It’s The Pmb’s Economy Stupid
“It's the economy, stupid” was 1992's winning slogan by the Bill Clinton's presidential campaign. At the time, the message was an attempt to emphasize the significance of the struggling United States economy. Today, the message will be just as effective when made with the myriad of economic problems facing the PMB's administration.
Nobody actually knew how bad it was, when the economy was rebased and projected as the largest and best in Africa by the previous administration. Financial data showed that the rebase did not pan out as projected- serious economic weakness and turmoil. According to the National Bureau of Statistics, the March 2016 updated Gross Domestic Product (GDP) – which measures national income and output for a given country’s economy, grew an average of 3.10% compared to 2.84% of quarter 3, 2015 and 9.19% in 2014. As a share of the economy, the oil sector represented 10.27% of the total real GDP, down from the shares recorded in the corresponding period of 2014 by 0.18% point and up from the share in the second quarter of 2015 by 0.46% point, inspite of falling oil prices. Suffice to state that oil sold for over $100 per barrel compared to below $40 today.
With plunging oil prices – forex shortages, terrorism, unemployment, power shortages, not to mention widespread corruption among others, the question is, whose economy is this and what is being done to correct it?. It looks, in other words, we are living in the economic era of persistent weakness, in which inflation and deficits, are the key challenges.
This isn’t PMB's economy, it's a non- petrodollar based economy, that’s the economy we’ve right now. Hitherto, petroleum was the mainstay of our economy, with astronomic fall in crude oil prices and wide scale corruption , comes the current fiscal crisis – sharp imbalances between revenues and expenditures, and the mounting cost of running the government.
In fact, the state of our economy endanger more than just security, jobs, infrastructural development and standard of living. It stands to destroy our democracy. This president to say the least is doing something to correct the myriad of problems facing the economy. It is undeniable that several reform initiatives put in place has, to some extent succeeded in delivering the President's economic agenda, even as it fell short in some areas. It is imperative to note that PMB is the first president to really use the levers of the presidency to correct the problems of corruption in our economic space.
On the issue of job creation, PMB has indicated that his administration will do all that is possible to get our youths back to work.Take for example, the Bank of Industry (BOI) recently launched N10 billion Youths Entrepreneurship Support (YES) project to empower youths with loans to start businesses. Economic indicators has shown that more than 40 per cent of Nigerian graduates had no jobs and that an average of eight million Nigerians entered the job market annually. It is projected that about 36,000 jobs would be created annually through 'YES'. Also, the recently passed 2016 budget provides for mass recruitment of graduates into the education sector.
In the words of PMB, “This administration's adoption of the Treasury Single Account has resulted in the blocking of financial leakages in the public sector, making more funds available for the business of governance and ensuring the welfare of our citizens.” The Treasury Single Account (TSA) is one of the financial policies implemented by the Federal Government to consolidate all inflows from all the Ministries, Departments and Agencies (MDAs) in the country by way of deposit into Commercial Banks traceable into a single account at the Apex Bank in the country. As at last count by this administration, TSA has yielded over three trillion Naira into the Federal Government account.
On agriculture, PMB has indicated his administration's readiness to address the issues of rising food prices, lack of agricultural inputs at affordable prices, high cost of fertilizers, pesticides as well as labour. He also identified the importation of subsidized food products such as rice and poultry and the wastage of locally grown foods, notably fruit and vegetables, which go bad due to lack of even moderate scale agro-processing factories and lack of feeder roads. He went on to state that his administration is putting forward reforms to correct these problems. It is important to note that these policies if carried out will address the issue of foreign exchange shortages.
On the devaluation of the Naira, some have argued that, since the rate of Naira in the parallel market has worsened, the Naira be devalued to match its rate. Calls have also been made for the adoption of precedence abroad in this regard. Our government had quite often tended to merely follow precedents or get boxed into bureaucratic and ideological straitjackets rather than an excellent exposure to the diversity and complexity of development challenges. In the first place, some if not all the economies used as model of adoption have no parallel market and speculators driving the Dollar rate. The president's insistence in leaving the rate of the Naira as it were has paid off. If the Naira was devalued, the rate of the Naira in the parallel market would have gone up. The current policy of allowing the growing strength of the economy to dictate its rate is the right way to go. However, the president should take a second look on our forex policy as it relates to import, foreign education and medical treatment abroad.
It is self-evident that the poor performance of the electricity/power sector has been a significant barrier to private investment in the country, the overall development and economic growth. Nigerian has one of the most problematic electricity sectors in the world, with an estimated installed electricity generation capacity of 8,644 MW, and available capacity of only approximately 3,718 MW, to cater for the needs of a population of over160 million.
PMB has indicated that his administration will continue the power reform process of the President Jonathan’s administration. Though a laudable program by the previous administration, actions were taken that seemed to undermine the reform process – alleged bias in the granting of distribution licenses, capacity shortages and, generally letting the bottom fall out of the quality of power generation and distribution.
On the issue of capacity shortages, the president said that, “in the three years for this administration we have given ourselves the target of ten thousand megawatts distributable power. In 2016 alone, we intend to add two thousand megawatts to the national grid.” He also said the government would fast-track the completion of pipelines from Gas points to power stations and provide more security to protect gas and oil pipelines.
It is not enough to question the president's economic policies but to proffer answer to such question. I cannot but end this article with President Barak Obama's “closing argument” TV ad, Obama called for a “new economic patriotism” that creates economic opportunity, protects the advances of the New Deal and Great Society, and asks the most fortunate in our society to contribute their fair share.
***Felix Ayanruoh, an Energy Expert/Regulatory Consultant and Managing Partner of a US and Abuja based Law Firm – Ruskat Partners.