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| By Paul Okolo |
CIVIL society organisations in Nigeria had an unusual meeting in Abuja on October 29. They didn’t gather to demand social justice or political reforms. The agitation was over the deplorable state of the economy. Led by Clem Nwankwo of the Policy and Legal Advocacy Centre, the group decried the “steady and continuous decline of the Nigerian economy” since President Muhammadu Buhari reported for duty on May 29. Should we be concerned?
Truth be told, the economic indicators are not looking too good. The Nigerian Stock Exchange’s All-Share Index is down 15 percent since the inauguration of the new administration on May 29. In other words, investors have lost about one trillion naira or $5 billion as share prices continued to fall. The naira has also been officially devalued by more than 20 percent against the US dollar in the past year. The National Bureau of Statistics put the gross domestic product in the second quarter of this year at 2.4 percent, down 1.6 percent from 4.2 percent in the same period a year ago. To put this in perspective, GDP averaged about 7 percent annually for almost a decade before the downturn set in this year. The country’s foreign exchange reserves have dropped 30 percent since last year to $30 billion, according to data obtained from the Central Bank of Nigeria. It may well be harsh to blame President Buhari for the state of the economy. He took over at a time of falling prices of crude oil – the country’s top revenue earner and main export product.
But it’s his response or body language, in current parlance, to the economy that irks many observers. Beyond his commendable stance against corruption, the CSOs believe the president has not done much to reassure Nigerians and foreign investors that he has a game plan for reviving the economy. The fact that the ministers who will help steer the ship are yet to be assigned portfolios strengthens this argument. As Nwankwo, their spokesman, put it, “the major challenge we are currently facing is that we cannot see the urgency of this administration to improve the (depressing economic) situation.” Nor does it appear that it has a good grasp of the issues, he added. For instance, the decision of the central bank, backed by the government, to control the foreign exchange market rather than devalue the currency in the face of the persistent pressure on the local currency, has elicited criticism from both local and foreign analysts.
To be fair, the whole world is experiencing economic slump. Some nations are even in a worse state than Nigeria. It’s so that Nigeria does not become one of such basket cases that the Buhari administration needs to act fast. “This regime should do quick, wake up and address the problems”, Ayo Teriba, chief executive officer of Economics Associates, an economic think tank, pleaded. To make up for lost time, Mr. President will do well to inaugurate his cabinet this week without further delay. Thank God the Senate has cleared the ministerial nominees. So after five months of waiting, the wheel of government machinery should therefore begin to turn again. This will ease everybody’s concerns. Foreign investors can then decide to either invest in the country or go elsewhere. Local businesses can expect to be paid money owed them and bid for new contracts while millions of unemployed youths can expect to get hired as economic activities resume.
As we wait for the ministers to take office, all eyes will be on the persons who will be in charge of key ministries such as finance, trade, mines, transport, aviation, works, agriculture and industries. The occupiers of these positions matter a lot to economic observers. Journalists and analysts will show more than a keen interest in certain ministries because if the financial markets like them, sentiments toward the government may turn positive. As a result, the floodgate of foreign direct investments could be opened. But if they are disliked, foreign investors may likely prevaricate. This was why four South African presidents from the late Nelson Mandela to Jacob Zuma retained Trevor Manuel as Finance Minister for 13 years between 1996 and 2009. It was also why former President Olusegun Obasanjo hired Ngozi Okonjo-Iweala to head the finance ministry and why Goodluck Jonathan anointed her as Coordinator of his Economic Team, a powerful position that was until then unknown in Nigeria. Businesses and financial markets usually seek any information on these pivotal ministers to help them understand them and so be able to predict their policy bearing. The reason is because markets dislike surprises. They prefer people they know and can trust. If they are former colleagues on Wall Street or the City of London, or Ivy League classmates, or pro-business eggheads whose temperament they can forecast, fine.
For President Buhari, forming the cabinet is the easy part for obvious reasons. Getting the economy up and running again won’t be a child’s play. According to Teriba, the problems he inherited from the past administration are quite intimidating. Among the tests he’ll face is the matter of the 2016 budget, whose presentation to parliament is already running late. Crude oil theft and the fuel subsidy trouble, with the fraud associated with it, will be crying out for attention, not to mention the destructive insurgency in the North East. Government will need to find alternative sources of income to make up for dwindling oil revenues. Otherwise, it will be impossible to fulfill campaign promises. And away from the usual lip service paid to diversifying the economy, it’s this administration that will have to actually do it. Unemployment must be confronted, inflation must be tamed, and exchange rate stabilised. Then with corruption, despite President Buhari’s body language, we don’t need a prophet to know that corruption won’t be an easy nut to crack.
Paul Okolo is an Abuja-based public affairs commentator
— Nov 16, 2015 @ 01:00 GMT
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