A Look at the Economic Policies and Actions of the Buhari’s Administration in the Last Five Years
Nigeria for the first time witnessed an election that ushered in an opposition presidential candidate as the winner in the person of President Muhammadu Buhari in 2015. This expectedly birthed new policies aimed at redirecting the scarce resources of the nation towards achievement of prosperity for all while at the same time surmounting the challenges of nation building. President Buhari met an economy that over the years has depended on crude oil with the black gold accounting for over 70 percent of government revenue and over 90 percent of foreign exchange. The country had huge import bills as it consumed much of what it does not produce with high importation of agricultural products which could otherwise be produced locally. Nigeria’s foreign reserve which was $40 billion as at January 2014 reduced to $29.01 billion in February 2015 from $47.55 billion dollars in 2012 and $51.91 billion in 2007. There was rising profile of Nigeria’s debt despite the period of boom in the oil market experienced before the current administration when the price of crude was selling at an average of $110 per barrel between 2011 and 2013.
As encapsulated in the Nigerian constitution, the primary objective of governance is to promote the welfare of the masses and ensure security of lives and properties. The policies of the Buhari administration could have derived its philosophical underpinning from this provision of the nation’s supreme law. The President’s policies are founded on a tripod pedestal; economic recovery, combating corruption and ensuring national security.
It is without doubt that the current democratic dispensation came during a period of economic downturn and fiscal challenges that resulted in the economy sliding into recession resulting in the deployment of various stabilization policies aimed at ensuring macroeconomic stability. As States were unable to pay salaries, the president had to quickly respond through the disbursement of bailout funds and the distribution of the secured Paris Club debt refunds to states of the federation. This significantly facilitated in reflating the economy and stabilizing the purchasing power of the citizens particularly the civil servants.
What made the crisis more difficult to tackle was the fact that there was meagre savings and foreign reserves during the then period of falling oil prices in the international market which greatly affected the availability of foreign exchange. Oil had declined to less than $30 per barrel. The Central Bank of Nigeria (CBN), in June 2015 responded through the exclusion of 41 commodities from accessing foreign exchange from the official window in order to encourage local production of these items and sustain foreign exchange market stability. Although this resulted in high prices of the commodities removed from access to the official foreign exchange, and high cost of production to manufacturers that use the items as raw materials, the policy helped in boosting domestic demand for and production of the commodities with government intervention helping to achieve this, and also reduced pressure on the CBN for foreign exchange. The policy was later reviewed in line with request from the Manufacturers Association of Nigeria (MAN).
Nigerians were urged to return to the land and the anchor borrowers’ programme (ABP) was launched to facilitate selfsufficiency in food production. The ABP was launched in November 2015 by President Buhari in Kebbi state with the objectives of linking anchor processing companies with smallholder farmers (SHFs) of some key agricultural commodities, ensure easy access to credit at low interest rate, increasing banks’ financing to the agricultural sector, reduce agricultural commodity importation and conserve external reserves, increase capacity utilization of agricultural firms, assist rural smallholder farmers to grow from subsistence to commercial production, and reduce the level of poverty among them. The programme thrust of the ABP is provision of farm inputs in kind and cash (for farm labour) to SHFs to boost production, stabilize inputs supply to agro-processors, and address the country’s negative balance of payment (BOP) in food. According to the CBN governor, ‘as at first quarter of 2019, over 190 billion naira has been disbursed to over 1.1 million smallholder farmers cultivating over 1.3 million hectares of land’ which signifies high access to finance by farmers and job creation as well. Nigeria today ranks highest in Africa in rice cultivation and milling, with over seven million tonnes yearly.
The administration has made considerable efforts in the area of trying to stop fertilizer importation through partnership with the government of Morocco known as the presidential fertilizer initiative. Currently, not less than 11 moribund blending plants have been resuscitated and the country now produces about 1.3 million tonnes with the price of fertilizer crashed from fifteen thousand naira to five thousand five hundred naira per bag. Other benefits include annual savings of $200 million in foreign exchange, and 60 billion naira annually in budgetary provision for fertilizer subsidies
In August 2019, the president ordered partial closure of the Nigerian land borders to curtail the smuggling of food products especially rice into the country and encourage local production of agricultural products. The policy stemmed out of the failure of the neighbouring countries to fulfil their obligations of the ECOWAS agreement which states that goods coming into member country must be containerized and taken through the right borders where proper rules of origin can be established. Food products particularly rice, continued to be smuggled into the country despite efforts aimed at boosting domestic production and this continued to have negative effect on local producers. In 2017, an estimated 1.3 million metric tonnes of rice found their way into the country with paltry duty accruing to the federal government. The border closure has yielded fruits in the form of billions of naira accruing to government purse from payment of duties (about 5 billion naira daily more than before), increased domestic production of food items like rice, poultry, vegetables, tomatoes etc., with an added drop in fuel consumption by eight million litres a day. However, the border closure has resulted in significant rise in the price of rice which is the most important food crop for people in low and lower-middle income countries, Nigeria inclusive. Local rice production capacity was not adjusted for the sudden increase in demand as a result of the border closure, with the resulting high price of rice likely to make many Nigerians worse off due to the high poverty rate and low per capita income of majority of Nigerians.
