AS he bids farewell to Nigerians on May 29, an overwhelming verdict of gross failure on the economic front pockmarks the two-term tenure of the President, Major General Muhammadu Buhari (retd.). This era witnessed a relentless upsurge in human misery, rising national debt, two recessions, record unemployment and inflation levels, and receding foreign direct investment. While so much had been expected of him, he delivered eight locust years.
He made bad choices, failed to demonstrate any real grasp of modern economic ideas, and lacked the presence of mind or leadership acumen required to turn the ailing economy around.
Inheriting a battered economy from the equally inept Goodluck Jonathan in 2015, Buhari at every opportunity blamed previous governments for not saving or building infrastructure when oil prices were high. But he appeared to forget that he rode to power precisely on the promise and perception that he would reverse the failures of his predecessors on the economy, security, corruption, and leadership. His successes were few, his failures legion.
Truly, he inherited a precarious economy. Averaging $111 per barrel in 2011 and 2012, oil prices had started nosediving by mid-2014, thus upturning Nigeria’s revenue and spending plans. By early 2016, oil had receded to $28pb. Although prices later recovered, Buhari never initiated the required ameliorating policies – drastically reducing the cost of governance, strengthening the tax system and divestment.
Consequently, the economy fell into recession in 2016, the first time in 25 years, after successive quarters of negative growth. The economy recovered as oil prices rebounded, ending 2017 at $60pb on the average.
The second recession in 2020 was caused by the outbreak of the COVID-19 pandemic-induced global recession impacting on the country’s fragile economy. In the second quarter 2020, Nigeria’s GDP contracted by -6.1 per cent, and -3.6 per cent in Q3 to wipe out three years of tentative recovery.
But the resurgent oil prices from 2017 could not mask Buhari’s shallow economics, headlined by a confused foreign exchange system, uncoordinated populist schemes, faltering sectoral programmes and a command economy that inhibits private investment. While the naira exchanged officially at N197.8 to $1 in June 2015, it was N460.97 to $1 by April 20. At the parallel market, where most buy, it is N747.
Inflation spiked.In 2015, annualised inflation was in single digits at 9.0 per cent. In December, the inflation rate hit 21.47 per cent, a 17-year peak. In March, it climbed to 22.04 per cent, and is likely to rise higher as the government mulls removing the petrol subsidy.
Nigerians have never had it so bad. The country overtook India in 2018 as the global capital of extreme poverty with 87 million of its population adjudged to be extremely poor. Some 91.6 million Nigerians currently live in extreme poverty, second behind India, per the World Poverty Clock. The National Bureau of Statistics in 2022 assessed 133 million citizens as living in multidimensional poverty.
These figures are not surprising. On Buhari’s watch, the economy is rudderless. Unlike previous governments, he did not value an Economic Management Team, to plan and guide economic recovery.
Buhari prefers the lazy recourse to borrowing, breaking all borrowing records in eight years. The Debt Management Office put Nigeria’s debt at N12.12 trillion in June 2015, a debt-to-GDP ratio of 13.1 percent. It had climbed to N44.7 trillion by December 2022; ‘Ways and Means’ borrowing (mostly printing money) was N22.8 trillion. Accordingly, debt-to-GDP ratio has risen to 34.7 per cent. With the binge borrowing, servicing obligations wipe out revenue; 96 percent of revenue went for debt servicing in 2022, said the World Bank. The supine Ninth National Assembly that unthinkingly approves Buhari’s loans is complicit in the binge borrowing.
Buhari is disconnected from economic reality: while he borrows heavily and pays highly to service debt, he has just increased public workers’ salaries by 40 per cent. The increment is not tied to any new source of revenue.
Investment, foreign and domestic, has atrophied. The NBS estimates unemployment rate at 33.3 per cent, and youth unemployment at 42.5 per cent. Insecurity is taking a huge toll on investment. Currently, international airlines cannot repatriate over $800 million because of the dollar shortage that has also restricted the importation of raw materials, machinery and parts.
