and the size is phenomenal. This is the real political economy of change- A change in our economic expectations. A privately driven economic resurgence which would see Government in the background providing an enabling environment and international guarantees to these business. A government that would support but not spearhead infrastructural developments. The possibilities embedded in these areas are humongous and we have the deep markets to ensure their sustainable growth.
Nigeria in the next five years would be a different Nigeria if we get it right. A Nigeria where economic power would rest in the hands of private initiatives thereby reducing the concentration of economic power in the hands of government. This would itself solve the issues of political strife that are currently tearing us apart simply because there is a survivalist need to be at the epicentre of power or near it for purely personal gains.
This is my humble take.
Article written by Joseph Edgar