By Dele Sobowale
“Nigeria’s recovery is expected to be weak and gradual under current policies. Real GDP growth in 2021 is expected to turn positive at 1.5 per cent.”
International Monetary Fund, IMF, in 2020 Article IV consultation with Nigeria.
As we get into the middle of the second month in the year, global economic and financial institutions are busy forecasting what the end result will be for all the nations of the world.
Their analyses and projections are purely technical and devoid of political bias or influence. The IMF is seldom off the mark; and, usually, that occurs when the entire world had experienced a year like 2020. The global institution, like all others, had to alter its forecasts frequently as COVID-19 ravaged global economies more than expected in January. This year’s predictions are also tentative because it is still uncertain how much COVID-19 will damage economies round the globe. Few economic forecasters will disagree with the IMF’s cautious pronouncement. Shortly, we will examine why the IMF estimates might be even more positive than it should be.
The IMF projection has demolished two delusions contained in the 2021 Budget. First, the projection of 1.5 per cent GDP growth implies that the FG’s hope for 3 per cent growth will be dashed once again. Two, as is always the case with economic results, no figure stands alone. Every percentage point missed in GDP growth means so many millions more dropping below the poverty line on the aggregate for the period under review. When taken in combination with population, which is still growing at about 3 per cent, it is clear that the President’s vow to reduce the number of Nigerians by 10 million annually amounts to self-delusion of the worst kind. That conclusion is consistent with the World Bank’s projection that 15 to 20 million Nigerians will be added to those living in poverty by 2022.
“Reform economy, cut dependence on oil, IMF tells Nigeria.” News Report
The IMF understandably is only performing its duties by asking the FG to reform the economy and reduce dependence on crude oil. The global institution might as well be talking to a wall.
Not only this government, but, all the FGs of Nigeria, since 1983 have failed to listen to advice to diversify the economy and create other sustainable sources of generating revenue. Crude oil money is easy money and its presence appeals to lazy thinkers – even if they are Presidents. Diversification calls for hard work, a grasp for economic opportunities, innovation and well-educated modern leaders. But, we have been ruled since 1967 by mostly badly-educated satraps trained to destroy – not to build. Even if given a thousand years to rule, Buhari can never on his own think of how to diversify the economy; and he will never appoint people with demonstrable ingenuity to make it happen. Obviously, it is a safe bet that until May 29, 2023, we are stuck with this government. There will be no reduced dependence on crude oil. Our economy is run by novices and on prayers. Nothing more.
Variables which determine the future —Fdi
“Policy clarity is also important to attract larger capital inflows, including foreign direct investments, which have dropped significantly in recent years and successful diversification.” Ari Aisen, Jesmin Rahman and Jiaxiong Yao, of IMF
As one picture is often better than a thousand words, the graphs above (Courtesy of VANGUARD) already tell most of the story. But, not all. Already, there are indications that the first quarter of 2021 might continue the downward trend. Nothing in all these augur well for Nigeria in 2021. Furthermore, if there is anything lacking in the nation’s economic policy framework, it is often clarity. Allied with that is consistency. Two recent examples would illustrate the point.
First, the Central Bank’s instruction to banks to close all Bitcoin accounts immediately. Never mind that security was the excuse given. But, billions of naira worth of funds were suddenly placed at risk without prior warning. Investors in Bitcoin had been operating under the impression that it was all legal. Now, they have problems. The banks, which operate across the globe also have problems. By itself a minor aspect of the nation’s economy, but, the sudden change of, previously unclear policy to prohibition, would frighten other foreign investors considering Nigeria. Who knows what will be banned without warning tomorrow.
Incidentally, the same panic measures were taken when the bank froze the accounts of #EndSARS protesters. In both instances, the CBN behaved as if we are back in a military dictatorship by taking away banking rights from individuals and companies who have not been convicted of any crime. Foreigners must really ask themselves: if the CBN can treat its own citizens this way, why should I risk my funds in that country?
“It’s a crime to open a bank account without NIN —PATAMI.
Dr Isa Ali Pantami, the Minister for Communications and Digital Economy, was reported to have made that absolutely ridiculous statement. I opened my first account with UBA in 1974, at a time Pantami was still learning how to run. I have opened over a dozen since then in different parts of the country with eight banks – most of them long before the badly managed National Identity Number, NIN, was first started. Not once was NIN required as a condition for opening an account. I am not alone if regarded as a criminal. President Buhari also opened all his accounts without NIN years ago. So, if the Minister is looking for people to arrest, he should start with oga patapata in Aso Rock.
But, setting jokes aside, Dr Pantami stands as a good example of inexperienced and incompetent individuals who occupy high office now. The same Minister ordered 80 million Nigerian GSM subscribers to link our numbers to the NIN or get disconnected – in ten days. That was simply ridiculous as simple arithmetic would have demonstrated.
Even if all 80 million already had NIN, it would mean linking 8 million subscribers per day, 3.3 million per hour, 56,000 per minute by the networks – Saturday and Sunday inclusive. And, that is for one set.
Those, like me, with multiple sets will increase the workload significantly. It was a mission impossible and all efforts to at first get Pantami to understand simple arithmetic met with brick wall until almost the last day. Then more time was given; which was still not enough. Now, the deadline had been shifted to April.
Where was the thinking cap when ten days were given? Unfortunately, that bit of official irresponsibility will have economic and health costs for Nigerians. Millions have been fed to COVID-19 in the desperate effort to obtain NIN. Uuh!