Deriving from the policy thrust of the government, there has been continuation of existing infrastructural projects and initiation of new ones particularly those with direct bearing on economic activities and comparatively high multiplier effects. The administration has demonstrated commitment to upgrading and developing Nigeria’s infrastructure with high budgetary provisions for capital expenditure. Among the critical infrastructure projects are; the Lagos-Ibadan rail project that covers a stretch of 158 kilometres, the second Niger Bridge was signed in August 14, 2018, and work commenced on September first of the same year. So far, 35% of the work has been completed as at March 2020. In addition, the Abuja-Kaduna-ZariaKano road which contract was signed in April 2018 has reached 34% completion. Another infrastructure project worthy of mention is the Mambilla Hydroelectric Power Station, a 3,050 MW hydroelectric power project under construction which when completed will be the largest powergenerating installation in the country. The contract award for the project was approved on 30th August, 2017 by the Federal Executive Council (FEC) though some legal tussles and environmental issues have stalled the project but these have recently reached high point of being resolved. The Buhari administration was able to secure agreement with the Exim Bank of China which has committed to contribute 85% (as loan) of the funds needed for completion of the project. Generally, it is expected that the project will massively create jobs and improve electricity supply in the country. As part of efforts aimed at revamping the power sector, the government has launched payment guarantee to generating companies and gas suppliers with much needed reforms and strengthening of distribution companies. However, more employment and income generation could have been achieved through mass housing construction in all states of the federation as contained in the APC Manifesto.
The Buhari’s government has also facilitated support for Micro, Small and Medium Enterprises (MSMEs) through series of funding and capacity development initiatives. Successes have been recorded in the ease of doing business reform with Nigeria moving up the ladder in the ease of doing business. The SIP of this government is the largest social safety net in the history of Nigeria. We have hundreds of thousands of
N-Power beneficiaries, millions of primary school pupils are benefitting from the Homegrown School Feeding Programme (HGSFP), and a lot of Nigerians have been captured in the conditional cash transfer (CCT) programme, with consequent positive multiplier effects on the economy.
The National Economic Recovery and Growth Plan (NERGP) is the Federal Government’s medium-term Economic Plan launched by the president in April 2017. The vision of the ERGP is to restore economic growth, invest in Nigerians and build a globally competitive economy. Generally, the plan has charted a course for the Nigerian economy from 20172020. However, there is no hope that the objectives of the plan will be fully realized in view of funding challenges and external shocks to the economy particularly with the current economic downturn arising from the scourge of COVID-19 pandemic. In addition, absence of a coherent long term National Development Plan and lack of autonomy for National Planning Commission are real set backs to sustainable development intervention capable of triggering prosperity for the majority of Nigerians.
Nigeria has witnessed a more ambitious anti-corruption struggle with the EFCC securing more wins than previously recorded from prosecution of offenders at the court, and conviction of high-profile individuals like former governors. There has been massive recovery of looted funds with as much as 1 trillion naira recovered internally so far. Budget reforms have been carried and this include directive that all Ministries Departments and Agencies (MDAs) should prepare their budgets in line with international public sector accounting standards (IPSAS) using a budget template designed for that purpose. For the first time ever, the 2017 budget was collated using web-based application developed by the Budget Office of the Federation (BOF) and this replaced the paper submission process hitherto practiced with more than 4,000 staffs of the MDAs trained to use the new application. This strengthened the process against manipulation and unauthorised alteration. Also, in August 2015, the president introduced the Single Treasury Account (TSA) and issued a directive to all MDAs to close their accounts with the Deposit Money Banks (DMBs) and transfer their balances to the CBN on or before 15th September, 2015. This decision helped in consolidating more than 20,000 bank accounts previously spread across DMBs in the country, and in saving of an average of 4.7 billion monthly in banking charges associated with indiscriminate government borrowing from the DMBs. It also helped the government to have a comprehensive overview of cash flows across the entire government, hence resulting in increased transparency in public financial management. The government has also ensured deployment of BVN for payroll and social investment programme, replacement of old cashbased accounting system with an accrualsbased system, creation of efficiency unit to reduce recurrent expenditure and promote efficient use of government resources, and the new whistle blowing policy. However, much more could have been achieved in resource optimization with a clear national costing policy of capital expenditure programmes using relevant professionals and consensus building with all relevant stakeholders.