If words are to be believed, Nigeria will get out of recession shortly. Ms Kemi Adeosun, Nigeria's Finance Minister disclosed this in a CNBC interview on the 19th of April, 2017 – on the same day, Nigerian news carried the headlines "Nigeria out of recession," credited to World Economics, a London-based financial insights organisation. Some would argue that the story constitutes "deliverables" in a 25 Million Naira public relations brief for UK based agency, Africa Practice, in its bid to help Nigeria save face.
"Any data about Nigeria"s economy is "fake news" Statistician General, Yemi Kale tweeted, dismissing the report as "at best just an opinion." The opinion that Nigeria is coming out of the recession finds strength in a string of fortunate events. By a stroke of luck, Nigeria has witnessed rising oil prices above its budget benchmark and the exclusion from OPEC production cuts has allowed room for greater stability and responsible for the rising external reserves hitting slightly above $30 billion.
Planning to Fail?
The present administration has no shortage of policy initiatives and plans. President Muhammadu Buhari launched in March 2017, an Economic Recovery and Growth Plan (ERGP) touted by senior officials within the federal government as a game changer and the bedrock of a sustainable economy for the country. A greater attention to the issue of financing this growth proposal – savings and borrowing cast a shadow over its practicality. Many Nigerians find it difficult to understand the funding of the Excess Crude Account, ECA, to be shared across the tiers of government as a fiscal buffer measure, at this time.
An additional 87 Million US Dollars was injected into this account while the country continues to seek credit from all sources to finance expenditure and badly required infrastructure. A recent audit revealed that a third of Nigeria's 36 states are indebted to its civil servants despite several bailouts. Only three of these states: Lagos, Rivers and Enugu, all in the southern part of the country would be able to keep up with its recurrent expenditures according to a report by civic technology organisation, BudgIT.
False Hopes, Faulty Premise
Nigeria hopes to emerge from the current recession stronger. Among the various initiatives outlined to achieve its desires include a renewed emphasis on non-oil revenues and infrastructure development through taxation, and financing options including asset divestitures, concessions, external credit and strategic investments through the Sovereign Wealth Fund (SWF). "Based on the ERGP, our infrastructure deficit is roughly $200bn," said Manasseh Egedegbe, a Eurobond investor and Chief Investment Officer at Premium Pensions.
"SWF is something between $1.5bn and $2.5bn. What kind of strategic use?" he queried the rationale behind the position, outlined in the infrastructure section of the plan. Uncertainty underlies government plans to raise taxes and expand the net. More businesses continue to cut costs, pruning personnel and their wages in a bid to stay afloat.
"While the state is undertaking tax reforms to increase revenue collected, the impact of those measures will be gradual," Gene Leon, the IMF's mission chief in Nigeria was quoted in a Bloomberg report on the wide gap between government outlook and reality. Leon's comment envelopes Nigeria's unrealistic projections and implementation handicap in political correctness. This single issue can be argued to be responsible for the tragic fate that has befallen previous national economic and social development plans.
Lessons taught, Nothing learnt
The economic recession presents an opportunity to learn and avoid future recurrences in the manner which Autophagy, in medical parlance, produces a lasting benefit for the body through temporary stress. If the economic agenda presented by the Nigerian government at the IMF spring meeting is anything to go by, then we can assume nothing has been learnt. Featuring majorly in the economic reform agenda was the recovery of stolen funds and the whistleblower policy that gives financial incentives - up to 5 percent for persons who report illicit financial activity.
The issue remains that the Nigerian government continues to plan on uncertainty, the same manner it continues to budget against the price of crude oil, its natural resource - the main factor responsible for its economy being in the doldrums. Nothing in history suggests that recovering illicit funds is an easy task. Monies looted by the former head of state, General Sani Abacha decades ago are yet to be fully returned and the subject of several legal procedures across various jurisdictions.
More recently, loot allegedly seized by the Economic and Financial Crimes Commission from a former Nigerian first lady, Mrs Patience Jonathan was repossessed by the owner on the orders of a high-court Judge. The Buhari administration's plan to recover stolen funds, against the background of weak justice institutions and deep mistrust, is a history fail. Nigeria would do well not repeat this class.