As Nigerians continue to come to terms with the harsh economic reality, scholars and analysts have spoken out on where the problem is really coming from.
Rather than apportioning blame, I would consider the factors that are responsible for the economic challenges. There are two major factors to consider – external and internal problems.
The external factors are outside the control of the country but they have serious impacts on our economy. The collapse of the global oil market has a direct implication for the Nigerian economy. About three years ago, a barrel of crude was over $100. Now the same barrel is about $40. Oil is the main source of the revenue of the country.
Also related to this is the crisis in the Niger Delta, which has drastically reduced the volume we were producing a few years ago. We used to export over two million barrels per day. Now, we export 600,000 barrels below that quantity.
Secondly, the United States has become a major producer of crude. That used to be our market. The Nigerian Natural Liquefied Gas is not doing well as it used to because there are many other countries that operate in the market. Apart from that, the global economy has slowed down. If the global economy was doing well, there would be more demand for oil and gas. Demand for both oil and gas has fallen while supply has increased, causing a crisis in the market.
Because of several reasons, the inflow of foreign capital has gone down. That is another extraneous factor that is responsible for the current problems.
But more fundamental are the internal factors. And some of these factors originated from the immediate past administration. That is where I would blame the past administration for part of the problem. One, we did not prepare fully for the kind of economic crisis that we are confronted with now. Both our external reserve and excess crude account reduced drastically during the Goodluck Jonathan administration.
Many of the states are insolvent today because they went borrowing without much check by the Federal Government. Corruption was high while the Petroleum Industry Bill that should have been passed to lay a strong foundation for investment in the sector was stalled. There were challenges.
But the current administration cannot continue to hide under those challenges. We are over a year into the administration of President Muhammadu Buhari. Yet, people are still asking – what is the economic direction of the country? Where is the document that one could look at to see our objectives, strategies and the coordination of the economic programmes that would take us to our destination? I cannot see any concerted effort or blueprint that would take us out of the problems.
Every government meets challenges. The responsibility of the government is not to emphasise those challenges but to bail out the country. President Barack Obama met challenges; the US’ unemployment rate was about 11 per cent when he came into the office. But that has dropped to about five per cent. There were policies and programmes to address the challenges. In the case of the Buhari administration, I have not seen any sense of urgency to get out of the challenges. We expected to see an economic document like the one developed by ex-President Olusegun Obasanjo when he came into power in 1999.
The economic policies (of the government) do not have linkages. Look at the exchange policy. You don’t even know what policy it is. Is it deregulated, controlled or regulated floating exchange rate? We have all kinds of markets; the existence of unofficial and official rates is an indication of the inefficiency of the monetary authority. At the black market, it is about N390/dollar; at the official market, it is about N300/dollar. I understand there is also a window where you can get N199/dollar. That creates uncertainty among investors.
– Prof. Adeola Adenikinju (Director, Centre for Petroleum Energy Economics and Law, University of Ibadan)
I do not think this is the appropriate time to blame anybody. We may do that later. Political governance is a continuous thing. President Muhammadu Buhari started where his predecessor, Goodluck Jonathan, stopped.
Jonathan might not have done his best, hence, Buhari was elected to right what went wrong in the six years of Jonathan’s administration.
So far, I think Buhari is doing well. The fight against corruption is a good way to reposition the economy. Also, we need to guarantee the safety of lives and property in order to have a robust economy. I would give good marks to Buhari in the area of security.
Yet, there are certain things I think the President needs to do to fast-track economic recovery. He needs to encourage local production. The economy also needs to be diversified and our infrastructures need to be fixed. So far, we have not seen much effort in this regards.
– Abudullahi Etsemeuno (Acting Registrar/National Coordinator, Institute of Chartered Economists of Nigeria)
The economic challenges were caused by the Goodluck Jonathan administration. This is because there were supposed to be sufficient savings for the rainy day. But the administration squandered the savings left by the administration of Chief Olusegun Obasanjo.
The administration, at a point, was borrowing money to survive. That should not have happened.
The current administration inherited problems; it did not know the magnitude of the problems until it assumed power. It did not realise that the country was already borrowing before it came in. when ex-President Olusegun Obasanjo was leaving office, we had about $50bn in the reserve.
When Jonathan assumed office, it was still above $40bn. The administration should have built on the reserve because the prices of oil were still high. But the public officials were busy stealing money when they should have been building on the reserve.
The government did not develop the infrastructure. Yet, it blew away the reserve and started borrowing as soon the prices of oil fell.
– Sheriffdeen Tella (Professor of Economics and former Vice-Chancellor, Crescent University, Ogun State)
The current administration is grappling with perennial economic challenges. However, the administration lacks the focus and the appropriate expertise to handle the challenges. The fact is that there is no country that does not have challenges. Every country finds a way to manage its challenges. That is what this administration has not been able to do. There has to be a sound economic team at a critical time like this.
The administration seems to have good economic programmes but it appears to lack competent individuals required to implement them.
You cannot say that you are fighting corruption and you put the economy on suspension mode. The Buhari administration is using military tactics to lead a democratic country. That is the challenge.
For me, the administration has the responsibility to put the economy on the path of growth, which it is not doing. It has continued to complain of lack of funds. What has it done with the loots it recovered from corrupt politicians? That money should have been channeled to the productive sectors of the economy.
– Ken Oteje (Economic analyst)
The administration of Goodluck Jonathan did not do what was required to avert the problems we face today. The money the past administration earned from crude some years back was not properly used. The reserve was wasted; that was the money the government should have used to fix the infrastructure and diversify the economy.
But we cannot exclude the current administration entirely. We are like a country that is on a battlefield. You cannot send naval officers to the desert to fight neither would you send those who should be operating fighter jets to the sea to fight and expect a good result. The administration needs to put the right people in strategic positions if we must overcome the economic challenges facing us.
As an economist, I consider economic stabilisation the most crucial in every decision I analyse. We must be able to stabilise the economy. The government needs to sustain the growth we have recorded after which it could think about growing the economy. If the President had put in place his cabinet and put the right people in sensitive positions much earlier, we would have probably averted some of the current challenges.
– Friday Udo (Port Harcourt-based economist/accountant)
Culled From Punch
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