By David Adonri
The pursuit of socio-economic welfare of citizens is the cardinal goal of every government. The process of attaining this goal is centered around mobilisation and efficient allocation of resources for production of goods and services. Entrepreneurship has been identified as the catalyst which drives resources or factors of production into generating the desired economic outcomes.
Nigeria is blessed with abundant resources but continues to lack capable entrepreneurial leadership competent enough to convert resources into modern products. Eight years of President Muhammadu Buhari’s rule demonstrates how an unenterprising and incapable leadership can damage the prospects of a resource-rich developing economy. All macroeconomic indicators deteriorated during the eight years of President Buhari’s disastrous administration.
When he took office in May 2015,
Nigeria’s GDP was $594 billion according to NEXIM. At the end of his tenure in
May 2023, the country’s GDP had fallen to $460 billion according to reliable
sources. Inflation rate in May 2015 was 8.7%. It galloped to 22.22% in April
2023. Monetary Policy Rate, MPR, was 13% in May 2015. It increased to 18.5% in
May 2023.
Official foreign exchange rate
was N197/USD and the parallel market rate was N220/USD in May 2015. In May
2023, the official foreign exchange rate was N465/USD while at the parallel
market, it was N740/USD. In May 2015, the unemployment rate was 7.5%. In May
2023, the unemployment rate had worsened to 33%. In May 2015, total public debt
was N12 trillion.
In May 2023, total public debt
had ballooned to N77 trillion. Crude oil production per day in May 2015 was 2.2
million barrels. In May 2023, it had declined to 1.1 million barrels per day.
Crude oil price in May 2015 was N65 per barrel. In May 2023, it was N75 per
barrel. Nigeria failed to profit from the windfall of the Russia/Ukraine
war.
In 2015, foreign investor’s
participation at NGX was 54%. It fell to 17% in 2022. FX scarcity and capital
controls kept many foreign investors trapped, thus eroding their
confidence.
When President Buhari took
office in 2015, he raised a deafening alarm that the national treasury was
empty. Paradoxically, not only did he empty the treasury before leaving in May
2023, he inflicted an unimaginable debt burden of over N77 trillion on Nigeria
which threatens the financial security of the country and mortgages the
financial future of unborn generations. With the mess President Buhari threw
the economy into, can there be any justification in his claim of leaving
Nigeria better than he met it?
There were clear signals from
the beginning of President Buhari’s tenure that his indolent style of
leadership will plunge the economy into crisis. In spite of the frightening
challenges of a collapsing crude oil market which extended from President
Goodluck Jonathan’s administration into his, President Buhari went into a deep
slumber, letting the threat fester.
Not even the visit of a former
British Prime Minister or IMF President, Mrs. Lagarde, to forewarn him of the
impending economic danger could wake the President up. It took him over six
months to constitute a cabinet and when he eventually did, the composition was
uninspiring. President Buhari’s delay in taking crucial remedial measures to
correct imbalances eventually plunged Nigeria into stagflation, a dangerous
economic crisis in 2016.
Stagflation is a very difficult
economic super crisis to arrest. Its prevention is always better than
attempting to cure it. This is because measures taken to correct one side of
the imbalance can exacerbate the negative effect of the other side.
The Stagflation of 2016 caused
fragility of the Nigerian economy to persist almost throughout the tenure of
President Buhari. He was a laid back leader who reacted belatedly to issues
after maximum damage had been done. For example, while the EndSARS agitation
was at its teething stage, he treated it with levity until it degenerated into
a raging storm which soldiers terminated through merciless force.
The economy was yet to fully
recover from the 2016 stagflation when another one struck in 2020. It was
blamed on the lockdown and economic disruptions caused by COVID-19 pandemic.
That was a lame excuse because even before the onset of the pandemic, Fitch and
Moodys had downgraded Nigeria’s economy from stable to negative.
The rating worsened further in
2022 to B-, taking the country’s sovereign rating to junk status. The
deteriorated socio-economic conditions of Nigeria before 2020 caused by
President Buhari’s failure to deal firmly and ruthlessly with insecurity
through dominating the battlefields, the way the late President Idris Derby of
Chad Republic did, and the ineffectiveness of his 2017 Economic Recovery and
Growth Plan, ERGP, made the Nigerian economy vulnerable to external shocks and
unchallenged assault by COVID-19.
The misfired policy response to
combat the pandemic in 2020 through the Nigerian Economic Sustainability Plan,
NESP, caused a bubble in the equities market instead of reflating the
productive economy. That poorly conceived expansionary macroeconomic policy
continues to haunt the economy till date through galloping inflation left in
its trail.
President Buhari’s macroeconomic
policies added little or no value to the economy. His fiscal policy was unduly
expansionary even when the economy did not have the income base to withstand
the financial risk of excessive debt. As a result of his rapacious appetite for
spending, he callously depleted the Excess Crude Account, ECA, which was
created to serve as a fiscal buffer.
His administration’s pillaging
of CBN’s lending facility through “Ways & Means” advances to the tune of
over N23 trillion for unapproved expenditure remains a sore point and bastardisation
of public finance. His penchant for foreign loans without considering the risk
implication, knew no bounds. Monetary policy under his administration lacked
focus and even became dangerously disruptive at the twilight of his
tenure.
Monetary policy often strayed
into the fiscal space through several opaque interventions in the real sector
and enactment of trade policies. CBN’s administrative allocation of hard
currency through multiple exchange rates robbed the government of enormous
revenue, promoted corruption and rent from several shady deals. It was a severe
blow to the allocative efficiency of the economy. There was excessive money
creation which saturated the markets and fuelled inflation.
Over expansion of monetary
policy caused total money supply to grow from N15.35 trillion in 2012 to N52
trillion in 2022 without commensurate growth of the economy. Macroeconomic
policies under President Buhari did not always work in harmony. Since 2022,
while monetary policy has been contractionary, fiscal policy has been
expansionary. This public policy mismatch which neutralises each other has made
it difficult for policy objectives to be realized.
Failure of President Buhari to
secure the upstream sector of the petroleum industry which is the main foreign
income earner, robbed the nation of substantial hard currency while at the same
time, fuel subsidy at downstream sucked the national treasury dry. Although the
Petroleum Industry Act, PIA, came at the tail end of his administration, he did
not capitalise on it to fully deregulate and privatise the industry.
factors of production to do so.
President Muhammadu Buhari increased Nigeria’s import dependence.
For Nigeria’s economy to be made
self-reliant, strong and built to last, an Executive President with entrepreneurial
acumen and indefatigable intellect should always be chosen, devoid of
sentiments, by the electorates to steer the Ship of State in the right
direction.
*Adonri, Vice Chairman, Highcap Securities, is a commentator on public issues
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