As President Muhammadu Buhari marks five years in office, an economic report has urged him to focus more on human capital reform, diversification of the economy, and opening the government.
The report, published by Centre for Democracy and Development (CDD), examined the economic policies of the Buhari-led administration since it flagged off in 2015.
The report, titled ‘A review of the Nigerian economy in the last five years (2015-2019)’ argued that focusing on reforms in the human capital sectors is key to achieving growth in other sectors, especially economic development, as the quality of the labour force influences the productivity of both private and public sectors.
Nigeria would do better if governance is open, CDD said in the report, by leveraging on new digital technologies in formulating programme strategies as well as during implementation.
It cited examples like the use of application programming interfaces (API) for government databases in order to improve access to information as well as peer learning in e-governance as used in East African Rwanda.
“This will not only improve accountability and transparency,” the report launched in May wrote, “but will also ensure that citizens participate in the process, and as such bring about more efficient and equitable outcomes.”
The report also said the nation’s infrastructural gaps, particularly transportation and electricity, need to be closed. This, it said would reduce the cost of doing business and keep small and medium scale businesses afloat.
While it said that funds for the projects could be drawn from other countries, it urged the government to ensure that the projects are “bankable with clear and agreed-upon means of obtaining the returns on investment.”
This is largely because a quarter of the federal government’s revenue is used to service loans, with national debt toll at about is ₦26.2 trillion. This is even as $22.7 billion and $5.513 billion loans await legislative approval.
This aside, the report noted that there is a need to address “regulatory and structural issues such as bureaucratic bottlenecks, corruption, and lack of enforcement of laws/contract.”
It called for legislative reforms as well as a more business-friendly attitude for both local and foreign investments to thrive.
It also said the CBN’s quasi-fiscal role should be reduced while also improving information on credit facilities such as the Anchor Borrowers’ Programme. This it said would ensure fiscal transparency and correct the attitudes of beneficiaries of credit facilities who see credits as grants.
Buhari’s economic footprints
In 2015, Mr Buhari inherited an economy experiencing a declining growth rate of the GDP. This, coupled with the age-long dependence on crude oil export as a major source of government revenue and foreign exchange earnings as well as weak policy response from the new government, contributed significantly to the 2016 economic recession.
Oil-revenue which dropped by 22 per cent in 2015 affected funding of federal and state governments’ budgets. This was even affected more by the increase in oil-facilities vandalism in the Niger Delta, the nation’s oil-rich region.
The resultant effect of this was the fiscal struggle by states. About 27 state governments could not cover their personnel expenses as their lower Internally Generated Revenue (IGR) could not compensate for the declining FAAC allocations, CDD wrote in its report.
This was not helped by the six months delay in constituting the federal cabinet, thereby affecting capital releases and creating an atmosphere of uncertainty “that slowed down private sector investment decisions, and increased outflow of foreign investments.”
The fiscal crisis in the states compelled the federal government to approve bail-out loans of $2.1 billion for states to offset a backlog of unpaid workers’ salaries.
The country’s economy, however, survived the recession in 2017 after an annual growth of 0.8 per cent. But economic growth since then has remained sluggish, leaving the economy with lower per-capita income, high poverty and unemployment rates.
About four in every ten Nigerians are poor, data from the nation’s statistics bureau show. While 23 per cent of Nigerians are underemployed, 20 per cent as unemployed as of the third quarter of 2018, according to the bureau.
The government, in 2016, launched the National Social Investment Programme (N-SIP), a four-pronged programme, viz: the Conditional Cash Transfer, which was aimed at capturing poor and vulnerable Nigerians in the social safety; the Home Grown School Feeding Programmenet, a cost-effective feeding of public primary school students; N-Power, which gives jobs and skills to young Nigerians; and the Enterprise and Empowerment Programme, a loan initiative for petty traders and MSMEs.
“These reforms have been far reaching considering that there are about 1.64 million households in the national register,” CDD wrote, “and the number of beneficiaries of each programme are: Conditional Cash Transfer (394,430), Home Grown School Feeding Programme (9,817,568), N-Power (526,000), and Enterprise and Empowerment Programme (2,136,911).”
As federal earnings continue to shrink due to global oil glut, an effect partly triggered by the COVID-19 pandemic, finance minister Zainab Ahmed said the country’s economy will go into a recession at an average of -4.4 per cent in 2020.
“The economy is thus under the real threat of running from one economic recession to another in the life of the Buhari administration,” the report read.
As a way out, the not-for-profit CDD said the administration’s policies should expand the country’s revenue base and export earnings to non-oil activities, while also creating an enabling environment where domestic and foreign investors could thrive.
The report lauded the Buhari-administration for signing the Finance Act 2019. The act reduces the Companies Income Tax (CIT) and Value Added Tax (VAT) for small businesses (with a gross turnover of ₦25 million annually) and medium-sized businesses (with a gross turnover of between ₦25 million to ₦100 million annually) from 30 per cent to 20 per cent.