By OBINNA EZUGWU
President Muhammadu Buhari will be starting his second term in office in less than two months, on May 29. His economic team is projecting three percent GDP growth for the year, which would be a massive improvement from the 1.9 it recorded in 2018, but analysts say this is a tall order.
Many people voted for the president in 2015 because they expected he would tackle the growing insecurity, fight corruption and grow the economy.
Boko Haram terrorists launched daring attacks across the North, particularly in the North East, and then president, Goodluck Jonathan, appeared to be unable to bring the bloodshed to an end.
Buhari, as former military general, was to do much better and possibly bring an end to Boko Haram. He had indeed promised to do so in the first few months of his administration.
On this call, the president did commendable job. Although the terror group’s attacks have continued, it is now largely confined in the North East. But at the same time, other frontiers of insecurity have opened and escalated in the form of Fulani herdsmen and banditry, rolling back whatever progress achieved in tackling Boko Haram.
The Buhari government has, to a large extent, explained away these failures by blaming past governments. The default line of defence for the government’s failures is that the PDP government damaged the country, almost beyond repair, and that it would be unfair to expect it to correct in three or four years, PDP’s sixteen years of misrule.
The APC’s excuse is, of course, untenable. The administration’s failures is mostly self inflicted, and as a consequence of structural inefficiencies. But all the same, the excuse of past governments being responsible, is largely swallowed by the supporters of the president, however, it is a support base that is increasingly waning. The real outcome of the presidential election bears testimony to this.
But how is the president likely going to fare in his second term in his three areas of focus: economy, security and anti corruption, given his first term antecedents?
The president had promised to improve on his unimpressive first term and Nigerians wait, earnestly, for a better deal.
However, much improvement is unlikely given the president’s attitude to governance and his appreciation of the country’s challenges.
The president will have his hands full in his second term. The economic outlook is not particularly encouraging. Africa Development Bank projects 2.3 percent growth GDP in 2019 – World Bank projects 2.2 percent – and 2.4 percent in 2020. While this, if it be the case, will be a welcome improvement from the 1.9 percent achieved last year, it is still grossly inadequate for a country whose unemployment rate stands at 23.1 percent, and even so, it could prove a tall order.
“The rate of improvement of the economy depends on choices the government makes. The government is projecting growth rate of 3.01 percent in 2019, the Central Bank is projecting growth of about 2.7 percent, IMF and World Bank are projecting 2.0 and 2.2 percent respectively, so the government obviously has the most optimistic projection among all the forecast for the Nigerian economy in 2019,” says Mr. Johnson Chukwu, CEO of Cowry Asset Management Limited.
“The government projecting 3.01 percent growth might be too optimistic, that is going to be a tall order. The first question the government should ask is, which sectors will drive the 3 percent growth? The agricultural sector is still facing challenge of insecurity in the North East and North Wes, and herdsmen crisis in the North central.
“The other sector of the economy which accounts for a significant percentage of the GDP, the trade sector, is still in recession, followed by the telecommunications sector. You can say the telecommunications sector is growing, but the growth moderate. Oil and gas is still in the negative, so I don’t see how the 3 percent growth will be achieved.
“But the key thing is that policy will determine what happens in subsequent years. That’s what the government should focus on; what policies they should put in place that would drive faster economic growth rate in subsequent years, not necessarily in 2019”
Buhari’s emergence as president in 2015 brought fresh hope in a despairing country. Having been presented as a Spartan anti corruption, czar and a man of integrity, his coming to power was to herald the end of pervasive corruption in the country. And for many, once corruption was taken care of, Nigeria would achieve the economic progress that had eluded it for decades.
But it didn’t take long for many to realise they were, perhaps, mistaken. Buhari had taken six months to name his ministers, claiming at the time that he was searching for the best, but when eventually he came up with the list, it was a list of already known, less fancied faces, signifying perhaps, the president’s limited appreciation of the issues at hand. It took only a few months afterwards for the country to slide into a recession, for only the second time in about three decades.
“Last time, he (Buhari) put together a group of people that Nigerians still question their credibility and their competence,” notes Dr. Bongo Adi, Senior Lecturer, Lagos Business School. “Again, the kind of cabinet that he will form will determine everything. We can’t say much now.”
On the three plank promise of providing security, fighting corruption and growing the economy, the president largely failed to deliver. And perhaps the single biggest indictment of the president in this regard is that, as opposed to economic growth, Nigeria achieved a record of being the global headquarters of extreme poverty. The country’s unemployment rate rose from 18.8 percent in Q3, 2017 to 23.1 percent in the corresponding quarter of last year. About 14 million people have lost jobs from 2015 to 2018.
Late last year, data from Brookings Institution, corroborated World Data Lab’s World Poverty Clock – which provide real time poverty estimates globally – showed that six Nigerians enter into extreme poverty every minute.
The same institution said Nigeria, with its 180 million population had overtaken India which has over one billion people, as the country with the largest number of extremely poor people – people surviving on less than $1.9 a day. The institution said their trajectories suggested that Nigeria had about 87 million people in extreme poverty compared to India’s 73 million. It’s a trend that is unlikely to change, given especially, the lack of holistic attitude of the government in evolving solutions to the challenges.
