Since he assumed office in May 29, 2015, President Muhammadu Buhari has embarked on quite a number of economic reforms which have yielded turnaround results in several sectors of the economy. In this report, ANTHONY AWUNOR, CHIKA IZUORA, ZAKA KHALIQ, JIDE FABAMISE, YUSUF BABALOLA and OLUSHOLA BELLO highlight salient economic developments, impacts and challenges within the four-year period.
Expectedly, Nigerians had very high hopes when President Buhari assumed office four years ago, especially in the areas of economic reforms which in turn are capable of raising the standard of living. Forty eight months down the line, the president has not disappointed the masses as his government has made some giant strides noticeable in various aspects of the economy.
Naira and Financial Industry Stability
President Muhammadu Buhari on assumption of office had inherited an economy that despite coming out of an oil boom, was headed towards a recession according to analysts. Although it did not seem as such at the beginning, the crash in the oil price saw the value of the naira crash from N160 to close to N500 to the dollar on the streets by early 2017. This prompted the Central Bank of Nigeria (CBN) to take several measures to stabilise the currency.
The most successful of the policies to stabilise the foreign exchange and narrow the gap between official and parallel market rates was the Nigeria Autonomous Foreign Exchange market also known as the Investors and Exporters (I&E) window. The window had increased the supply of dollars alongside the regular interventions of the CBN to the country making the naira to gain stability.
The stability of the naira had impacted the rate at which prices of goods and services rise and inflation had dropped from around 18 per cent to 11 per cent. Currently the value of the naira is at N360 to the dollar, a lower value compared to N180 which it was but better than the N400 which it was in early 2017.
Nigeria’s economy has recorded continued progress since it emerged from recession in 2017. Current result shows a Real GDP growth of 2.05 per cent. Non-oil GDP growth was driven by Quarrying and Other Minerals, followed by Telecommunications, Agriculture, Manufacturing, and Construction.
Also during in the last four years, the economy had been revived following polices of the CBN which removed foreign exchange privileges for products that could be produced in the country. The policy had seen the production of rice as well as some other food products rise in the country as various intervention funds had increased funding to the agric sector as well as its value chain. These had seen increased employment opportunities in the sector.
Growth Policy Couched In Cost Recovery In Energy Sector
Nigerians, specifically applauded the government on recent reforms at the Nigerian National Petroleum Corporation (NNPC). While refineries are suddenly coming back to life after years of idleness. With installation Dr. Ibe Kachikwu to spearhead reforms as the new group managing director, NNPC began to exhibit true characteristics of transparency and probity in the government business especially in award of the annual crude oil contracts such as evacuation of Nigeria’s crude oil equity from the various crude and condensate production arrangements.
The corporation hinted during the process of restructuring that it had commenced recovery over $7billion (N1.4trillionn) in over-deducted tax benefits from joint venture partners on major capital projects.
NNPC also engaged an international accounting firm to ascertain the exact amount due to government on the Strategic Alliance Contracts entered by Nigerian Petroleum Development Company (NPDC). To guarantee the security of the oil and gas assets, President Muhammadu Buhari launched a $10 billion infrastructure development fund for the oil-rich but restive region.
The $10 billion infrastructural rebirth investment programmes in the Niger Delta region further helped to manage the restiveness in the region. The impact of the investments in Nigeria’s oil and gas sector, which took a downturn in the recent past picked up following the conclusion of a review of the country’s Joint Venture Cash Call (JV) framework.
Government also reviewed the mechanism of securing oil and gas installations in the country to conform with standard practices as obtained in other oil and gas producing climes and government projected a rise in the country’s oil production to 2.2 million barrels per day (mbpd) and 3mbpd, based on the fact that the JV structure had been reviewed and funding issues sorted out.
The federal government came up with the ‘7 Big Wins’ initiative to reposition the oil and gas industry, attract global investors, create transparency and efficiency in the NNPC, as well as robust engagement with the Niger Delta.
Improvements In Investors’ Confidence
The Nigerian stocks market in the last four years has had its ups and downs as market experienced volatility. Yearly performance of the market showed that in 2015, the market lost 17 per cent, in 2016, it lost six per cent. However, it recovered in 2017 with 42 per cent growth to become the third best performing market, while in 2018, the NSE-ASI down by 17.81 per cent.
Meanwhile, the NSE rose by N2.06 trillion within the four years of the Muhammadu Buhari-led federal government as a result of the latest listing of MTN Nigeria Plc on the Nigerian Stock Exchange (NSE). NSE data showed that the market capitalisation grew by N2.06 trillion from N11.658 trillion on May 28, 2015 to close at N13.718 trillion on May 22, 2019.
Also, the NSE All-Share Index also rose by 7.76 per cent 31,145.15 basis points on May 22, 2019 from 28,902.25 basis points.
