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2019: Nigeria faces a turbulent year without seismic shifts

By Olu Fasan
AT the beginning of every year, analysts daringly make predictions. Some never come to pass because they are over-optimistic, too pessimistic or simply offered as much in hope as in expectation. Of course, it’s difficult to predict the future with exactitude. Yet, this hasn’t stopped analysts from making new year predictions. I want to follow in that tradition by giving my take on how things might pan out for Nigeria this year.

But in doing so, I would rely on clues from last year on where things are heading this year. In other words, what can we learn from 2018 to help us chart the uncertain paths ahead politically, economically and socially in 2019? Let’s start with politics, with the general election taking place next month.

 

Electoral politics: Who wins, who loses?

The two main parties, All Progressives Congress, APC, and People’s Democratic Party, PDP, were preoccupied in 2018 with trying to outsmart each other ahead of this year’s elections. The PDP appeared to have won the tactical stakes. First, the party lured back virtually all its former members that went to the APC in 2014.

These defectors, such as Senate President Bukola Sariki, will inevitably cost the APC some votes, even states. The emergence of Atiku Abubakar as PDP’s presidential candidate, with Peter Obi, former governor of Anambra, as his running mate, also gives the PDP a fighting chance, as does former President Olusegun Obasanjo’s high-profile support for Atiku, and his visceral opposition to President Buhari’s re-election.

But the APC was not without its own tactical wins. The party made some in-roads into the Southeast, where General Buhari won fewer than 300,000 votes, compared with President Jonathan’s 2.5 million, in the 2015. But the Southeast has never warmed to Buhari, and so his party is unlikely to make a serious dent in PDP support in the geo-political zone, not least with Obi as a vice-presidential candidate.

The APC also secured some tactical gains in the South-South, with the defection of former governor Godswill Akpabio from the PDP to the party. I would, however, be surprised if Akpabio’s influence neutralises Jonathan’s impact in much of the South-South.

But, inevitably, the key question is who is likely to win next month? Well, as I said, it’s hard to predict. Even the two arms of The Economist magazine could not agree on the likely outcome. While the Economist Intelligence Unit predicted that Atiku would win, The Economist magazine reckoned the winner would be Buhari. Scientific opinion polls, rather than mere conjectures, provide sounder basis for election predictions.

That said, if policies are the determinants of electoral victory, Atiku should win. His radical programme of political, economic and institutional reformstrumps Buhari’s pedestrian and repetitious promises to fight corruption, tackle insecurity and expand social intervention programmes. President Buhari implicitly invites Nigerians to judge him on the three issues – corruption, security and the economy – on which he said he campaigned in 2015. But his performance on each of the issues is so poor that, elsewhere, he would not win re-election!

Yet, let’s face it, Buhari has a cult of personality that makes him extremely popular among his fanatical followers. Atiku doesn’t have such followings. In the end, politics is a game of numbers. And the key question is: Can Atiku beat Buhari in the North? For if he can’t, he won’t win, despite strong support from the Southeast and the South-South. But it is uncertain that Atiku can beat Buhari in the North, especially as some of his policies, particularly on political restructuring, do not seem to chime with much of the North.

Of course, truth be told, Atiku also carries a baggage of negative perceptions and is running under a party that still has a serious image problem, a legacy of PDP’s 16 years in power. Make no mistake, the APC will pull out all stops, including playing the integrity card. They will use the perception of corruption mercilessly against Atiku and the PDP during the campaign, and if that sticks, Atiku and the PDP would lose public support.

The truth is, corruption remains a major concern of most ordinary Nigerians, and whoever wins the battle of public opinion on the issue during the campaign may win the election.

Okay, all that said, you may still want me to put my head above the parapet and predict the likely winner. Well, that’s hard, but I would make a working assumption. Given all the above, my view is that, as things currently stand, Buhari has a slight edge! That may, of course, change, depending on how Atiku and the PDP handle the campaign!

But the biggest source of turbulence politically is the fear of rigging and violence. In its report entitled “Nigeria’s 2019 elections: change, continuity and the risks to peace”, the United States Institute of Peace, USIP, which interviewed over 200 Nigerians from nine states, notes that Nigerians feared that “deliberate attempts to frustrate the will of the voters” in this year’s elections “could lead to violence”. That’s true, which is why it’s absolutely important the elections are free and fair! I turn now to the economy.

An economy in comatose: How bad can things get?

President Buhari said at the end of last year that the economy “is in bad shape”. That presaged a turbulent economic situation for Nigeria this year. Although the Buhari government launched the Economic Recovery and Growth Plan, ERGP, in April 2017, the only major reform that has, so far, taken place was the Central Bank’s introduction, that year, of the foreign exchange window for investors and exporters. That was widely welcomed by foreign investors. It addressed the liquidity problem in the foreign exchange market and led to increased portfolio investment inflows into the country.  But an economy that is facing serious structural challenges needs radical structural reforms. As the IMF points out, “actions on a coherent set of policies to reduce vulnerabilities and increase growth remains urgent”.

