Could the decision of the administration of President Muhammadu Buhari to come clean on the decline in the country’s economy, jeopardise the 2016/2017 budget or does it simply herald a new dawn of transparency in governance, TORDUE SALEM queries
ore than a month ago, the minister of Finance, Ms. Kemi Adeosun, took the world by storm when she announced that the country was in “a recession”.
She made the statement during a session with parliamentary journalists after a long session with senators on the decline in the economy and the measures President Buhari’s government was taking to curtail the slide.
That would be the first time in Nigeria since 1951, that a minister or any official of government would admit a decline, talk more of a recession in the country’s economy. In the past, it appeared opacity was a sacred rule.
For five years (2010-2015), federal budgets ran a deficit of over a trillion naira in each of those years. The economy was in a danger zone as well. A House of Representatives panel found in 2014 that over 30 key revenue-generating agencies were not remitting to the Federation Account.
But as it is habituated with orthodox economic managers, the then minister of Finance, Dr. Ngozi Okonjo-Iweala denied that the country was in decline.
The minister of Transport, Rotimi Amaechi even had cause recently to state in an interview that Ngozi Okonjo-Iweala begged him in 2014 not to drum the fact that the economy was in decline. More like the case of accountants cooking the books.
On every occasion, the then ‘coordinator of the economy’, said instead of a decline, the indices were positive and there was no cause for panic. Because a recess does not come overnight, the decline and our near-depression economy, could have taken roots from the past when things started going wrong with our accounting system.
The decision of PMB’s government to embrace transparency as a foundation for running the economy, has been applauded across sectors by pundits, while others used to the embellishments of the past, have questioned the brutality with which the announcement of a decline was made.
Miffed by the president’s attitude to the economy, the leading opposition party, Peoples Democratic Party (PDP) called on the president to resign.
But in a statement titled: “Beyond PDP’s comments on the economy”, the ruling APC described the PDP’s call as insensitive.
The governing party instead, asked the president to ignore the PDP and stay focused on reviving the economy.
“In reacting to the orchestrated and insensitive comments by the Peoples Democratic Party (PDP) on the economy, the All Progressives Congress (APC), urges the President Muhammadu Buhari-led administration to remain focused in its bold bid to restore economic growth in the country”.
A statement issued by its national secretary, Mai Mala Buni, stated that “In spite of the PDP’s orchestrated and feeble attempts to blackmail the current administration and twist facts, the reality remains that the prevailing socio-economic hardship being faced by Nigerians is a direct consequence of the mismanagement of the economy and unprecedented looting of the country’s commonwealth perpetrated under its watch. The PDP’s attempt to turn truth on its head is fraudulent, insensitive and an insult to Nigerians. For the umpteenth time, the PDP must own up to its transgressions and apologise to Nigerians”.
According to the APC, “Going forward, the urgent task before the President Muhammadu Buhari-led APC administration is to restore the country’s battered economy back to health and all legitimate and innovative means are being employed to achieve this in the quickest possible time”.
The party assured Nigerians of the strong political will and commitment of the President Buhari administration to revive the economy and tackle the nation’s current challenges through suitable and well-thought out economic policies, fiscal discipline and socio-political reforms.
The party listed that among other strategic economic agenda, “diversification of the country’s economy is a priority for the administration”.
It said “To this end, President Buhari is aggressively formulating and implementing policies aimed at diversifying Nigeria’s economy from oil to other sectors such as agriculture, mining and manufacturing.”
“The APC assures Nigerians that the administration will pull the country out of the present hardships. With the support, cooperation, patience and prayers of Nigerians, the country will reach its deserved potential under our leadership.”
To address the biting hardship of the majority of Nigerians, the president, through the office of the vice president, Prof. Yemi Osinbajo, is seeking for emergency powers to halt the decline in the economy.
The VP, Prof. Osinbajo has said that though the economic team was thinking of tinkering with some laws on the economy, those measures were yet to be passed to the Federal Executive Council and the National Assembly.
“The economic management team has indeed been considering several policy options and measures to urgently reform and revitalise the economy. Some of these measures may well require legislative amendments and presidential orders that will enable the executive arm of government move quickly in implementing the economic reform plans.”
“As far as I know, this has not been passed on to the president, the Federal Executive Council or the legislative arm of government. So, at this point, there are no further details to share”, he said.
