May 29, 2020

SPECIAL REPORT: BUHARINOMICS, FIVE YEARS AFTER: Diversification agenda falters, gropes for traction

Farmers assure Buhari on production of enough maize, availability

President Muhammadu Buhari

President Muhammadu Buhari

By Emeka Anaeto, Business Editor

THE Federal Government’s main economic strategy is anchored on diversification of the economic base away from oil dependency.

This has been encapsulated in the Economic Recovery Growth Plan, ERGP, launched in the wake of the economic recession that heralded the President Muhamadu Buhari’s first year in office, June 2015-May 2016.

The ERGP is a medium term all-round developmental initiative focused on restoring growth, investing in people and building a globally competitive economy. The ERGP was launched in April 2017. It was inaugurated as a medium term strategic action set to terminate with the set objectives achieved, hopefully, by April 2020.

As the Buhari administration marks its fifth year corresponding to the end date for the main economic plan, ERGP, we examine the performance of the Plan in line with set objectives. First, the Buharinomics (the economic regime of the Buhari administration) was designed to diversify the economy, restore economic growth, create jobs, empower the youths, develop the human capital and infrastructure, improved business environment and bring about technological growth.

In more specific terms the following are the objectives:

Tackling constraints to growth resulting from fuel, power, foreign exchange shortages and unfriendly business regulations, shortage of skills and technology to promote the growth of micro small and medium enterprises, MSMEs, and multinational corporations, national and social inclusion and market development;

Promoting macro-economic stability, stimulation of fiscal policy, monetary policy stabilization and improvement on balance of trade;

Diversify the economy by creating the enabling environment for the agricultural, energy, MSMEs, manufacturing and services sectors to thrive using science and technology;

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Create jobs and wealth for the youth especially in the North East and the Niger Delta through the N-Power programme and reduce the rate of unemployment and underemployment;

Promote the production of made-in-Nigeria goods and increased investment in the health and education sectors to meet the targets set by the United Nations Sustainable Development Goals, SDGs;

Embark on long-term investment in power, roads, rail and port and broadband networks projects in partnership with the private sector;

Regulate the business environment in a transparent and business oriented manner in line with the mandate of the Presidential Enabling Business Environment Council, PEBEC, and World Bank’s Doing Business Report in order to gain high ranking in the World Bank’s Doing Business index by 2020; and

Link the industrial policy of Nigeria to the SMART Nigerian Digital Economy Project in order to increase the contribution of ICT to Gross Domestic Product, GDP, by establishing an ICT ecosystem and ICT clusters in the Special Economic Zones, SEZs, expand the broadband coverage and e-government.

In this section of our review we focus on macro-economic indicators that would underline successes if any, in the set objectives. Observers of the ERGP implementation would expect the policy executives to see policy outcomes resulting in economic growth reflected in the Gross Domestic Product, GDP numbers, inflation figures, exchange rate, capital importation, employment rate, manufacturing index and general living standard or poverty index. GDP was targeted at 7.0 percent in 2020, 4.5 percent in 2019 and 4.8 percent in 2018. Inflation was targeted at 9.9 percent in 2020, 13.39 in 2019 and 12.42 in 2018.

The implementation of the Plan is projected to reduce unemployment from 13.9 per cent as of third quarter 2016 to 11.23 per cent by 2020. This translates to the creation of over 15 million jobs during the Plan horizon or an average of 3.7 million jobs per annum.

Some of the information available to us in all the stated macroeconomic indicators shows a huge gap in the negative between the planned projections and the actual achievements. In most cases, the Buharinomics underperformed the base figures.

“The feedback we heard in Lagos is that this beautifully designed plan was not being implemented effectively,” says Charles Robertson, Chief Global Economist at Renaissance Capital. “Nigeria would be one of the best reform stories of emerging markets if only they could actually implement this plan.”