Nigerian Economy Suffered Severe Decline Under Buhari’s One Year In Office – Chamber Of Commerce

The Lagos Chamber of Commerce and Industry, LCCI has undertaken an appraisal of the one-year old administration of President Muhammadu Buhari and returned a verdict that the Nigerian economy suffered severe decline within the period.

It lamented in a report titled: “The Economy After One Year of Buhari’s Administration” released on Friday that the economic policy space remained unclear, adding that the policy conception was faulty, hence, policy coordination and implementation suffered serious setback.

The LCCI explained that the woeful outcome of the nation’s economic performance was the result of “the absence of well structured, broad-based and synergized economic blueprint with clearly stated goals, plans, policies and strategies to drive the economy.”

The organised private sector body stated in the report that: “There is, therefore, urgent need for central policy strategy with detailed and well-designed policy direction. This is critical to effective and efficient coordination and implementation of policy.

“While the policy goal of eliminating corruption is laudable, the need for concerted effort on the side of the government with respect to policy, legal and regulatory environments in order to boost private sector participation is highly desirable.

“Improving the ease of doing business through efficient business environment vis-à-vis effective infrastructure in all facets of the economy is pertinent.

“It is imperative to make very strong moves to resolve the weakening oil revenue and find creative ways of incentivising forex inflow to Nigeria so as to boost liquidity and ease access to forex through alternative sources such as FDI in critical sectors of the economy and diaspora remittances.”

Analysing the various declining indices that left the overall economy in shambles in the last one year, the Chamber pointed out that the Gross Domestic Product, GDP, of the country which stood at 2.35 per cent in May 2015 when the current administration took office, has now crashed to -0.4 per cent(negative growth) in May 2016.

As for the official exchange rate of the dollar to the naira, it held that in May 2015, $1 exchanged for N197.9, while in 2016 a dollar is N199, but in the parallel market, according to the Chamber, a dollar was N219 in May 2015 but depreciated to about N350 in May 2016.

Other indices analysed were the rate of inflation which according to the LCCI jumped from 8.7 per cent in May 2015 to 13.9 per cent in May 2016.

The crude oil output in the country was also found to have dipped significantly, dropping from 2.05 million barrels per day (bpd) in May 2015, to 1.4 million bpd in 2016.

For the nation’s external reserves, there was also a decline of $1.25 billion in Buhari’s one year, falling from $29.1 billion to $27.86billion.

The Chamber noted that the Federation Accounts Allocation Committee, FAAC, also had its revenue markedly depleted from N409 billion in May 2015, to N299 billion in May 2016.

The stock market capitalisation followed suit in the decline with capitalisation dropping from N11.42 trillion in May 2015, to N8.7 trillion in May 2016.

Unemployment figures soared higher during the period, rising from 24.1 per cent in 2015, to 29.2 per cent in 2016.

Other statistics analysed by the LCCI included the Business Confidence Index which tumbled from 7.3 per cent to -8 per cent (negative); Industrial Capacity Utilisation which fell from 54.9 to 53.7; Ease of Doing Business fell from 170 units to 169 units; Agricultural sector growth fell from 4.7 per cent to 3.09 per cent; Industrial sector growth fell from -2.53 per cent to -5.4 per cent; Services sector growth fell from 7.04 per cent to 0.80 per cent; Aviation passenger traffic dropped from 4.2 million to 3.8 million people; Real estate vacancies index rose from 100 units to 143 units; Power output dropped from 3,205MW to 2,500MW; Power available per day dropped from 13 hours to 5 hours and Banks’ bad loans rose from N25.3 billion in May 2015 to N41.5 billion in May 2016.

Making recommendations on how to stem the drift, the LCCI stated: “We observed remarkable success in containing Boko Haram insurgency by pushing them from taking territories and local councils to the fringes of Sambisa Forest. As the final clearing of Boko Haram continues, we urge the government to extend its attention to the growing security breaches coming from groups such as the armed Herdsmen and the Niger Delta Militants. Businesses and the private sector can only thrive in a peaceful and secure environment.

“Anti-corruption war of the present administration should continue unabated and we are happy that emphasis is being placed on recovering looted funds both from within and outside the country. It is our wish that government reviews its processes and put in place reforms including frameworks that would inherently curb corruption.

“We welcome Government’s recent removal of subsidy on kerosene and PMS. However, we call for full deregulation of the downstream petroleum sector. This will reduce distortions in the downstream oil industry, eliminate corruption that has marred the sector over the years, increase government revenue whilst empowering the government to fund infrastructure and other social interventions.

“We welcome the decision of the Central Bank of Nigeria (CBN) to adopt a flexible exchange rate regime which is desirable in the light of prevailing economic realities. There is however, a need for clarity on what the CBN describes as a special window for critical transactions for which preferential rates will apply. We would like to caution against possible abuse and distortions that such a window could create. On the immediate, relaxing the impediments that will allow liquidity to flow into the autonomous forex market is desirable.

“The Budget has been signed into law after about four months of delay. We expect marginal recovery in economic activities as soon as disbursement of capital projects and social intervention programmes start. The 2016 budget assent and implementation should give rise to positive macro environment. However, inflationary impact remains a concern as the presidency will become more practical in its quest to deliver on some critical electoral promises.”