President Muhammadu Buhari
In this piece, IFEANYI ONUBA writes that many Nigerians took a hit as the nation’s economy remained on a relatively weak growth trajectory for the most part of President Muhammadu Buhari’s first term
When President Muhammadu Buhari took over the mantle of leadership on May 29, 2015, there were high expectations from Nigerians that the long-awaited ‘messiah’ had come.
The word “change”, which was the campaign slogan of the All Progressives Congress during the build-up to the 2015 general elections, became almost as popular as the National Anthem.
Buhari’s administration came into office with three major promises to Nigerians: Fighting insecurity, tackling corruption and reviving the economy. To revive the economy, the administration promised to pursue an economic diversification programme that would make Nigeria produce what it needs and consume what it produces.
This was expected to be achieved through the implementation of the Economic Recovery and Growth Plan as targeted spending would be in key sectors of the economy such as infrastructure, agriculture, and solid minerals.
To make it easier for investors to do businesses in the country, the President also signed three Executive Orders, all aimed at making the business environment less hostile and competitive.
But during the last four years, many Nigerians did not see the benefits of the change, which the government promised.
For instance, between the second quarter of 2015 when the President took over the mantle of leadership and the first quarter of 2018, the economy, as measured by the Gross Domestic Product, contracted in seven quarters and expanded in eight quarters.
During the period under review, the country also experienced various threats to inflation largely due to incessant herders and farmers’ crisis in some key food-producing states as well as weak economic fundamentals.
An analysis of other major economic indicators such as the unemployment rate, and capital importation, which measures investment inflows, also revealed the various form of volatility.
For instance, an analysis of the GDP report showed that in the third quarter of 2015 when Buhari spent his first three months in office, the economy recorded a growth rate of 2.84 per cent.
However, during the fourth quarter of that same year, the growth rate dropped from 2.84 per cent to 2.11 per cent.
Further analysis of the report showed that in the first quarter of 2016, the economic growth was negative (-0.36 per cent), compared to 2.11 per cent in the fourth quarter of 2015.
Despite government efforts at stimulating the economy, the economic performance worsened in the second quarter of 2016 as the negative growth rate widened to -2.06 per cent. This development made the economy to slip into recession for the first time in 25 years.
In the third quarter of 2016, the economic performance contracted further, with the country witnessing a negative growth rate of -2.24 per cent.
However, in the fourth quarter of 2016, the economy started experiencing a rebound with a GDP growth rate of -1.3 per cent.
In the first quarter of 2017, the GDP growth rate was put at -0.91 per cent, while the second, third and fourth quarters witnessed growth rates of 0.72 per cent, 1.17 per cent and 2.11 per cent respectively.
But economic growth slowed down in the first quarter of 2018 with the country recording a growth rate of 1.95 per cent.
The GDP growth rate declined further to 1.5 per cent in the second quarter of 2018 but rose to 1.81 per cent in the third quarter.
In terms of the inflation rate, the consumer price index rose from 9.4 per cent in the third quarter of 2015 to 9.55 per cent, 12.77 per cent,16.48 per cent, 17.85 per cent and 18.55 per cent in the fourth quarter of 2015, first, second, third and fourth quarters of 2016 respectively.
However, in the first quarter of 2017, the inflation rate recorded its first decline since Buhari took over in May 2015.
The inflation rate was put at 17.26 per cent, 16.1 per cent, 15.98 per cent and 15.37 per cent in the first, second, third and fourth quarters of 2017.
Between the first and second quarters of 2018, the inflation rate dropped from 13.34 per cent to 11.23 per cent before recording a marginal increase of 11.28 per cent and 11.44 per cent in the third and fourth quarters of 2018 respectively.
The inflation rate, according to data from the National Bureau of Statistics, stood at 11.37 per cent in April.
An analysis of the labour force statistics reports from the NBS revealed a steady increase in the unemployment rate in the country.
The unemployment rate, which was 9.9 per cent and 10.4 per cent in the third and fourth quarters of 2015, increased to 12.1 per cent, 13.3 per cent, 13.9 per cent and 14.2 per cent in the first, second, third and fourth quarters of 2016.
In 2017, the number of unemployed Nigerians continued to rise with the unemployment rate increasing to 14.4 per cent, 16.2 per cent, 18.8 per cent, and 20.4 per cent in the first, second, third and fourth quarters.
The unemployment rate rose further to 21.8 per cent, 22.7 per cent and 23.1 per cent in the first, second and third quarters respectively last year.
The number of Nigerians that were unemployed moved from 7.52 million people in the third quarter of 2015 to 20.93 million in the same period of 2018.
In the area of foreign reserves management, the country’s reserves grew from $28.57bn as of May 2015 to $45.06bn on May 23, 2019.
The Minister of Budget and National Planning, Senator Udo Udoma, while speaking at a media briefing to mark the end of the tenure, said the present administration took over governance at a very trying time.
He said, “We inherited an economy that was in very bad shape. The economy was badly affected by the sharp fall in crude oil prices from over $110 in mid-2014 to below $30 by January 2016.
“The situation was worsened by the disruption of oil production activities in the Niger Delta. The collapse of oil revenues led to a contraction of the economy, ultimately resulting in the economy falling into recession in the second quarter of 2016.
“This was the unfortunate situation we found ourselves in. Foreign reserves dropped from $37.33bn in June 2014 to $28.28bn in December 2015 and further to $23.81bn in September 2016. There were declining investor confidence, capital flight and a worsening balance of payments position.”
“Headline inflation rate rose from 9.2 per cent in June 2015 to as high as 18.5 per cent in December 2016 while the accompanying exchange rate instability saw the value of the naira plummet in the parallel market, ultimately falling to as low as N520 to the United States dollar. It was really tough.”
On measures so far taken by the administration in the last four years to reposition the economy, he said the first initiative was the introduction of an expansionary budget in the 2016 fiscal year.
He added, “The budget was designed to reflate the economy and stimulate economic activity. We followed this up with the development of a comprehensive medium-term plan, which is the Economic Recovery and Growth Plan, 2017-2020, with the broad objectives of restoring growth, investing in the people and building a globally competitive economy.
“The core vision of the plan is one of sustained, inclusive and diversified growth. The initiatives of the plan are directed at attaining structural economic transformation. The objective of the plan is, simply put, to boost national productivity so as to improve the quality of life of all Nigerians.”
In his assessment of the economy, a former Director General, Abuja Chamber of Commerce and Industry, Chijioke Ekechukwu, said the country’s over-reliance on oil constituted a danger for the economy.
He said, “The scorecard of the economy can be measured by how well the macro-economy has fared. The GDP has grown marginally; the government has also had various programmes and incentives to encourage Micro, Small and Medium Enterprises.
“However, the unemployment rate still remains high. The inflation rate came down consistently in the last nine months until recently, but this has not reflected in the real prices of goods and services.”
The Registrar, Institute of Finance and Control of Nigeria, Mr Godwin Eohoi, said there was a need for the Federal Government to come up with innovative measures to stimulate aggregate demand in order to avoid a repeat of the recession that was witnessed in 2016.
Eohoi said, “We have just increased minimum wage now and what will follow is an upward adjustment in the prices of goods and services.
“Once this happens, the purchasing power of the people will drop. If nothing innovative is done to stimulate the economy, then you will see that the level of economic productivity will start declining.”
He said the government should implement policies that would stimulate output, particularly in the area of agriculture.