PRESIDENT Muhammadu Buhari was sworn into office on May 29, 2015 and so, has spent two of the constitutional mandate of a four-year term. However, while campaigning for office, Buhari made a few promises specifically concerning the economy. For ages, Nigeria has been exposed to the vagaries of boom and bust cycles of the global oil industry. For instance, the economy grew at an average of seven per cent during the boom cycle. Between 2009 and July 2014, crude oil sold for an average of $100 per barrel.
Only a few months after the bust cycle set in however, the economy had run into trouble so much so that by January 2015, the Federal Government, according to the then Minister of Finance, Dr Ngozi Okonjo-Iweala, was already borrowing heavily to pay salaries. The budget for 2015 was actually one of austerity.
It was in this environment that the 2015 electioneering took place and Buhari, being the candidate of the All Progressive Congress (APC) party, promised Nigerians solemnly to diversify the economy such that there will no longer be dependence of sale of crude oil if he was elected into office.
The promises
Some of the promises relating to the economy and diversification made by the APC, which turned them into the darling of majority of voters, include the revival of Ajaokuta Steel Company; generation, transmission and distribution of at least 20,000 MW of electricity within four years and increasing to 50,000 MW with a view to achieving 24/7 uninterrupted power supply within 10 years; and create 720,000 jobs by the 36 states in the federation per annum (20,000 per state).
There were also promises of embarking on vocational training, entrepreneurial and skills acquisition schemes for graduates along with the creation of a Small Business Loan Guarantee Scheme to create at least five million new jobs by 2019; provide allowances to discharged but unemployed Youth Corps members for 12 months while in the skills and entrepreneurial development programme; making the economy one of the fastest-growing emerging economies in the world with a real GDP growth averaging 10 percent annually; make information technology, manufacturing, agriculture and entertainment key drivers of our economy; and balance the economy across regions by the creation of six new Regional Economic Development Agencies (REDAs) to act as champions of sub-regional competitiveness
The party equally said it would put in place a N300bn regional growth fund (average of N50bn in each geo-political region) to be managed by the REDAs; amend the Constitution and Land Use Act to create freehold/leasehold interests in land along with matching grants for states to create a nationwide electronic land title register on a state by state basis; create additional middle-class of at least two million new home owners during the first year in government and one million annually thereafter; guarantee a minimum price for selected crops and facilitate storage of agricultural products as and when necessary by buying excess produce by farmers; and then end gas flaring and ensure sales of at least half of gas produce, within Nigeria.
Prevarication
Special Adviser to President Buhari on Media and Publicity, Mr Femi Adesina, while responding to enquiries on the performance of his boss in two years said, “APC never promised to solve the nation’s problems in two years. You can’t write the report card of this administration at half time. It has four years. You can’t write the report card of this administration when it is just hitting the half way mark. That will not be fair. The term is for four years and the promises are going to be spread over those four years. APC did not promise to solve all the country’s problem in one or two years. The mandate the party has is for four years and it is pacing itself as it goes along. I am sure that by the end of those four years, we will have a lot more to record. It is not by a snap of a finger but will the promises be fulfilled? Yes, I believe it will be fulfilled. This administration will take Nigeria far beyond how it met it. So, if anybody says APC has failed, just tell them it is too early in the day because it is a four-year term and this is just two years. You don’t reach definitive conclusion in two years.”
On provision of jobs, Adesina declared, “it is not government’s responsibility to create jobs but to create the enabling environment for job creation.”
Upon inauguration, it took the administration many months after inauguration to emplace the cabinet while its first budget became operational only in May 2016 by which time the economy had lapsed into recession.
Between 2010 and 2015, Nigeria’s GDP grew at an average rate of 4.8 per cent a year on the back of the non-oil sector, which grew 6.2 per cent a year while the oil and gas sector declined by 4.5 per cent. Growth in most sectors has since slowed considerably, contributing to the onset of the economic recession in mid-2016.
The oil sector accounts for only 10 per cent of Nigeria’s GDP, although it remains a large contributor to export earnings and government revenues. The largest contributors were services (53.2 per cent of GDP, including retail and wholesale trade), agriculture (23.1 per cent of GDP), manufacturing (13.3 per cent of GDP) and construction and real estate (3.9 per cent of GDP). Given their historical growth rates, these sectors have great potential to restore growth and diversify the economy, while generating foreign exchange and increasing the resilience of the economy to external shocks, especially in the oil and gas sector. Despite its relatively low contribution to GDP, solid minerals also has large potential for growth.