A few weeks ago, some senators however disagreed with the quest for emergency powers. A group of senators who spoke on condition of anonymity rejected the proposed bill, saying Buhari was seeking to transform himself into a tyrant and would foist a dictatorship on the nation.
The bill entitled, “Emergency Economy Stabilisation Bill 2016”, will be sent to the national assembly by the president upon resumption from its vacation next month.
The quest for emergency powers by the executive is the initiative of the economic team headed by Vice-President Yemi Osinbajo, which has been saddled with the responsibility of reviewing various policies in the country and their effects on the economy.
The economic team took a look at state of the economy and resolved to make a headway, certain laws had to be rejigged or circumvented temporarily.
The fear of the government is that in the event the recession persists, a rebound might be extremely difficult.
Among others, the bill also seeks to empower Buhari to abridge the procurement process with a view to guaranteeing stimulus spending on critical sectors of the economy; make orders to favour local contractors/suppliers in contract awards; abridge the process of sale or lease of government assets to generate revenue; and allow approval of budgetary allocations to projects that are urgent, without a recourse to the national assembly.
It also seeks to amend laws such as the Universal Basic Education Commission (UBEC) Act, so that states that cannot access their cash trapped in the commission’s accounts as a result of their inability to meet the counterpart funding can do so.
But the wider senate headed by Saraki, is likely to toe a more nationalistic and patriotic line, going by the voting or legislative trajectory of the 8th Assembly since June 2015.
In line with its principles on the economy, the senate, before its closure for recess in July, endorsed the Central Bank of Nigeria’s measures to boost productivity, create employment and grow the economy.
The senate leadership gave its backing to the federal government on the economy, through a statement issued after an executive session with the governor of the CBN, Mr. Godwin Emefiele on Tuesday by its majority Leader, Mohammed Ali Ndume on behalf of the entire leadership of the upper chamber.
Though the Red Chamber in its statement on the economy, acknowledged a decline, they agreed with the apex bank on measures adopted to put it back on the growth lane.
The statement from Ndume reads in part, “The senate also acknowledged the pains that many people may be facing at this time, especially in light of increases in price of electricity and fuel. But having carefully considered the policies of the CBN, the senate would like to commend and support these policies because they are mostly geared towards increasing local production, creating jobs here in Nigeria, safeguarding our commonwealth, and expanding economic opportunities and growth in Nigeria”.
The senate leaders, through the statement, revealed that the CBN helmsman briefed the chamber on the reasons for a flexible exchange rate and the apex bank’s sanitisation of the banking system.
“The governor’s presentation also gave us an insight into the bank’s decisions in the Foreign Exchange Market, and the rationale underlying the recent re-introduction of a Flexible Exchange Rate Mechanism in Nigeria “, he stated.
According to him, the CBN governor “drew linkages of these occurrences with the Nigerian economy, especially with respect to the over 70 percent decline in oil prices from about $116 per barrel in June 2014 to about $30 per barrel in June 2014, and also to about $30 per barrel earlier in the year”.
The senate “also acknowledged the pains that many people may be facing at this time, especially in light of increases in price of electricity and fuels. But having carefully considered the policies of the CBN, the Senate would like to commend and support these policies because they are mostly geared towards increasing local production, creating jobs here in Nigeria, safeguarding our commonwealth, and expanding economic opportunities and growth in Nigeria”.
The senate advised that “it is critical that we all put hands together to seek long term solutions to our underlying problem of diversification of foreign exchange earnings and revenues, rather than pointing fingers or apportioning blames”.
According to the statement “The senate believes strongly in the resilience of the Nigerian economy and the ingenuity of the Nigerian people and as such, we are confident that we will all pull through these difficulties and come out as a much better, equitable and prosperous nation”.
However, the danger in the emphasis of government on the decline is that an excuse may be provided on why the 2016/2017 budgets may not be substantially implemented.
Another flip side is that, social safety nets like the N500billion earmarked for poor and unemployed Nigerians may not be implemented on account of government’s emphasis on inadequate funds to finance the laudable initiative. The emphasis on a receding economy will also scare certain Foreign Direct Investments (FDIs) into the country, even though some gains may have been recorded so far.
Key infrastructure in the power, oil, works and other key sectors must not be sacrificed on the basis of a recession. New thinking must provide other alternatives to the full implementation of the 2016/2017 budgets.