John Danjuma Omachonu
In about seven days, a new administration will take over reigns of government. But the country is saddled with so many challenges, ranging from insecurity, resulting in killings and kidnappings, heightened tension occasioned by the disputed elections, particularly, presidential that seems to be threatening the foundation of the country.
Beside the trust deficit that it has engendered, investors seem to be waiting on the wings as money would naturally go to relatively peaceful environment where appreciable returns are guaranteed on investments.
More worrisome is the fact that the new administration is expected to take on the weighty and burdened country with tepid growth of about three percent, ballooning inflation, currently at 22.22 percent and elevated debt burden, estimated at about N77 trillion when the N22 trillion securitized Ways and Means from the Central Bank of Nigeria, (CBN) is added.
Specifically, scientists see ‘matter’ as anything that has mass and volume and takes up space. It is a substance made up of various types of particles that occupies physical space and inertia. Specifically, it is anything that takes up space and can be weighed.
Some analysts see the country weighed down by embarrassing economic indicators, which have been manifesting, particularly, in the last few years.
For instance, in 2014, the inflation rate which was hovering around 7.7 percent being the lowest then to the highest point of 8.5 percent, moved to an average of 9 percent in 2015, when Buhari took over.
But today, it has reached the rooftops of over 22 percent amid soaring food prices and poor purchasing power.
In the second quarter of 2015, when the outgoing administration took over power, unemployment rate rose to 9.9 percent in the third quarter of that year from 8.2 percent. Since then, unemployment, poverty and economic dis-empowerment have remained disturbing features of lives of Nigerians, with the scourge at over 30 percent officially, while some analysts say it is above 45 percent effectively. Today over 130 million Nigerians are multidimensionally poor.
In 2015, November, Naira was exchanging for N197/$, six months after Buhari took over as president, the fortunes f the local currency began to nosedive. Between then and now, the Nigerian unit has gone through ceaseless devaluation, with official rate at N460/$, considered by analysts as unrealistic, while black market as at Monday, May 22, was around N760/$.
Policy inconsistency and existence of multiple exchange rates by CBN has been the bane of the economy resulting in the continued volatility of the foreign exchange market.
Indeed, the nation’s foreign exchange market has been riddled with uncertainties, especially in recent times, largely due to the incoherence in monetary policy appreciation and contradictory fiscal policy measures by the ministry of finance
In the same vein, analysts have continued to flay the foreign exchange policy mix of government, particularly over its numerous restrictions and other transparency concerns in indiscriminate foreign exchange allocation to some high-net worth individuals and corporate organizations, under the discredited subsidy that has continued to drain the nations foreign reserves.
Similarly, analysts argue that the level of unrestrained borrowing has become unsustainable when viewed against worrisome debt-to-revenue ratio.
Incidentally, the Debt Management Office, (DMO) has consistently defended the federal government in particular that it has been sustainable.
Some Nigerians expressed surprise recently when, DMO, that had been encouraging government, turned around to raise alarm about the unsustainability of the debt profile.
‘Most of us are not surprised at the double speak by the leadership of DMO, as all boils down to the need to preserve and defend their positions as has been the case with most MDAs,” says an analyst who pleaded anonymity
Also, some Nigerians have continued to criticize CBN’s continuous illegal printing of money for the federal government while at the same time pretending to be fighting inflation.
Most Nigerians see the current leadership of CBN as an appendage of government, arguing that rather than being an independent body, it sees itself as a quasi fiscal agent, using its ability to print money for the outgoing government.
According to a tweet in August 2022, kingsley Moghalu, ex-deputy governor of CBN, the wheels have come off the Nigerian economy , which he described as a victim of a mismanaged fiscal space and a deeply compromised CBN that has sold its soul to politicians and private sector profiteers.
Moghalu further said that CBN, which is supposed to check the excesses of the ministry of finance and the political elite, has compromised, particularly under the leadership of the present governor.
The crisis is further magnified by alleged fiscal mismanagement by the finance ministry, whose action or inaction has contributed to the worsening of the economy.
Responding to some arguments by government officials that some of these challenges are caused by effect of global crisis in Sahara Reporters, he said, “Please don’t tell me that inflation is a global phenomenon, just as some will mischievously or ignorantly refer to the levels of debt to GDP ratios of advanced, productive economies. There is a difference between real global challenges and us fundamentally killing our own economy with our own hands in the service of corruption, vested interests and incompetent political leaders.”
But, according to the foremost economist, and chief executive of Financial Derivatives Company, (FDC), Bismarck Rewane, the federal government’s debt is like a ‘matter’ that occupies a space, adding that the disturbing figure is currently occupying and determining levels of businesses and investments coming into the country.
Rewane, in the current edition of the FDC Monthly Bulletin, with the FDC Think Tank said, “Still, the FG’s public debt is “matter”—it has weight (now ₦70 trillion: 31% of GDP) and occupies space in the minds of investors, business owners, analysts and the common man, who all wonder how this debt will reduce amid the revenue shortfall. As Lincoln once said, “You can fool all people some of the time and some people all the time. But you can never fool all people all the time”.
Quoting the popular author, Matt Fox, which said, “Poor decision-making will almost always lead to less than desirable outcomes”, and considering the imminent change of baton at the federal level, he further said, the “new administration takes on the weighty and burdened Nigeria—tepid growth (3%), ballooning inflation (22.04%), and elevated debt level (₦70 trillion).”
He sad the onus lies on the incoming government to bring in desirable economic outcomes and to accomplish this, they must first break free from past mistakes, choose the best Armour bearers and commit to making the tough but necessary decisions (reforms) to defibrillate the economy.
He was quick to add that it will be hard, especially with the trust deficit of Nigerians and the international community to achieve the desired immediate objectives, while expressing the hope that achieving them, lies in first, starting the process.
According to the chief executive, looking at the mirror would show most Nigerians that we are not free from debt’s wrecking ball.
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’’it’s only a bookkeeping exercise that took place when the National Assembly approved the transformation of Ways & Means advances (₦22 trillion) to a 40-year bond at a 9% interest rate. In truth, this was nothing but a home-grown definition of securitization, looking more like warehousing than an orthodox financing model. This is because the instrument lies in the balance sheet of the CBN and is not for sale to the public, which is the way typical securitization processes work (sell your debt, buy time to generate revenue, and when it’s time, pay the debt).
For the incoming administration, and as promised by the president-elect, Bola Tinubu, he must hit the ground running and also be wary of what some analysts regard as ‘landmines’ being lais through last minute appointments, loan negotiation and other policy decisions.