But they all suffered from his characteristic inattentiveness, and delegation of responsibility without supervision, feedback, or reviews. Targets are missed or abandoned, and sanctions or replacement of incompetent officials rare.
Agencies and banks flout TSA under which public revenue is to be remitted directly and in real time. The ABP has run into loan repayment crisis and the “rice revolution,” an early regime success, has faltered; the ERGP’s growth targets, diversification and export boost have not materialised, while the wasteful, ill-conceived cash disbursement schemes are massive looting conduits.
Creditably, Buhari signed a watered-down version of the Petroleum Industry Bill into law in August 2021. Bungled by previous governments, that is a major success. The opening of the Abuja-Kaduna, Warri-Itakpe and Lagos-Abeokuta-Ibadan rail lines and extension of others are notable. The flipside is that they come with heavy loans; when the government should have allowed the private sector to undertake these capital projects.
Works and Housing Minister, Babatunde Fashola, credits the regime with the reconstruction of 400 highways and bridges. Highways like Bodo-Bonny, or Loko-Oweto Bridge that cuts travel time between the South-East and North-Central by four hours are major landmarks. For eight years, the Lagos-Ibadan Expressway, the Second Niger Bridge, Abuja-Kaduna-Zaria-Kano (for which the regime received $311 million of the Abacha loot), Ibadan-Ilorin, Lagos-Abeokuta, East-West Road, and other critical highways have yet to be completed. He did nothing to rescue the Apapa Ports access roads; private sector operators are trying to remedy the grave neglect.
Buhari is leaving the energy and solid minerals sectors as he met them. With no more than 5,000 megawatts available, Nigeria is electricity-poor. Compare that to President Fatah el-Sisi, who almost tripled electricity output to 60,000MW (2014-2019), transforming Egypt to a net exporter of power.
Natural resources are idle or being appropriated by Chinese operators in collusion with corrupt Nigerians. Buhari was defeated by oil thieves: in the year to March, Nigeria lost N2.3 trillion to oil theft and pipeline vandalism. Nigeria was losing $700 million monthly to oil theft, the Nigerian National Petroleum Company claims.
Typically, the Executive Orders of his regime on the seaports, airports, and ease of doing business, are implemented in the breach.
The President failed to forge a synergy between fiscal and monetary policies. Under him, politics interfered with economic decisions, exemplified by the riotous sale of dollars for religious pilgrimage at concessionary rate when manufacturers cannot access the same.
His conspiracy with the Central Bank of Nigeria Governor, Godwin Emefiele, with the short-sighted naira redesign policy severely knocked the economy. Nigerians are still living in hardship and businesses are incurring losses because of the policy, with the banks experiencing liquidity problems and the new banknotes still scarce.
Agriculture, still the largest contributor to GDP and employer, is besieged; the poultry, tomato, pepper sub-sectors are groaning under the cash squeeze. Farmers are tormented by Fulani herdsmen, who spurn ranching, the global best practice, as well by bandits and terrorists.
Ultimately, his statist bent played out, virtually shutting down the long-running privatisation programme. Buhari failed to privatise the moribund refineries, the Ajaokuta Steel Complex, the airports, and the seaports or liberalise these sectors.
On balance therefore, his tenure is an economic fiasco, leaving behind higher poverty, unemployment, inflation, and business fatality rates. He has no excuse; he simply lacks the leadership, cognitive and administrative capacity to successfully pilot a modern economy. Ignacio Lula Da Silva, who in his first presidency pulled 20 million Brazilians out of poverty, Festus Mogae, who managed Botswana from wretchedness to become Africa’s fastest growing economy for a while, and Paul Kagame, who is remaking Rwanda into a modern economy, demonstrate what enlightened, capable leadership can accomplish. For economically traumatised Nigerians and the business community, Buhari will not be missed.
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