Accra, Ghana, November 22, 2017//-President of Nigeria, Mahammadu Buhari, is still struggling to fix the country’s fragile economy which he inherited from the previous government , almost three years in office.
He was sworn in on May 29, 2015 against background of high expectations that the former major general of the Nigerian Army would fix the economy, create jobs for the teeming unemployed youth, enhance security, among others.
But these expectations are yet to be met.
Just yesterday, members of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) retained the policy rate of the Africa’s largest economy at 14 percent, citing weak economic recovery.
Announcing the decision of the committee, the Governor of the CBN, Godwin Emefiele, noted that economic recovery from recession remained fragile.
Risk of violence flaring up hampers outlook
The Nigerian economy entered a recovery in second quarter (Q2), 2017, with gross domestic product ( GDP) growing for the first time since third quarter, 2015.
“Higher oil output and positive dynamics in the agricultural sector helped the economy exit recession, and incoming data for the Q3 suggests that the momentum continued to build in the subsequent months”, according to FocusEconomics, a leading provider of economic analysis and forecasts for 127 countries in Africa, Asia, Europe and the Americas.
The Purchasing Managers’ Index (PMI), an indicator of the economic health of the manufacturing sector, recorded its best quarter since Q4 2014 in Q3, and oil production rose in September according to OPEC’s monthly report.
While encouraging signs are emerging throughout the economy, the recovery is likely to be fragile and is at risk of being derailed by a military conflict in the oil-rich Niger Delta region.
Tensions between militants and the government remain high, and a number of analysts speculate that violence could flare up ahead of the 2019 elections.
Recently, members of Niger Delta Avengers (NDA), the militants had threatened to resume deadly hostilities in the Niger Delta region.
The threat contained in a statement issued by the NDA spokesman, Murdoch Agbinibo, cautioned that unlike the 2016 operation, the upcoming operation would be full of casualties. It added that the group would stand against anybody or group who would stand on their way to blow up pipelines and oil installations.
If this threat is carried, it would have dire consequences on the Nigerian economy, according to economic analysts.
After GDP plunged in 2016, FocusEconomics panelists see the economy growing a modest 1.6% in 2017 thanks to higher oil output and recovering oil prices.
Next year, growth should gain steam on the back of firmer activity in both the oil and non-oil sectors. However, uncertainties over stability in the Niger Delta, a weak fiscal position and foreign exchange distortions are clouding the outlook, Angela Bouzanis, Senior Economist at FocusEconomics explained.
“The panel sees GDP expanding 2.6% in 2018, which is down 0.1 percentage points from last month’s forecast. In 2019, GDP is see growing 3.1%”.
Keeping eyes on prices
The country has recorded seven consecutive months of lower inflation, Naira rate is beginning to stabilize, appreciating from N525 per $1 in February this year to N360 in October. Broad-based economic growth is leading the country out of recession.
Furthermore, the CBN Governor told journalists at the MPC press conference in Abuja yesterday, that tightening the policy rate would strengthen the impact of monetary policy on inflation with complementary effects of capital flows and exchange rate stability.
Mr Emefiele was quick to added it could potentially dampen the positive outlook for growth and financial stability as this would constitute a risk in productive sectors of the economy.
Blame game
However, in spite of oil prices being an average of $100 per barrel and about 2.1 million barrels a day, that great piece of luck was squandered and the country’s social and physical infrastructure neglected, President Buhari told Nigerians when he delivered a speech to mark the country’s 57th Independence on 1st October, 2017.
“We were left with no savings and huge infrastructure deficit”, he blamed the erstwhile Goodluck Jonathan administration.
President Buhari was emphatic: “The All Progressives Congress (APC) Government’s Campaign rallying cry to restore security, re-balance the economy and fight corruption was not all rhetoric.
The country must first be secured. The economy must be re-balanced so that we do not depend on oil alone. We must fight corruption, which is Nigeria’s Number One Enemy. Our Administration is tackling these tasks in earnest”.
Successes chalked
With respect to the economy, his government has remained pro-active in its diversification policy. The Federal Government’s agricultural Anchor Borrowers Programme, which President Buhari launched in November 2015, has been an outstanding success with: 92 billion released through the CBN and 13 participating institutions; 200,000 smallholder farmers from 29 states of the federation benefitting; 233,000 hectares of farmland cultivating eight commodities, namely Rice, Wheat, Maize, Cotton, soya-beans, Poultry, Cassava and groundnuts, in addition to fish farming.
These initiatives have been undertaken in close collaboration with the states. With the abundance of rainfall last year and this year, agriculture has enjoyed Divine intervention.
Since December last year, Buhari’s administration has produced over 7 million 50Kg bags of fertilizer. Eleven blending plants with a capacity of 2.1 million metric tons have been reactivated.
The government has saved $150 million in foreign exchange and N60 billion in subsidy. Fertilizer prices have dropped from N13,000 per 50Kg bag to N5,500.
Furthermore, a new presidential initiative is starting with each state of the Federation creating a minimum of 10,000 jobs for unemployed youth, again with the aid of CBN’s development finance initiatives.
Power remains a huge problem. As of September 12th, production of power reached an all-time high of 7,001 Megawatts. Government is increasing its investment, clearing up the operational and financial log jam bedeviling the industry. The government is hoping to reach 10,000 Megawatts by 2020.
Key priorities include better energy mix through solar and Hydro technologies. After many years of limbo, the Mambilla Power Project has taken off.
Elsewhere in the economy the special window created for manufacturers, investors and exporters, foreign exchange requirements has proved very effective. Since April, about $7 billion has come through this window alone. The main effect of these policies is improved confidence in the Nigerian economy and better investment sentiments.
By Masahudu Ankiilu Kunateh, African Eye Report
Email: mk68008@gmail.com
