Cheta Nwanze, Lead Partner, SBM Intelligence

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Conspiracy of silence by Nigerian economic policy experts 15 Sep 2022

A recent analysis compared the economic performance of President Muhammadu Buhari with those of his predecessors since 1999. His performance was dismal, indeed the worst since the country returned to democracy 23 years ago.

During the current administration, the country has had significantly inferior results in reining in inflation, building foreign reserves, managing the exchange rate, fostering the sustainability of public debt, and achieving strong Gross Domestic Product (GDP) growth. The Buhari administration has an average inflation rate of 14.07% while the Presidents Obasanjo, Yar'Adua, and Jonathan administrations had average inflation rates of 12.19%, 13.18%, and 9.70%, respectively.

The real GDP growth rate has averaged 1.1% since 2015 under the Buhari administration, while the economic output growth averaged 7.7%, 7.1%, and 5.5% under the Obasanjo, Yar'Adua, and Jonathan administrations, respectively.

Under the Buhari administration, Nigeria’s external reserves, less external debts, is at a deficit of $0.82 billion. The metric during the Presidencies of Obasanjo, Yar'Adua, and Jonathan was positive, at $40.17 billion, $22.34 billion, and $13.57 billion, respectively. The Buhari administration, in the last nine months of its tenure, has $40 billion in external debt, and the Obasanjo, Yar'Adua, and Jonathan administrations ended up with external debt levels of $3 billion, $10 billion, and $15 billion, respectively. Buhari alone has been responsible for more debt than all other post-1999 presidencies put together.

Nigeria uses the Excess Crude Account (ECA) to save oil revenues over and above the budgetary benchmark price for the commodity (with the assumption that the country will meet the budgetary benchmark for production volume). At some point in 2012, Nigeria had $11.5 billion in the ECA. However, in July 2022, the balance in the ECA stood at $375,000.00. Nigeria also has a N3.1 trillion fiscal deficit. Suffices it to say that inflation and unemployment rates are at alarming, new highs.

These results show a clear pattern of the familiar economic incompetence of the current administration. The economic data coming out of the country show that the Buhari administration has really done a number on the well-being of Nigerians and as the 2023 general election approaches, Nigerians have to figure out how to elect a President who is a lot more focused on how to improve productivity and wealth-creation rather than one who prioritises borrowing and spending on vanity projects or unproductive consumption.

The source of the report was equally striking. Although he has tried to distance himself from it, multiple newspapers credited the analysis to Bismarck Rewane, a member of President Buhari's Economic Advisory Council and one of Nigeria's foremost economic commentators. Mr. Rewane, like most other Nigerian accomplished and illustrious economists, had been rather quiet as the economy tanked under the spectacularly lethal handling by President Buhari.

One is tempted to say, "better late than never", but the saying that seems more appropriate is the one from the author David Steindl-Rast, which says, "The challenge is to learn to respond immediately to whatever it is time for. Not to wonder whether you have time for it or whether you like it, but simply to respond when it is time."

The job of an official advisory council is to offer advice and feedback in a timely manner to prevent disaster and maximise progress. Much of the advice would have been presumably provided to the officialdom. But finding the avenue to hint to the public is not out of place. But it is definitely rather late now, when Rewane and others decided to speak up publicly. The Nigeria Employers' Consultative Association (NECA), the umbrella organisation of employers in the Organised Private Sector, is also caught in this conundrum of offering warnings after the damage had been done. It is pointless locking the doors of stables after the horses have long bolted, the stallions have gone long enough to find mares, copulate, and have colts.

From what is known of him, President Buhari would most likely have chosen the same disastrous economic policies that produced the disastrous outcomes even if the Economic Advisory Council and other respected voices had spoken up earlier. The damage was done when Nigerians chose a man who adored the notion of statism and had a legendary aversion to the views of experts. He never really tried to hide his views. What happened back in 2014 and 2015 was that a decisive majority of the voters projected our fantasies on him. However, after making such a disastrous choice, the moral burden was to at least speak up.

At the 25th Nigerian Economic Summit on 7 October 2019, Buhari said: "Today, many mistake prosperity with wealth. They are not necessarily the same. A significant proportion of Nigeria’s prosperity today is concentrated in the hands of a few people living primarily in 4 or 5 states and the FCT. Some of the most prosperous Nigerians are here in this room. Our economic policies in the last four years focused on the need to uplift the poor and the disadvantaged and encourage inclusivity."

Of all the speakers in the hall that day, only Doyin Salami, who, interestingly, chairs the PAC today, pushed back against the President’s avowed economic policy direction. The others clapped. I was spooked enough to tweet about it. The President’s statement was clear, showing that he has been focused on a welfarism that the State had no capacity to event practically articulate in coherent policy and finance. It was all a fanciful leftist idea of central economic planning.

This is a consumption-driven mindset that does not adequately consider production and wealth creation. Combined with the petrol subsidy and exchange rate protection, it is very easy to see how Nigeria fell into the hole it is currently in.

During his speech at the Summit, Buhari also said "Nigeria’s unique challenges can only be solved by made-in-Nigeria solutions." Nigerian politicians are not referring to the research Nigerian scientists and academics when talking about indigenous solutions. Not at all. The politicians are essentially hinting at their whims and caprices will replace expert policymaking and disciplined implementation of the policies. Days after Buhari gave this speech, the Federal Government announced a total closure of the country’s land borders, effectively banning the legitimate and illegitimate movement of goods in and out of the country.

In one of the next weekly advisory notes by SBM Intelligence (where I work), we warned of the effects that the border closure would have on export-dependent Nigerian businesses. The policy directive meant that Nigerian companies and traders would be unable to export their products to other African countries by land. The action also had international political repercussions because it went against the ECOWAS protocol on the free movement of people, goods, and services, and was unhelpful to the drive by ECOWAS and the African Union (AU) to successfully implement the African Continental Free Trade Area (AfCFTA) policy that is intended to bring about the free flow of goods, services, and people across Africa. The AfCFTA initiative that should have had Nigeria as its champion instead had the country under Buhari becoming an impediment to its success.

The border closure was done to force the country into becoming “self-sufficient” in the production of rice. But with the national demand for rice at roughly 7.3 MMT while the national supply level was 4.8MMT, a predictable outcome of the border closure was a steep price increase for rice, which only served to make people spend a higher percentage of their income on food and become poorer.

The conspiracy of silence of the Nigerian economics intellectual was troubling. Without their informed voices, we watched presidential spokespeople claim that the increase in food supply from the land borders was partly responsible for the rise in food price inflation and they did not get the disgrace their ignorance or mischief deserved from those who know better.

When senior, independent policy-people voluntarily lose their voices, the country will derail. Attempts to speak up after the damage has been done do too little to serve the best interest of the country.

Cheta Nwanze is Lead Partner at SBM Intelligence.