In July, the IMF forecasted that the Nigerian economy would contract by 1.8%, plunging the country into a recession. The International Monetary Fund was downgrading from its earlier projection of 2.3% made in April. The IMF said, “In Nigeria, economic activity is now projected to contract in 2016, as the economy adjusts to foreign currency shortages as a result of lower oil receipts, low power generation, and weak investor confidence.” As if this was not enough, after two years at the apex of the African big economies list, Nigeria was toppled by South Africa due to the depreciating naira. The weakening currency is symptomatic of a larger problem in the Nigerian economy. As one Johnson Chukwu, Management Director of Cowry Assets Management Ltd. put it, “It is only when the economy recovers that the currency will be strengthened.”
The blame game: Buhari’s fault or an inherited menace?
On August 11, Senator Bala Ibn Na’allah, the Deputy Leader of the Nigerian Senate said the economic woes could not be blamed on the All Progressives Congress. His words were, “The important thing is that the problems were not created by the APC-led federal government, they were created by Nigerians themselves for failing to act when there was the need to act.” He also said the APC had underestimated the damage already done to the country by the previous administration. President Muhammadu Buhari, himself, blames the People’s Democratic Party, which had 16 years of majority rule. He said, “In the past 16 years, we made a lot of money without planning for the rainy day. We showed a lot of indiscipline in managing our economy and that is why we are where we are today.”
The PDP’s political leadership saw Nigeria enjoy average annual growth of 8.2% as a result of the oil boom. In essence, Nigeria became a commodity driven economic giant. This lack of diversification made sure it was prone to economic fluctuations in response to changes in prices. Buhari’s tenure coincided with a sharp drop in oil prices. As Buhari says, the country was not prepared for that plot twist and now it is stuck in the doldrums. Buhari has been lauded for his tough stance on corruption and the prioritisation of property security but there is growing discontent over his administration’s lack of discernible economic direction. What is the Buhari policy? Fighting corruption is not an end but a means to an end. It seems this is where the Buhari administration has been getting it wrong. Instead of meeting problems head-on with counter movement that gives the country a fighting chance, this administration is eager to point fingers and emphasise on the weaknesses of the previous administration. That is simply not enough. As Professor Adeola Adenikinju, the Director of the Centre for Petroleum Energy Economics and Law at the University of Ibadan said, “Every government meets challenges. The responsibility of the government is not to emphasise those challenges but to bail out the country.”
There is a sort of fanatic obsession on the economic rankings which has necessitated the discussion around what’s going wrong in Nigeria. However, as Professor Akpan Ekpo, the Director-General of the West Africa Institute of Financial and Economic Management puts it, “the issue is not whether a country in Africa is number 1 or 2, the challenge is for our policy-makers and leadership to deal with the present recession in Nigeria by implementing robust fiscal policy that will ensure economic recovery. There have been calls for the fiscal authorities to support Small to Medium Enterprises in Nigeria by eliminating double taxation and improving ease of business in the country. With this in mind, more Nigerians should fuse entrepreneurship with their skills, regardless of profession. This will boost production in the country and diversify the economic base of the country. Simply depending on oil is not sustainable; there are many threats to the oil market now. For its part, the Buhari administration should create a coherent policy framework it will follow to the letter. The blame game will not help the low projections the IMF keeps releasing. Everyone is letting everyone down. Now is the time to jumpstart the dysfunctional systems of co-operative action towards the betterment of Nigeria. The rest of Africa should look on and learn as Nigeria negotiates this difficult recession.