Why Nigeria’s Economic Recovery Is Slowing Down

By Mazi Sam Ohuabunwa

Ordinarily there should be so much going for Nigeria’s economy. Production of crude oil at about 2 million barrels per day at a good price of about 70 dollars per barrel is yielding good foreign exchange for the Nation, helping to boost foreign reserves which today stand at about 47.25 Billion dollars. Inflation has continued to decline steadily over several months coming to the current level of 11.4% as the CBN and its MPC retain monetary policy index at a tight stance.

*President Buhari and Finance Minister Adeosun 

 Also some great effort is being made at the economic management level to pursue the Nigeria Economic Recovery and Growth   plan( NERGP). Additionally, some improved liquidity has been noticed in terms of funding Nigeria’s infrastructure projects, combining oil revenue,tax heist with a large dose of debt from sundry sources.

Though the trickle down effect of the budgetary expenditure and policy choices are yet to appropriately reflect on the quality of lives of most Nigerians or on the overall Human Development Index( HDI) as unemployment and under-employment still hover around 40% in the General population, with worse statistics in the youth population. In the last Global HDI ranking we are around the 150 mark against 188 Countries, with a GDP per capita of $1995 ( as against $3082 in 2013).

Yet there was hope that the sustained effort at better economic management and much more determination to improve our operating environment, improve the ease of doing business and competitiveness index, the trajectory of economic recovery would be sustained and may be the long expected relief would be attained. But recent events in the Nation are threatening to undermine or stultify much of the efforts made in the management of the economy.

 Talking to investors and business men at both local and international fora recently , I find there is a great deal of apprehension about what one American investor described as “High dose of Political uncertainty, weak business environment and scary security concern”. They point to all the issues that Nigeria is confronting and accept that there is some evidence that the Nigerian economic managers are making reasonable efforts to make the economy attractive for investments. But they point that the problem lies with our politics and governance.

They feel that our political institutions are being weakened by the day, pointing to what has been happening between the Executive and the Legislature. They seemed terribly alarmed by the recent security siege on the National Assembly and expressed a fear that a weakened or ineffective legislature would result in a denatured democracy, resulting in a high level of executive impunity. For them, impunity is a precursor of self help and lawlessness.

They fear greatly that law and order may break down in Nigeria if things are allowed to remain as they are with no punishment for those who take laws in to their hands. They tell of warnings by many of their country embassies in Nigeria that Nigeria is becoming a very high risk Country.They are alarmed by the regular killings of Nigerians by all kinds of non- state actors who seem to have a free reign,facing little or no consequence. They point to the regular alarms raised by opposition governors of threats to their lives. Governors Wike and Fayose had raised alarms in the past and last week Ortom raised similar alarm.

They wonder that if State Governors are so terrified as to raise alarms over their safety and then other Nigerian Nationals are killed without much consequences, what would be the fate of non- Nigerians?Many say they are under tremendous pressure by their families not to visit Nigeria, and if they must, then they should restrict themselves to Lagos and Abuja only. In fact many said, they have been asked not to go anywhere in Nigeria by Road except within Lagos and Abuja metropolis and even here, it must be with security escort.

Some efforts I made to explain to them, that things may be   bad, but not really as bad as they seemed to perceive, was rebuffed. Well some of the fears may be over stretched, but we can not deny that the political shenanigans going on in Nigeria right now are beginning to take a toll on Nigerians psychologically and in real terms. In terms of economic out put, it is doubtful if the economy recovery will not be slowed down by these worries and uncertainties especially in the months leading to the 2019 elections. Q1 2018 GDP at 1.95% growth declined by 13.4% over Q4 2017.

Hope was that Q2 growth should be stronger than this but that hope is being challenged and yet we are still about 6-months to the elections. Some analysts projected a Q2 GDP growth that will be below Q1 growth and this week, Nigeria’ Bureau for Statistics confirmed that the economy grew by only 1.5%.

With population growth of nearly 3%, this is bad news.The analysts had pointed to the stagnation or sluggishness of the Purchasing Managers Index ( PMI) since April when it reached 56. 9% but declined to 56. 5 %in May, went up to 57% in June before moving back to 56.8% in July. They project this to indicate a drop in the momentum of productive activities. There is potential that the economy could take a big hit if efforts are not made to reduce the political uncertainties and improve governance. We therefore appeal to our political class to consider the poor and suffering masses of this country and try and calm down and do what will keep Nigeria in peace and promote investment and economic well being.

The Party in power particularly has a critical role to play in lowering the political temperature. They should know that it is their responsibility to ensure that Nigeria does not derail any further, because they are the party in power and will take much of the blame should things get really awry.

Chairman Oshiomhole must temper his rhetoric and work to engender peace across the lines. Critically the party should discontinue with its effort to remove Saraki from the Senate Presidency by all means. This desperation has become a major destabilizing factor in the political environment and it is helping create much of the political uncertainties in Nigeria .

It has been a three-year battle that must cease now, before it boils over and cause irreparable damage to Nigeria. It is only six months to elections and that should give the Country a peaceful opportunity to change leadership of all arms and tiers of the government without destroying the economy. Equally important is that we must shield the economic ministers and managers from politics. Let the politicians do their partisan manipulations and gerrymandering, but let the economic managers keep their eyes on the ball, if at all possible.