Tuesday, 31 May 2016

President Buhari’s One Year in office: Economic assessment and public opinions on national and states’ performances.

President Buhari immediately after taking
oath of office, 29th May 2015.
By Dr. Ahmed Adamu

The following article reviews the economic performance of President Buhari in his first year in office, but it first reports and analyses the outcome of a public survey I conducted to crowdsource public opinions on the one year performance of President Buhari and state governors.

The survey was conducted online and lasted for 48 hours. The participants in the survey came from across the 34 states in the country, even though some 24 of them withheld the name of their states. The outcome of the survey differ from states and regions. There were some discrepancies in national and states outcomes. Only Oyo, Ondo and Ebonyi states did not participate in the survey.

Starting with the aggregate outcome, 53% of the respondents are satisfied with the President Buhari’s one year in office, and most of them think his policies are not extremely effective, but just effective, and 18% of them think his policies are not effective. 43% of the respondents think his policies are inclusive, while 15% of them think they are not inclusive. 86% of the respondents still have hope for the future under President Buhari. There are more of the respondents who think their state governments performed poorly or could not decide yet.

Majority of the participants from 9 states out of 13 southern states are not satisfied with the administration of President Buhari in its first one year. However, majority of respondents from 10 states out of these (southern) states think that their state governments performed either excellently or good. However, 100% of respondents from Bayelsa state think that their state government performed poorly. Likewise, 55% of respondents from Delta state think their state government performed poorly, and 66% of respondents from Abia state either think that their state government performed poorly or are indecisive. Majority of respondents from 5 southern states are still not hopeful for the future under President Buhari, and some majority from 7 states in the south do not have confidence in the competence of political appointees under President Buhari’s first one year in office.

All the 19 northern states participated in the survey, and majority of the respondents from 16 of these states are extremely satisfied with the first one year of President Buhari in office.  However, 100% and 77% of participants from FCT and Jigawa state are moderately satisfied with the government of President Buhari in the first one year respectively. Furthermore, 43% of participants from Taraba state are not satisfied with President Buhari’s one year in office, and another 43% of the participants from the state are moderately satisfied.

In terms of states performances, majority of participants from 10 northern states think that their state governments performed poorly. The poor performing northern states from the responses of this survey include Bauchi, Benue, Borno, Jigawa, Katsina, Kwara, Plateua, Taraba, Yobe, and Zamfara. Specifically, 100% of respondents from Zamfara state think that their state government performed poorly.

Respondents from Adamawa, Kaduna, Kano, Kebbi, Kogi, Niger, and Sokoto think that their state governments did not perform excellently, but performed just well. There are more perceived poor performing states in the north than in the south in the first one year of the current administrations, but they are largely more hopeful for the future and they are confident in the competence of the political appointees.

There are few shocks in the above discoveries, and that is important in identifying areas of weaknesses and strengths. The survey was based on general performance devoid of specific sectors. 

Even though there have been social and print media reports scoring the performance of the current administration in various sectors, I think they are not without sentiments. There are sectors that require intensive and strategic planning and implementation before witnessing any progress. So, it is not fair to judge the current administration on some major development indicators considering the fact that, it has not implemented any of its blue prints and plans yet, as the first budget of this administration has just been approved. Similarly, considering the economic situation inherited by the current administration, it will take time and patience to fix some of the infrastructural deficits and economic downturn.

The porous Nigerian economy has already responded to the global economic slowdown and have already imported inflation and unemployment. Of course, the current administration was not responsible of making the economy porous. It is the effect of long term mismanagement of resources and reliance on one sector i.e. Petroleum Resources. And recovery from this resource curse will definitely be long and slow. It is going to be a slow growth. The pace of economic downturn is always faster than its recovery.

Looking specifically at the inflation index, when President Buhari came on power, the inflation rate was around 9%, and at the end of his first one year it rose to 13.7%. This could be the repercussion of the much helpless economy built over the years and its vulnerability to foreign currency exchange shocks. With the recent sharp depreciation of Naira resulting from rising importation, the cost of importation became higher, and this caused increase in general price levels. Similarly, payments for some contractual obligations in foreign currency especially for foreign capitals invested in the country have become more expensive (due to Naira depreciation), causing increase in the cost of goods and service provisions especially in power sector. And this significantly affected prices. So the inflation is explained by the resultant effect of a porous economy (Naira depreciation) built over a decade. So, the currency depreciation was not caused by effects of the current economic policies, it is the remanence of the long ineffective policies.  