A senior stockbroker with Calyxt Securities Limited, Mr. Tunde Oyediran said that stock market under Buhari has been a mixed performance. He noted that the day Buhari won the election in 2015, the market had its biggest gain but after the market went down because it did not witness the expectation expected from the government.
He noted the drop in crude oil price to as low as $30 per barrel and the exchange rate affected the market negatively. Oyediran however said that the intervention of the Central Bank of Nigeria (CBN) with the introduction of FX Window in April 2017 impacted on the market, signalling rising investor confidence in Nigeria, saying that this impacted positively on the market in 2017 and first quarter, 2018.
He added that the market reversed its positive movement from second quarter 2018 due to political risks, oil price volatility and rising global yields resulted in bearish sentiments, and stressing that Buhari four year administration on capital market was mixed.
He also added that the first tenure of Buhari brought in the listing of MTN Nigeria on the floor of the NSE, which is a good development to the market.
Quest For Robust Legal Framework For Insurance Sector
Activities in the Nigerian insurance industry has been on the upward scale since 2015 when this present administration came to office. The Consolidated Insurance Bill was sent to the national assembly and it was yet to be enacted into law.
The Chairman, Nigerian Insurers Association (NIA), Mr. Tope Smart, tasked President Muhammadu Buhari on the need to pass the Consolidated Insurance Bill into law, saying the passage of Consolidated Insurance Bill would enhance insurance service delivery, increase insurance penetration and enforcement in the country.
He said “Apart from the industry’s capacity to improve its contributions to the Gross Domestic Product (GDP) and employment creation, the bill could also provide short and long term funds for government for infrastructure development, instead of resorting to external borrowing,” he said.
Despite the fact that Pension Reforms Act (PRA) 2014 mandates employers to buy group life insurance cover for their employees, 35 states of the federation are yet to procure group life insurance cover for about 2.5 million civil servants, as at 31st of March, 2019. This, however, leaves Kaduna State and the Federal Capital Territory (FCT) as the only two states with life insurance coverage for their workers.
Market observers said non-adherence by these state governments is exposing the families of over 2.5 million workers to imminent danger should anything happens to workers in the concerned states. They urged governments at both levels to pay great attention to insurance and pension entitlement of their workers, especially, as new government comes in on May 29.
Currently, the families of the deceased civil servants in the current year within the 35 states are left to their own fate, as they are not entitled to death benefit claims, meant to sustain the bereaved after the death of their loved ones.
On his part, the president, Nigerian Council of Registered Insurance Brokers (NCRIB), Mr. Shola Tinubu, said employers, of which government is one of, must take up the responsibility of insuring their workers as this may also motivate employees to be dedicated to work.
Acting director-general, the National Pension Commission (PenCom), Mrs. Aisha Dahir-Umar, had raised concerns over series of reports of non-remittance of monthly pension by some states and the inability of some state governments to join the new pension scheme, urging the states that are yet to join the CPS to speed up the process of domesticating the PRA 2014 in their respective State laws for easy transition to the new pension scheme.
She said, her commission was aware that some employers, which also includes, States, having withdrawn the employees’ contribution from their respective salaries, fail to remit such into their RSAs, thereby short-changing the concerned workers, warning the defaulting employers to desist from this act and begin to remit their workers’ pension as and when due.
Port Infrastructure As Major Hurdle In Maritime Sector
The president of the National Council of Managing Directors of Licenced Customs Agents, (NCMDLCA), Lucky Amiwero, has urged President Muhammadu Buhari to invest in port infrastructure in his second term in office.
Amiwero has identified low draught as reason why Nigeria has lost its hub status to neighboring countries especially Togo and Benin Republic. Amiwero said except there is a change in infrastructure rehabilitation, Nigeria will continue to lose cargoes to neighbouring countries which have deep seaports and better facilities.
He further stated that Nigerian ports cannot accommodate mega ships with 8000-20000 TEUs, arguing that this was against the trend in neighbouring ports. He said that the neighbouring ports have already positioned their ports as “Millennium Ports, Preferred, Transshipment or Load centre”, adding that most West African ports built their ports to accommodate Nigerian bound cargo knowing about the country’s poor infrastructure.
Amiwero identified the neighbouring ports which have either completed their deep sea projects or near completion as Cotonou, Lome, Ghana and Cameroun. He pointed out that while Nigerian ports draught is between eight and 13 metres which cannot accommodate mega ships, the least draught in other neighbouring ports is 15 metres.
He gave a breakdown of the draught of the neighbouring ports as Lome – 15.5m, Cotonou – 15m, Ghana 19 metres while Cameroun has 16m draught level. He added that the scenario is that most Nigeria bound goods by mega ships are transshipped from these countries with smaller vessels.
