A recent report by the World Bank was to the effect that Nigeria has not eased, in real terms, from the deep recession that gripped her economy from 2015 to 2017. It pointed out even though she has to spend massively through investments in capital-intensive projects, to push back – make history of the ugly phenomenon of recession itself – in classical fashion, there was a pressing need to curb waste in government spending and inflation, via a monetary policy that would, ultimately, slash consumer price index (CPI) to an immediate and desirable level of 8 percent – nearly 50 percent shave off the current rate.
By inference, what the World Bank has said, somewhat charitably, is that, even though inflation – and the attendant price of some goods and services – had fallen by nearly 3 percent, in February to about 15.7 per cent, there was need for a lot of caution to avoid what some of its economists and financial specialists referred to as ‘unfounded youthful exuberance.’
In response to the World Bank report, on Nigeria’s nasty encounter, during her two-year odyssey, on the swollen sea of deep recession, the National Bureau of Statistics, reported a fairly promising picture of recovery: an across-the-board decrease in the price of agricultural products – mainly consumer food items to services in the aviation, transportation and telecommunication sectors of the economy.
“Although the World Bank report was friendly and advisory, what it did take deep and well-registered cognisance of,” said Bassey Anigena, a former banker, now a financial derivatives specialist, based in Port Harcourt, Rivers State, “is the fact that the recession did not happen overnight.
“The World Bank report should have taken into account the fact that a lot damage had been done to the key indices of the Nigerian political economy, via unimaginable massive corruption, during the Jonathan administration. And that, naturally, presupposes that the Buhari administration has a lot of herculean task to do, in rectifying the gamut of dislocations and distortions in the Nigerian economy; the greatest and most burdensome aspect of which is accessing sorely-needed funds to effect desired economic reconstruction.”
There is a tacit admission in the World Bank report that on account of the 2015-2017 recession, most of Nigeria’s able bodied youths, including university graduates, who ought to have been gainfully engaged in the agricultural sector or environmental sanitation, trooped to Libya, via the wilderness, that is, the Sahara Desert, and therefrom, to the European Union, in unseaworthy vessels via the Mediterranean Sea. Between Libya and the southern part of the European Union, many died. Today, many are still trapped in inhuman conditions in Libya; probably awaiting repatriation to Nigeria. How well they will benefit from the post-recession programmes of the federal and state governments, is yet to be seen.
Perhaps, the intent of the World Bank report is a reminder that the Buhari administration should see the Bank as a willing partner in a post-recession amendment; that, perhaps, still, Abuja should approach it for loans, at acceptable interest rates, to address the demands of monetary and budgetary responsibilities.
Since that report, the Central Bank of Nigeria (CBN) has reported a record five-year-high in the country’s foreign reserves of nearly $43bn. Its Governor, Godwin Emefiele, said that the cheering development was a function of the apex bank’s monetary policy and the unswerving bent of the Buhari administration to curb conspicuous consumption of imported agricultural products, like rice, and frozen poultry goods by Nigerians.
This is a prominent arm of the economic diversification policy of the Buhari administration to wean away the Nigerian economy from over-dependence on crude oil – a product whose price performance in the international market is susceptible to manipulation and naked conspiracy by foreign powers. Between the World Bank’s report and CBN’s monetary policy performance, there are two tugging extremes: the World Bank’s message is that it’s not yet uhuru, despite the fact that what was once a fixed, beautifying frown on the faces of Nigerian tax-payers is fading away to whence it came; the CBN’s progress report is that given a substance of the political will exhibited, so far, amid the adversities of economic recession, by the Buhari administration, the short-term picture of progressive recovery from economic recession, in the next five years, say, is quite realistic.
That’s an assertion that appears steeled by the recent confirmation by the senate of the CBN’s five-strong Monetary Policy Committee members. While the World Bank has advised the CBN to extend its financial base adequacy policy in the core banking sector, Emefiele has responded by instructing skippers of far-from-well banks – those who have declared, in recent months, very low profit, to shelve payment of dividends to their shareholders. Sound economies, it’s true. It makes a lot of sense, if only to let the stakeholders and shareholders of those banks, still unidentified, with non-performing loans (NPL) face the ugly reality by the World Bank’s report that the effects of the recent deep recession would still linger for about the next three years. In the short run, the shareholders of such banks may have to redesign that budget to suit the absence of dividends.
“With a structured MPC in place, the CBN appears well positioned to press, without rigour and confidence decision that would give prospective local and foreign investors an informed insight,” said an economist and ex-banker, based in Lagos, Anaeto Emeka, “into what direction the apex bank is driving the Nigerian economy. There is, besides, a need for the CBN to reduce, fast, the cost of borrowing money from banks now that the MPC can now meet, just as it is necessary for the Buhari administration to reduce the cost of doing business at the Nigerian ports to help the activities of Nigerian manufacturers, who are members of the Lagos Chamber of Commerce and Industry (LCCI), Manufacturers Association of Nigeria (MAN) and Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).
It’s Anaeto’s thesis that “the manufacturing sector should be seen, perhaps, compellingly, as a reliable ally in the Buhari administration’s post-recession effort of economic diversification, generation of employment and wealth, so as to sink deep the roots of food security.” Buoy the manufacturing sector of organised private sector, Anaeto offered, with less harsh monetary policy, as it affects bank loans, recession, if not melted finally away, anytime, hence, inflation will be less nasty, than it was during the last two years, which was worsened by the ugly effects of fuel scarcity in most of the country’s urban centres in the last quarter of 2017.
And yet, despite the conflicting reports by the World Bank and the CBN, the Buhari administration said that the World Bank’s position on the Nigerian economy was constructive. “That is why we must forge ahead with economic diversification and job and wealth creation,” said Minister of Budget and National Planning, Udoma Udo Udoma, in Abuja. “We see the World Bank report, as we launch the Focus Labs of Economic Recovery and Growth Plan (ERGP) as an encouragement that Nigerians must eat or patronise the goods and services that they produce, in the agricultural sector, for instance, and export the excess of what they produce, so as to earn foreign exchange and better the economic fortunes of the country.”
If anything, the World Bank report has energised the Buhari administration to press post-recession policy and execution, strengthen on economic diversification and campaign against corruption, as two bright and firm pillars of national development. Thus, it’s perhaps, safe to nod at Udoma’s optimism, that “there’s beginning to appear a silver lining in the economic cloud of Nigeria.”