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The Economist predicts poorer economy in Buhari’s 2nd term

June 6, 2019

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Zainab Ahmed, Minister of Finance, Nigeria

London-based authoritative magazine, The Economist, has cautioned Nigerians to prepare for tough times under the second term of President Muhammadu Buhari.The magazine warned that while Nigerians were made poorer in Buhari’s first term, the situation could become even worse in the President’s second coming.

The Nigerian economy was “stuck like a stranded truck” in the first term of Buhari (May 29, 2015 to May 29, 2019), the magazine remarked and warned that average incomes would not rise in the next 6 years.

In a report entitled “Baba go-slow, Nigerians got poorer in Buhari’s first term,” the Economist said based on predictions by the International Monetary Fund (IMF), the average income of Nigerians “will not rise for at least another six years,”.

In the report posted on its website, the magazine cautioned that the Buhari administration needed to solve a revenue crisis in their second term or face economic meltdown.

“Long lines of lorries stretch like tentacles from Apapa port, the largest in Nigeria. Drivers doze in their cabs, feet flung over dashboards; some sling hammocks beneath the chassis. Musa Ibrahim, an ebullient trader, says he has been queuing for two days. He gestures at empty buildings. “Most of the companies you see here they done close,” he sighs.

“The Nigerian economy is stuck like a stranded truck. Average incomes have been falling for four years; the IMF thinks they will not rise for at least another six. The latest figures put unemployment at 23%, after growing for 15 consecutive quarters. Inflation is 11%. Some 94m people live on less than $1.90 a day, more than in any other country, and the number is swelling. By 2030 a quarter of very poor people will be Nigerian, predicts the World Data Lab, which counts such things,” the report noted.

According to the magazine, the naira was overvalued because the government had spent decades neglecting basic public goods such as roads, schools and electricity. “Where urgency is needed, Mr. Buhari offers only caution. Few are holding their breath for any more drive in his second term, which began on May 29th. Yet officials are postponing a crisis, not averting one. Consider borrowing. The debt-to-GDP ratio is 28 per cent, but Nigeria collects so little in tax that interest payments swallow about 60 per cent of federal revenues,” the report added.

Apparently supporting removal of fuel subsidy, the Economist said public finances would be healthier if the government raised the price of fuel, which is imported by the Nigeria National Petroleum Corporation (NNPC) and sold on at a loss. The Economist said last year, subsidy was worth at least 0.5 per cent of GDP, noting that this was almost what the government spent on health care.

“Politicians are scared to end the subsidy. An attempt to do so in 2012 led to massive protests. Although the government has expanded the school-feeding programme and is working on a safety net for the poor, most citizens get few benefits from the state,” it added. For Nigeria to prosper, the report said the government should harness the potential of its 200 million citizens. The magazine said currently, the citizens were ignored except when politicians needed votes.

The Buhari administration has yet to react to the report, but the Peoples Democratic Party along with some other opposition parties has praised the report as a vivid account of the state of the economy under the Buhari government.

The PDP warned that the second tenure of Buhari would be disastrous for the country. PDP National Chairman, Prince Uche Secondus, said the report confirmed what Nigerians knew and had been passing through. “We all know the millions of people whose jobs had been lost; we also know that retirees are not paid while workers are praying daily to get paid for jobs they have done. We do not need any prophet to tell us that the last four years had been traumatic for Nigerians. But the sad thing is that, there is nothing on the ground to show that the next four years under the President will not be worse. It will be disastrous, especially when nothing is being done to secure the country and its people,” Secondus remarked.

Also, the African Democratic Congress (ADC) and the Social Democratic Party (SDP) agreed with the PDP that the report by The Economist only confirmed the position of opposition members that the present administration had no clue on how to manage the nation’s economy. ADC National Publicity Secretary, Yemi Kolapo; and her counterpart in the SDP, Alfa Mohammed, said in separate statements that the aspirations of Nigerians would not be met under the leadership of the President.

Kolapo claimed Buhari came to power unprepared. She said, “It should not really take The Economist of this world to tell Nigerians that the economy was so poorly handled under the All Progressives Congress government. The sad reality is that those who should know in the APC government have chosen to politicize everything at the expense of Nigeria and Nigerians. Look at all the economic indices there are to watch, they are all sloping downwards. This government came into power unprepared.”

“Nigerians made their choice by voting against President Buhari and the APC, but they have chosen to continue to inflict pain on the poor masses by sitting tight fraudulently. God will surely deliver His children.”

Mohammed, on his part, agreed with Kolapo that The Economist stated the obvious, saying there was no way there would not be poverty in a country where there was insecurity and government policies were not favorable to investors.

“The Economist is only stating the obvious. Every Nigerian knows that in the last four years, Nigerians have continued to be poorer. It is obvious for everybody to see. The genesis of the poverty the magazine talked about is known to all of us. Where there is insecurity and the people cannot carry out their business freely, there will be poverty. Where big businessmen who have the capacity to create jobs and employ people are being humiliated by the EFCC, there will be poverty. When you don’t create enabling environment for investment, there will be poverty.

“People now take their money outside Nigeria to invest, therefore, making those who are unemployed here to remain unemployed while providing jobs abroad. We in the opposition have been saying it that the policies of this government have been killing investors.”

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