According to him, this was the only solution to the diversion of goods to neighboring ports. He said, “There is the need to re-claim our cargo from neighboring West African countries that is now hub for Nigeria cargos, by working out mechanism for a better developed regional HUB to consolidate on our destination of Nigerian cargo that has been siphoned by regional ports”, he told the President.
Sustenance Of Improved Safety Standards In Aviation Sector
In the period under review, Nigeria witnessed significant improvements in the areas of infrastructure development, safety, security and manpower development. For instance, the airport terminals of Nnamdi Azikiwe International Airport (NAIA), Abuja and the Port Harcourt International Airport terminal was commissioned by President Muhammadu Buhari in 2018. Abuja airport terminal project was realised.
In addition, the NCAA had on September 16, 2017 and September 18th, 2017 certified the FAAN as the certified aerodrome operator for the provision of required airport services, facilities, systems and equipment at Murtala Mohammed Airport, Lagos and Nnamdi Azikiwe International Airport, Abuja respectively.
Regional devolution and route network connectivity between Nigeria and other countries led to a boost in air travel under Buhari regime. Key stakeholders and experts in the nation’s aviation industry have, however, rated the Nigeria Civil Aviation Authority (NCAA) high for attaining a high level of safety and for their oversight functions, not only in 2018 but for a reasonable period of time.
Speaking on NCAA and regulations, renowned aircraft engineer and former National President of Nigerian Association of Aircraft Pilots and Engineers (NAAPE), Engr Isaac Balami said that, truly, Nigeria’s airspace has remained safe. He pointed out that, safety has been attained to a reasonable level in Nigeria aviation industry, adding that no airline in the country is unsafe due to the strict regulatory oversight functions of the Nigerian Civil Aviation Authority (NCAA) which is on top of its duties.
Speaking further, Engr Balami disclosed to LEADERSHIP Sunday, that NCAA as a regulatory agency has reached a level, whereby Nigerians are envied by sister nations due to how far Nigeria has gone in regulations. “We are now being recognised by the International Civil Aviation Organization ICAO and Europe; even the FAA of America”, he stated”.
For the first time in Nigeria, apex global aviation body, the International Civil Aviation Organisation (ICAO) in collaboration with the Federal Airports Authority of Nigeria (FAAN) opened the Aviation Security Training Centre (ASTC) at the Murtala Muhammed International Airport in Lagos. With the school, prospective aviation security officers and those currently in full employment in the aviation industry can now have better training in the country.
Backward Integration Policy for Manufacturers
In the manufacturing sector, President Buhari’s administration has done everything in its capacity to restructure the economy especially in the manufacturing sector. The government was able to revive Backward Integration policy for easy access of raw materials locally and in a way to boost production.
Backward integration which encompasses local sourcing of raw materials as import substitution policy was a deliberate strategic government policy aimed at conserving foreign exchange, boosting local capacity, creating jobs, enhancing skill acquisition and ensuring that less emphasis is placed on imported raw materials.
Companies like Nigerian Breweries, Nestle Nigeria, Dangote Group, Coca Cola, Unilever, Cadbury and others which embraced that policy fared well within the period under review. Aside making use of what is available; most of these companies are breaking new grounds by expanding their coasts into backward integration and ensuring that those involved in the value chain are taken care of.
As an indication for improved business activities, local manufacture of cement installed capacity increased from two million to 32 million metric tons since backward integration began in the sector.
Procurement director, Large Africa Plc, Lolu Alade-Akinyemi noted that increased local capacity in the manufacture of cement has so far attracted $6 billion in investment. Within the period under review, there was also a renewed quest to ensure patronage of locally made goods so as to boost production of local manufacturers. This in turn created jobs for a large number of young people and also moved the country away from an import-based to an export-based country.
In assessing the four years Buhari’s administration, the Director General, Lagos Chamber of Commerce and Industry, Mr. Muda Yusuf, while speaking with LEADERSHIP in Lagos, disclosed that power generation has improved which in the long run rubbing off positively on manufacturing.
“In fairness to this present administration, we were able to come out better from recession and the country is back on track. With the apex bank monetary policy on Backward Integration, most industries now have access to raw materials”, he said.
Also former National president, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Iyalode Alaba Lawson said the nation’s economy is experiencing growth in assessing the present Administration.
“The exit from recession and consequent economic recovery has been largely attributed to the upsurge in global crude oil prices which currently stands at a 4-year high of around $70”, she added.
Director General of the Nigerian Employers Consultative Association (NECA), Mr. Timothy Olawale, said that Buhari has continued implications for policy continuity, improvement on the Ease of Doing Business, federal government intervention funding of the private sector through the Central Bank of Nigeria (CBN), adding that it is also a boost for FDI in the country.
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