Indeed, given that only seven sub-sectors account for more than 70 per cent of GDP (Figures 3.1, 3.2), it is imperative that Nigeria further diversify its economy.
Nonetheless, Nigeria, according to figures from National Bureau of Statistics and National Population Commission (NPC), has a population of 193 million.
Chest beating
On the contrary, the Minister of Information and National Orientation, Alhaji Lai Mohammed was full of praises for the government saying, “We’ve been able to restructure the economy on a very sound footing, we’ve succeeded in not just looking for quick fixes, but we are addressing the fundamental issues of our economy, which is basically that we are moving away from relying solely on oil to other areas like agriculture, solid minerals and the rest.
“But more importantly, in the area of the economy, is that for the first time, our emphasis is now more on infrastructure and capital projects rather than on recurrent. Also, in the area of fighting insecurity and the criminality in the North-East, fighting corruption and agriculture, we have good stories to tell.
“Before the Presidential Initiative on Fertilizer, what we had was that we were importing and subsidizing fertilizer and scarce foreign exchange was going to fertilizer subsidy. Today, with the presidential initiative on fertilizer, we now take phosphate and potassium from Morocco and Europe and we blend it locally in Nigeria here. And with that, we are cutting the cost of fertilizer by 33 per cent. Not that alone, we’ve been able to revive 11 blending plants. Before now, only five blending plants were working at 10 per cent capacity, and we saved about $100 million in foreign exchange and about N60 million in budgetary provision. In the area of power, we have signed 13 power purchase agreements with 13 solar companies. And that is going to add more to the national grid. So, we have a good story to tell Nigerians and I think that is what they want to hear.”
Minister of Agriculture, Chief Audu Ogbe observed that, “we are back to where we started off in agriculture many years ago. And sadly enough, I want to say that those were better times than now. We made some progress in physical development but philosophically, we haven’t really advanced, otherwise the Malaysians, Chinese and the Indians, whatever successes they achieved, they never forgot to invest in agriculture in their various countries. Go to any home today, virtually everything you see is foreign and when you are talking about food – rice, biscuits, milk, sugar, cookies – all are imported into Nigeria.
He said it became fashionable to be a contractor supplying tea, toilet papers, coffee to ministries. They became richer. Some of them owned pick-ups, built houses, etc. “Even cattle rearing, the estimate placed on them is lower than 15 million. The rest come from Mali, Senegal, Chad and Cameroon. The impact has been multi-dimensional. Our cows give just a litre of milk a day because of the grasses they eat. Brazilian, Argentine and Australian cows have access to grasses with 28 per cent crude protein.
“A cow needs at least 40 litres of water daily. Now, most of these cows do not have access to water. Also, because they trek so much, the meat and milk quality is not good. So what do we do? We import milk to the tune of $1.3billion a year. When we run out of oil, we will face tough times because we don’t have the dollars and our capacity is diminishing because of our own carelessness that we can’t even satisfy our needs.
“Our population is increasing. In another four years, this country would probably be 200 million in population. We add five million a year and with a low density of death rate and by the next 50 years, Nigeria will be the third largest country in the world. So it’s time Nigeria prepared for the future and I will do my best in my capacity to prepare Nigeria for the future,” Ogbe said in an interview some time ago.
But as the saying, “after all said and done, it is often discovered that more has been said than done” A United States Department of Agriculture released in April 2017 concluded that the Nigerian government’s support for agriculture has greatly waned in the last two years.
According to the report, combined estimates of Nigeria’s 2017/18 production for wheat, rice, corn and sorghum dropped from nearly 16.5 million tons to about 16.3 million tons expected to be produced in the current season, representing a slight drop from the current 2016/17 season estimate. The ministry stated however, 2017/18 imports will likely decline by nearly three percent to 6.6 million tons from 6.8 million tons due to declining purchasing power of the average Nigerian.
The report disclosed that grain production began to stagnate with Federal Government’s lowering support to agricultural efforts over the last two years.
“The country’s devaluing of its currency is expected to sustain rising domestic food prices. Interestingly, the same factor makes food prices relatively cheaper for consumers in neighboring countries, resulting in increasing demand for Nigerian grains in countries around the Sahel region. These emerging developments could indicate potential threats to Nigeria’s food security.”
“Over the last two years, market prices have been doubling just as costs of farming inputs such as fertilizers, farm labor, and agro-chemicals. Declining purchasing power and GON’s lack of funds to continue with grain purchasing for strategic grain reserve are also discouraging farmers from increasing production. Farmers are also sustaining huge losses because the GON has stopped purchasing corn supplies for strategic reserves, and operators in the poultry sector, who are principal consumers, are either downsizing or closing operations”, the report disclosed.