In terms of Job opportunity, the current administration promised to create 3 million jobs in a year during their campaign, but the unemployment rate has increased by 4.6% within a year, with new unemployed people numbering around 1.5 million joining the labour market in just the first quarter of 2016. This is not surprising due to the delay in the implementation of the expansionary fiscal policy, which the Buhari’s administration has to be responsible for. Likewise, job creations by organised private sector has dropped due to increasing cost of production and delay of investment as a result of recent political transitions and uncertainty in the new economic policies. Similarly, the proposed fiscal policy that will convert unemployment cannot be fully implemented without the passage of the budget. These explained the negative economic growth in the first quarter of this year.

The Central Bank of Nigeria has already injected close to N2 trillion in to the economy, and some banking population already possess enough resources to create jobs. Even though, the effect of this cannot be visible immediately, as people make investment decision as when they deemed optimal. However, with the recent passage of the budget, the government spending will commence, which will immediately create jobs and put more money on the hands of common man, which will increase their purchasing powers. So, there is need for at least a year to generate more jobs and distribute money through government expenditure within the framework of the first budget of this administration.

Within one year of President Buhari, the foreign reserve has declined by $5 billion, which can easily be explained by steep reduction in the crude oil prices and reduction in production of the crude oil due to vandalism. In addition, the rising importation and slow global economic growth has resulted to more utilisation of the reserve to offset local and international liabilities in foreign currency. So, any inability that reduction in the reserve may cause was apparently not as a result of the recent economic policy, but external factors.

In terms of electricity generation, it is evident that in just 2016, the average power supply has declined by 30%, this was largely caused by the shortage of gas supply to power plants as a results of gas pipeline vandalism. It is significant to note that the highest ever electricity generated in the history of the country was 5,074MW, which was generated on 2nd February 2016. But period after this was characterised by some few inevitable system collapses and pipeline vandalism, which lowered the generation to around 3,000MW daily at maximum.

It is apparent that some of the setbacks above are caused by some externalities and inherited weak economic systems, which the current administration must strive to address before building a new economy. So, this will require tough decisions and slow growth before the economy can pick up. This underpins the necessity to have more of economic advisers than luxury or political aids. The government must have the guts to tell the negative truths, and explain clearly and specifically the situations, and what the government plans to do to address them. Apology and keeping hopes alive cannot serve well, we have to be honest to ourselves and face our challenges together.

Some of the first year assessments of President Buhari are myopic and misguiding. For example, the Punch newspaper illustrated that, President Buhari performed poorly in electricity sector. This is not valid assessment due to above explanations under electricity generation. Even if this government will have to improve in electricity generation, it will take 2 to 3 years and huge amount of money to install new generation and transmission capacities, which the government cannot finance alone. Funds for power projects must be appropriated, and private investors must be wooed, which all cannot yield result in just a year.

It is apparent that, the economy is not so attractive, and giving excuses and blaming the past should not distracts the government. The government has done well in the area of tackling corruption, which made all other gained achievements possible, including security, financial prudence, efficiency of public institutions, patriotism etc. It requires an honest leader to fight corruption, which President Buhari is, so it is easy for him to fight corruption, and this is why he performed well in fighting corruption. 

Finally, it will take pains and patience to see the much needed positive change. Priorities must be set especially in energy and transportation, which is why there is need for separation of duties. No matter how much government want to minimise cost, it must share responsibilities to optimise quality outcome. It will be better to have separate ministries for power, housing, works, and youth. Similarly, the petroleum ministry require robust attention, as such it requires a substantive minister whose specific assignment will be the petroleum sector. 

Dr. Ahmed Adamu,
Petroleum Economist and Development Expert,
Pioneer Global Chairperson of Commonwealth  Youth Council,
University Lecturer (Economics), Umaru Musa Yar’adua University Katsina.

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