Lack of policies to boost  productivity and competitiveness

That urgency is, however, not appreciated by the Buhari government, with what foreign investors now see as policy inertia on the economy. Rising protectionism, failure to reform the oil sector, failure to create a unified and more flexible exchange rate and lack of policies to boost productivity and competitiveness are seriously undermining the economy. Nothing has been done to reduce the supply-side problems that impose unbearable costs on businesses in Nigeria. As a result, the private sector is not driving economic growth.

The result is an economy that has flatlined, growing at a miniscule 1.9 per cent. Up to 43 per cent of Nigeria’s workforce is unemployed or underemployed. Youth unemployment rose from three million in 2015 to 13 million in 2018 (a 263 per cent increase over 3½ years), according to the National Bureau of Statistics. Inflation, at 12.4 per cent, and interest rate, at 14 per cent are too high to improve living standards and increase business growth. These problems can’t be tackled by merely tinkering at the edges of reforms. But, sadly, tinkeringis exactly what the Buhari government has been doing over nearly four years.

So, what are the prospects for 2019? Well, the economy is likely to get worse under a re-elected Buhari government. A re-elected Buhari government would lack the fresh ideas and radical streak to turbo-charge the economy, and with a lukewarm response from foreign investors, most of who have suspended investment decisions because of uncertainties about the elections, the economy would face serious headwinds.

But there is even a more serious exogenous problem. The price of oil, currently at $75 per barrel, is likely to drop to below $60 this year. In fact, oil prices have plunged in the past three months due to accelerating production growth in the US and what some economists see as “gathering clouds over the (global) economic outlook”. With falling oil prices, which economists predict would persist this year, Nigeria’s vulnerable economy faces a turbulent year ahead. Yet, a radical programme of liberalisation could minimise the impacts. To be clear, I have no party allegiance, but I believe that the far-reaching liberalisation and private sector-driven economic reforms proposed by Atiku, if faithfully implemented, would boost investor confidence and economic growth.

If, as Bill Clinton famously said about elections, “It’s the economy, stupid”, then the truth is that Atiku’s proposed economic reforms would excite investors than Buhari’s dirigiste approach or policy inertia, and investors would prefer an Atiku administration to a re-elected, sclerotic Buhari government!

Nigeria’s social crisis: Human  tragedy, but who cares?

Now, what about social issues? Well, Nigeria is a country with appalling social and human conditions. Poverty is ravaging the people, insecurity is devastating their lives. Most Nigerians live is social squalor, with no access to basic things of life, like good healthcare, good education, good sanitation, etc. Take poverty, Nigeria now has more people living in extreme poverty than India, making it “the poverty capital of the world”. According to the World Bank, 71.7 per cent of the total workforce in Nigeria live on $3.10 a day; vulnerable employment (that is, those employed as unpaid family workers, etc) account for 80 per cent of total employment.

Nigeria’s population has grown by 72 per cent over the past 20 years. And productivity is very low, with the average productivity of a Nigerian worker is $3.24/hr, compared with $19.68/hr in South Africa. With a GDP growth of just 1.9 per cent, a paltry GDP per capita of $2, 080, caused by population growth outstripping GDP growth, and a very low productivity – all causes of poverty – most Nigerians are certainly condemned to bleak economic and social prospects.

Let us prey

 

 

 

 

What about insecurity? According to the 2018 Legatum Prosperity Index on Safety and Security, Nigeria is the fifth most dangerous (that is, least safe) country in the world. Of course, Boko Haram is still rampaging, recently capturing military bases and still holding over 100 of the Chibok girls, kidnapped in 2014, as well as the Christian girl, Leah Sharibu, abducted with 105 Dapchi girls in February last year. And the killer herdsmen have not gone away. They killed 2,500 people in 2016, according to the International Crisis Group, and several thousands more since then, not to mention the human calamity of several thousands of internally displaced people.

Then, of course, there are the appalling social conditions. When Bill Gates criticised the Buhari government last year for prioritising investments in physical capital over human capital, he was attacked by the government. But the country’s human capital and human development records are truly dreadful. Nigeria’s Human Capital Index in 2018 was 0.34, which made it the fifth worst in the world after Chad, South Sudan, Niger and Liberia. Nigeria ranked 157 out of 189 in the 2018 Human Development Index, below Zimbabwe and Cameroon. Government expenditures on health and education are among the worst in the world. But would any of this change this year? The answer is no. The Buhari government’s policyofcash transfers will not reduce poverty.

Only economic growth, innovation, productivity and targeted, not general, social security support can reduce poverty. The security challenges in Nigeria are, in large part, a function of the lack of social cohesion and unity, which can only be addressed through a negotiated political settlement and political restructuring.

Unfortunately, President Buhari is opposed to restructuring Nigeria. And, of course, Bill Gates was right on the human development crisis. Physical capital should not be prioritised over human capital. Elsewhere, physical infrastructure is funded through private investments so that government can investment in human capital – schools, hospitals etc, but, sadly, not in Nigeria.

So, my conclusion.2018 presaged a rockier 2019. The road will be rougher this year. There are great turbulences ahead politically, economically and socially. They can only be mitigated by seismic shifts: either the election of a radical reformist Atiku government or, if re-elected, a second-term Buhari administration with a Damascene conversion to economic and political reforms.

If neither happens, well, fasten your seatbelts as the road ahead will be bumpy indeed!

Danger ahead as economy is now on auto pilot

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