“The economy has been bleeding, and there is what I call the challenge of smallness. We have very small cash inflow relative to our GDP, which is above $500billion,” Adi says.
“We are still the 26th largest economy in the world; the first in Africa, our money supply is less than 20 percent. Compare that to South Africa which is above 70 percent.
“China’s money supply is over 300 percent of their GDP. Our stock market is only about 11 percent of our GDP; these are all warning signals that all is not well with our policy thrust. If you put together all the indicators of financial depth, what you notice is that Nigeria is actually shallow. Financial mobilisation remains a threat to any plan that the government may have.”
But the figures hardly come as a surprise. The last four years have witnessed exodus of foreign investment on account of unfavorable environment. Small businesses have also folded up in their numbers.
Foreign investment represents, for any country, a major creator of jobs in the economy, but they have left in droves and are still leaving. The president’s penchant for disregarding of rule of law is a red flag for any potential foreign investor. This is not likely to change, analysts say, which signposts tough days ahead.
“The economy just recovered from recession. The challenge of this economy has been credit to the private sector,” Adi explains. “It is investment that drives economic growth. It is also investment that drives jobs growth. We have limited investment. Nigeria has recorded very low foreign direct investment over the past four years and the exit of investment continues. This morning, it’s in the news that Accenture, an international consulting firm, has left Nigeria. So, you see that the country continues to bleed.
“That definitely points in the direction of more troubles ahead. It’s an indication that the economy is not favourable to investment, especially FDIs, and it is that FDI that we need in order to kick-start this economy, in order to create jobs.
“The other day, the Monetary Policy Committee (MPC) reduced interest rate by about 50 basis points. So, we now have 13.5 percent, from 14 percent. The question that some of us are asking is, why has it taken them almost three years to do that?”
“That has undermined every macroeconomic and fiscal policies that they have claimed to pursue. On the one hand, they say they are reflating the economy using many sectoral interventions; pushing money to certain sectors, but at the same time, they kept rates very high.
“Of course, those concessional loans they give people, if it has worked, people would have benefited from that. But evidence across the world shows that sectoral interventions make no impact. What works is a holistic policy rate that affects every sector.”
There is link between economy and security. Given the president’s poor showing on the economic front, which has led to increased poverty, the general atmosphere of insecurity is explainable. Security challenges are often offshoots of poverty and lack of opportunities. Poverty is growing.
Buhari’s major strength going into 2015 was his anti corruption posturing. Corruption had been hyped as the country’s key problem. Buhari was to come in and wipe out the menace with his magic wand. He has tried to, and jailed a handful of people on corruption. But his anti corruption drive has lost much of its credibility for its embarrassing lopsidedness.
Mainly opposition figures are being tried for corruption, and once you defect to the APC – as the examples of Godswill Akpabio, Orji Uzo Kalu, and others show – you are no longer corrupt. But more critically, those within the Buhari circle feel immune to punishment, the menace has continued unabated even within the government circles. This was well highlighted by a recent report by the United States Department of State on the administration.
The report noted that there is a climate of impunity in the President Buhari government that allows officials to engage in corrupt practices with a sense of exemption from punishment. Further noting that although the law provides criminal penalties for conviction of official corruption, the government did not implement the law effectively, and officials frequently engaged in corrupt practices with impunity.
“Massive, widespread, and pervasive corruption affected all levels of government and the security services. There were numerous reports of government corruption during the year.”
In his second term, many would expect the president to be more assertive in his anti corruption effort, since he is not going to stand for another election and would therefore have no need to keep sacred cows for election reward. But this is doubtful. Buhari has shown consistently that he is unable to move against friends and allies. Corruption, analysts say, is likely to continue. So is the nepotism that has also characterised his government.
“Looking at Buhari’s antecedents, there is nothing to give any person reason to be hopeful that he is going to perform better this time,” says Lagos based lawyer and political analyst, Bob Okey Okoroji. “What he is going to spend his time doing this time is to avenge or to go after those who he thought did not vote for him.
“You know who he is. Remember what his 97 percent versus 5 percent logic. That’s what he is coming back to do. But I’m also hopeful that the Nigerian judiciary will lift its head above water and rescue this country. Because I don’t think there was free and fair election. The process that brought Buhari the so called victory was not transparent.”
The reality of the Nigerian situation, however, is that no president, whether from the North or South, can solve its problems without embarking on fundamental structural changes. The first step towards tackling security challenges, for instance, would be the creation of state police. But Buhari is resisting, staunchly, such structural tweaking of the country means that it will likely hobble through another four years with its future looking increasingly bleak.
“Everybody knows that Nigeria’s problem is structural, whether politics or economy,” Adi asserts. “It depends on the political will of the government to push through the necessary structural changes. Those are not easy decisions; it depends on President Buhari because the buck stops on his table. He has four years left. In his final lap as president, it behooves on him to think about his legacy for Nigeria. Embarking on structural changes is the most important thing he can do at the moment. It depends on him.”
Going into second term in May, of course, there would be new expectations, at least for the remaining believers in the Buhari doctrine. But the sad reality is that, not much, if anything is going to change for the better. And Buhari will no longer have the luxury to blame his inability to perform on the PDP. Indeed, any attempt at such blame games would fall flat on logic.