By Olakunle Mohammed
Sometime in October, I visited the market where I usually buy groceries and discovered that the young northerner who usually sold pepper and tomatoes to me had handed over his kiosk to one of his colleagues. I thought it was one of those instances of rotational use of their shops, so that one of them could travel to the village to farm. But on the contrary, I was informed that he had left the business because he was running at a loss and moved back to the village to face farming squarely. I was perplexed because he was managing a business worth over fifty thousand naira, but this was at a time when food prices were increasing at an alarming pace with the purchasing power of naira declining everyday.
Over a month later, an economic quagmire that has been the bane of low-income households and earners since the lockdown period was officially announced by the National Bureau of Statistics (NBS), that the Nigerian economy has slipped into RECESSION, having recorded another negative GDP growth in the third quarter of the year (Q1, 1.87; Q2, -6.10; Q3, -3.62).
This had already been predicted by the World Bank in June; hinted by President Buhari during his presentation of the 2021 budget to the National Assembly in October; and there had also been obvious signs since the COVID-19 lockdown as food prices skyrocketed, global oil prices fell, production reduced and inflation was on the rise.
After the official announcement of Nigeria’s economic recession by NBS on November 21, the second one within four years and dubbed the worst in about forty years, a statement credited to the Central Bank of Nigeria’s (CBN) Governor, Godwin Emefiele, said the country would “exit its recession by the end of this year,” without any verifiable data as back up.
Emefiele’s statement is quite misleading for obvious reasons such as: we were two months into the fourth quarter before it was officially announced that we had been in recession since the third quarter; food prices and inflation have increased by over seventy and forty percent respectively since fourth quarter began; Brent crude oil price fluctuating within $25-$50 per barrel since March; dollar to naira exchange wobbles close to ₦500 in the parallel market; insecurity in the Northern region is on the rise and affects food production with sporadic kidnapping of farmers, bandits demanding for harvest money from farmers and Boko Haram’s Zabarmari massacre of 43 rice farmers in Borno and; the Agriculture minister reiterating that Nigeria’s land borders will remain locked and the key thrown into the lagoon.
As I pointed out earlier, Nigerian households have been in a loosing battle with recession since 2016 as the quality of life continues to depreciate and cost of living increases alongside unemployment, inflation and poverty rates. A situation made unsavoury by the federal government policies of VAT increment, stringent business rules and other policies and its adamant refusal to cut down governance cost within the executive, legislative and judicial arm. Meanwhile, Emefiele’s statement on exiting recession in 2020 is a pipe dream, if the federal government fails to address issues of resource wastage, mismanagement of public funds and cutback on governance cost.
Sadly, the CBN has become culpable in promoting the government’s extravagant spending by enabling the federal and state governments to borrow monies that have unfavourable interest rates or open credit lines for policies -like the Anchor borrower programme- which are another avenue for mismanagement of funds. Also, Buhari’s oil ministry is wasting resources as trillions of naira are allocated to servicing NNPC’s oil refineries which continue to run at a loss with zero productivity recorded and the corruption surrounding fuel import subsidy payments.
In addition, the Oronsaye Committee report of 2011 pegged the number of government ministries, departments and agencies (MDAs) at 541 (statutory and non-statutory) and recommended that statutory agencies be reduced from 263 to 161, Buhari’s directive to the SGF and HoS to implement the recommendations of the report came in April 2020, but investigations revealed that these MDAs are close to 1,000 as of April 30, 2020. The new twist came in November when the Budget office stated that 428 MDAs had exhausted their 2020 personnel costs due to the implementation of the new minimum wage and will be unable to pay the month’s salaries. This would not have happened, had these MDAs, many of which are duplication of duties and functions been strategically reduced to save governance cost.
Not only that, the Presidency has become a sinkhole for frivolous spending, judging by how the budget estimate for Presidential Air Fleet (PAF) increased from N4.37 billion in 2017 to N12.5 billion in 2021. As at November 2015, there were 10 aircrafts in the fleet, and negotiations to sell two of these aircrafts stalled since 2016. There are no official or unofficial updates on the sales, hence, it is safe to assume that Nigeria still has ten aircrafts in the PAF gulping resources that could be diverted into improving its economy. Whereas, the 2021 budget showed that the State House Headquarters would spend ₦135.67 million for refreshment and meals (46% increase from 2020 budget) while ₦160 million was budgeted to buy foodstuff and catering material supplies for PAF. All the expenses could be diverted to improving Home-grown School Feeding Programme and food security for the average Nigerians.
A major bender in the federal government’s extravagant spending is the legislature. The National Assembly budget has been pegged between ₦125-₦128 billion for the past four years. These billions of naira service 469 lawmakers of the green and red chambers, despite the country running a deficit budget for years, making it imperative to restructure the legislative arm either by making them work on part time basis on a minimum wage basis or reduce number of Senators and Representatives by one-third or scrap the Senate just like Senegal, Mauritania has done and maintain a regimented Green chambers just like Kenya, Mozambique and Sierra Leone. Though, Nigeria has the sixth largest legislators in Africa after Morocco (665), Ethiopia (659), DR Congo (620), Sudan (500) and South Africa (469) but its economy cannot survive the extravagance, hence the need to cutback on its governance cost by setting a salary base for them, reducing their numbers or adopting unicameral legislature.
Beyond that, there is organised corruption in the judiciary as revealed by a recent report published by the Independent Corrupt Practices and Other Related Offences Commission (ICPC), revealing how ₦9.4 billion was corruptly demanded, offered and paid as bribe in Nigeria’s justice sector between 2018 and 2020. This affects good governance, transparency and accountability within other sectors of the economy.
Nigeria’s long rap sheet of extravagant spending, mismanagement of public funds, inability to cutback governance cost, organised corruption within its centralised federal system are the major reasons why the economy is meshed in economic recession. These factors came to play during the COVID-19 lockdown as a lack of transparency trailed the sharing of relief materials and palliatives. Until these issues are tackled, other austerity measures put forward to exit recession will amount to fetching water in a basket. It is indeed a long walk to freedom for all Nigerians.