Central Bank of Nigeria’s Anchor Borrowers’ Programme in some selected states have, however, slightly ameliorated the inactivity of the fiscal authorities in the agricultural sector.
Solid minerals
Government has for some time, identified 44 solid mineral types available in commercial quantities. Some of them include tin, iron ore, limestone, gold, gypsum, kaolin, lead/zinc, coal and bitumen. In 2007 a Mines and Mining Act unveiled was introduced. In 2008 the ministry announced the prioritization of development of what it described as seven strategic minerals (7SM), namely coal, bitumen, limestone, iron Ore, barytes, gold and lead/zinc.
Also in 2012, a road map for the Development of Solid Minerals and Metals Section was designed but reliance on cheap to availability of cheap funds from crude oil sales, there was no impetus to follow these initiatives through.
Remarkably, most of the states in the country have one type of solid mineral or the other. Nasarawa State alone is reported to have over 20 solid mineral types including tantalite, barite, copper, iron ore, tin ore, coal, columbite and aquamarine. It has been reported that coal is present in about 13 states, with proven reserves of 639 million metric tons.
In December 2015, the Minister of Solid Minerals Development, Dr. Kayode Fayemi, in publicly unveiling the Solid Minerals Roadmap said that, “based on that presidential promise to build a more diversified economy, our task as a ministry is therefore to remove any and all obstacles to such growth. From working with the National Assembly to receive the right budgetary provisions to ensuring expansion of bulk handling terminals at multiple river and ocean ports, our role is to ensure that things work as intended. Our emerging vision a safe, sustainable and profitable sector.”
The policy direction is based on the core philosophical beliefs of jobs creation, revenue generation, industrialisation, sustainability, transparency, environmental justice and cooperation. Fayemi explained that part of the Ministry’s short term actions is to launch stakeholders’ communications with investors, communities and other parties to refine their thinking on the mining sector.
Structure of the economy
In 2015, Nigeria’s GDP was estimated at $1.1 trillion. Economic diversification and strong growth have not translated into a significant decline in poverty levels, however, over 62 per cent of the population still live in extreme poverty. Despite strong fundamentals, the country is still hobbled by inadequate power supply, lack of infrastructure, delays in the passage of legislative reforms, an inefficient property registration system, restrictive trade policies, an inconsistent regulatory environment, a slow and ineffective judicial system, unreliable dispute resolution mechanisms, insecurity, and pervasive corruption.
Regulatory constraints and security risks have limited new investment even in oil and natural gas. Because of lower oil prices, GDP growth in 2015 fell to around three per cent, and government revenues declined, while the non-oil sector also contracted due to economic policy uncertainty.
Future hope
The administration started rather slowly. However, it has begun to pick itself up and many of the promises are being looked into. It was probably a realization of the need to uplift the economy and live up to the expectations of Nigerians that government eventually launched the Economic Recovery and Growth Plan (ERGP) a couple of months ago.
In the medium term development plan, all initiatives under job creation will prioritize youth as beneficiaries. The implementing agencies will collaborate closely with the Ministry of Sports and Youth Development to ensure that the capacity building and skills acquisition interventions are targeted at youth-dominated sectors such as ICT, creative industries, and services. Furthermore, concerted efforts will be made to encourage youth to venture into other labour intensive sectors such as agriculture and construction.
“The ERGP aims to create jobs by developing labour-intensive sectors (such as agriculture, manufacturing, housing and construction), continuing and extending existing public works programmes, and encouraging private-sector participation in the economy. It will also develop infrastructure in sectors with the capacity to create demand for labour, particularly local labour. It will sustain the recently launched N-Power programmes and support MSMEs to maximize their potential for employment creation. In addition, the government will also implement a social housing programme to increase home ownership and create direct jobs for artisans and craftsmen. This programme will be delivered in partnership with the states and the private sector.
“Three elements will provide the foundation for these initiatives: direct job creation by the Federal Government, jobs created in the informal and formal sectors by the private sector, and skill-building programmes.
“The Federal Government will create direct jobs by filling vacancies in MDAs whose activities are crucial to the success of the ERGP, such as the Federal Inland Revenue Service, the Nigerian Police Force and the Economic and Financial Crimes Commission, on a priority basis. Through the N-Power programme, over two years, it will employ up to 500,000 young graduates as teaching assistants, agricultural extension workers and public health workers. States and Local Governments will complement these efforts.
and then