As the year 2015 comes to a close, it is appropriate to take a few moments and reflect on the outgoing year. So much has happened within the year that those who knew this country just a year ago may not quite recognize it. Everywhere you look there is plenty of change – for good and also for bad. First, the good news.
To me, the best thing that happened to us in 2015 was that we disappointed the world. Many political analysts and scenario-builders projected that the 2015 elections would bring Nigeria to its knees. They predicted that the struggle for power would exacerbate the national fault lines and cause an implosion. And the circumstances and environment were apposite. The two mega parties, PDP and APC, were billed for a major showdown. The APC’s well-oiled propaganda machinery almost swept the carpet from under the feet of PDP prematurely. In panic, PDP launched a most devastating vitriolic attack on the principal personae of APC, even if the impact was of doubtful efficacy. The stage was set for cataclysm. But the contrived six-week ‘half time’ declared by President Goodluck Ebele Jonathan (GEJ) gave the PDP a breather and eased off some tensions. Given the poor showing of INEC’s card readers at the polls eventually, one wonders what would have happened if INEC had conducted the elections six weeks earlier with less than 50 percent of voters only having the voter cards. Without being a prophet, it was certain that the confusion that would have arisen at that time would have produced a different ending for the 2015 national elections and Jega would not have bowed out with his head high. Yet, INEC was bluffing that it was ready to conduct elections in the public while acknowledging its unpreparedness in private.
Despite the overall poor performance of INEC, GEJ was conscious of two overriding issues. From the rebellion of some of the governors of PDP to form the ‘New PDP’ and from the sights and sound in the social media, he came to the painful conclusion that there was a strong demand for change. And this demand arose largely from an orchestrated feeling that he had not performed well. GEJ was stunned in interactions with critical stakeholder groups that outside his government and party, most of the great jobs he had done were either under-reported or misrepresented. Of course, the APC disinformation machinery did a great job! Secondly and critically, he had read all the ‘prophesies’ and predictions concerning Nigeria and 2015, and conscious of the fact that the North wanted the presidency at all costs, he decided to yield power to give credence to his famous quotation that “his ambition was not worth the blood of any Nigerian”. He had witnessed the 2011 massacre and knew that would be a child’s play if he tampered with what seemed a majority call for change. And he did it in a style uncommon in our history; called President Muhammadu Buhari (PMB) to concede defeat and to congratulate him even before the official collation of results had been completed. And since then he accepted his fate, retired to Otueke, Bayelsa State, refused to complain that he was rigged out as was the tradition of our politicians, refused to lodge any complaint to the Presidential Elections Petitions Tribunal and, despite all the efforts to rubbish him, he has remained calm and stayed above the fray! Exceptional good politics!
But if we had good politics or good political ending for 2015, our economics has been awful. First, as soon as the oil prices began to fall after reaching a peak of $112 per barrel in June 2014, we ran into a panic introducing half-baked austerity measures. Having chronically failed as a nation to prepare for life without oil, everything began to look downwards. Thus, in a few short months, our foreign reserves began to decline dangerously and our local currency depreciated precipitously. In May 2015, GEJ handed to PMB a faltering economy. The hopes that Nigerians had that PMB would hit the ground running and would wave a magic wand that would immediately turn the economy around fizzled out when PMB decided to take things very easy. It took him over five months to have a working cabinet, which earned him the nickname “Baba Go Slow”, and as the year closes, the ministers are still studying the files and getting acquainted with their assignments. In the interim, we made do with the adhoc policies introduced by the CBN to manage the declining foreign reserves, with focus on discouraging demand. The result of these measures has not been cheering. The naira has been on a freefall and by year-end was exchanging at close to N280 to the US dollar. The economy has contracted sharply and every segment of the economy seems to be in distress.
The oil industry which used to lay the golden egg that supplied Nigeria all its needs has become the most distraught. Virtually all the oil companies, both international and domestic, have seemly discontinued all investments in the industry. Many staff involved in well development and exploration have been sent home. The oil companies that used to be the toast of many contractors have now lost the attraction as they have become regular payment defaulters. Most of the oil service companies have not paid salaries for months and naturally have downsized or shut shop temporarily. The downstream oil sector is in apparent disarray as Nigeria faces one of the longest fuel scarcities in recent history. This Christmas I have been buying PMS at between N140 and N200 per litre in the South East and Dr Kachikwu says I will pay N87 or less in 2016. I must have faith.
The next most attractive business segment in Nigeria, the financial services sector, is facing one of its biggest crisis since Soludo forced them to consolidate. The Treasury Single Account (TSA) policy of the government which has improved inflow into the government treasury, helping to check leaks, has rendered the public sector departments of many banks virtually dormant as the policy has sterilized all public sector funds in the Central Bank. Thus, as at year-end, virtually every government expenditure from whatever ministry, department or agency is paid out from the CBN. There have been rumours of certain banks failing the stress tests. Many bank workers have been retired prematurely as both liquidity and profitability of the banks slide down dangerously.
At year-end, the manufacturing industry that had begun some recovery from 2010, achieving a peak contribution of 7 percent to Nigeria’s revalued GDP in 2013, was lying prostrate with negative GDP growth in the 3rd quarter of 2015. Manufacturing has been hit from several sides but mostly by the devaluation of the naira and the foreign exchange scarcity and control that have made establishing letters of credit for the import of raw materials and other industrial inputs a nightmare. The SME sector has not fared any better, also buffeted by the stringent exchange controls and the restriction of import of several items through ban on access to foreign exchange. The informal sector has been asphyxiated by the steady closure of all avenues of either sourcing foreign exchange from the banks or from domiciliary savings. Recently, the banks and CBN have taken oxygen away from parents and regular travellers who maintained their wards abroad and accessed their foreign exchange needs through use of credit and debit cards.
At year-end, Nigerian government authorities have returned Nigeria to a regime of stiff exchange controls, wiping out the liberalization that had occurred over the last 20 years or so. There are benefits that will accrue to this nation from this reversal, the most significant being that our foreign reserves will grow. The second is that Nigeria may be compelled to focus inwards for its needs and may force us to reduce our import dependency. In the long run, maybe, and that is if we can muster the staying power! But in the short run, our country is undergoing severe economic crisis. The naira is already on a freefall at the parallel market and if these measures are maintained, official devaluation will follow and gradually, the Nigerian currency will lose much of its value. This will stimulate inflation and unless local production is quickly ranched up, GDP will further decline and the misery index may worsen. If Nigeria could enforce its supply and demand contraction policies, then product shortages will increase, but given that we still have small capacity and capability to stop smuggling, the shortages may be ameliorated but at severe costs to the citizenry and to the economy. Unemployment and underemployment have worsened.
We are therefore ending the year with bad economics. How will 2016 play out in the face of all these, especially with the plan to run a deficit-driven budget of N6.08 trillion by the Federal Government? Let’s review next week. But believe me that I am praying and wishing Nigerians a happy 2016. Also believe me when I say that it will be tough! Thank God all the same.
