You Left The Nigerian Economy In Tatters, Buhari Reminds Former President Jonathan

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Your Excellency Jonathan, this is the economy you left behind, in case you have forgotten: With due respects to the former President Dr. Goodluck Jonathan, these are the facts about the economy you left behind, in case you have forgotten.

I hope this will help to erase the wrong statement credited to you at your party, the PDP Convention at the Eagle Square last weekend that you handed to President Buhari a robustly healthy economy.

To the same extent, this should also help to erase yet another false statement by Senator Ahmed Mohammed Makarfi, the Caretaker Chairman of the party, to the effect that under the previous administration there was money but now things are very hard.

 

Let me start by reasserting an obvious statement, which is that the President Muhammadu Buhari administration was handed an economy ravaged by years of mismanagement and corruption.

It is understandable that Dr. Jonathan kept his comments short, because a cursory look at any sector clearly indicated that he and his Government presided over the most monumental and tragic economic mismanagement recorded in our national history.

President Goodluck Jonathan

The oil sector boomed under his tenure, with oil prices as high as US$ 120 and peace in the Nigeria Delta. Nigeria earned unprecedented dollar revenues. Sadly, that is where the story turns sour. There is nothing to show for the revenues earned, no major capital project was completed, neither power generation, road development, rail or agriculture benefitted from the windfall earnings. Rather the administration presided over the diversion of oil revenues on a such a massive scale, that even without the protection now accorded to Whistle blowers, the then Central Bank Governor blew not only a whistle but a trumpet. He was hurriedly shown the door. Meanwhile, the acquisition by public officers and their cohorts of private jets, luxury yachts and the accumulation of expensive property portfolios world-wide continued unabated. Indeed the President once celebrated having the largest number of private jets, whilst our youth languished without jobs, our fields stood idle and our factories began the lay off of workers.

Government simply reticulated oil revenue through personal spending by corrupt leaders, wasteful expenses and salaries. This was done rather than investing in what would grow the economy. Economies grow due to capital investment in assets like seaports, airports, power plants, railways, roads and housing. Nigeria can not record a single major infrastructural project in the last 10 years. In short the money was mismanaged.

 

Such was the looting that even the goose that was laying the golden egg was being systematically starved. The direct contractual costs of oil produced , in the form of cash calls, remained unpaid. The incoming, President Buhari’s welcome from the oil majors included demand for US$6Bn owed by Nigeria for oil that had already been sold or stolen.

At the inception of the current administration, 21 States were unable to meet their salary bills and the specter of workers arrears had commenced. The PDP solution was the raid the Ecological Fund and selectively grant N2Bn each to the PDP States. It was only aggressive borrowing by the Ministry of Finance under Dr. Okonjo- Iweala that prevented Federal Government from also owing salaries. The economic wisdom of borrowing to pay recurrent bills is a questionable one, particularly as those paid would have included over 45,000 that have subsequently been removed by the Buhari led administration as ghost workers. It also included the lavish costs of chartering private jets, first class travel and other wasteful acts that have been eliminated under this administration.

To compound the problem the government was borrowing heavily and owed contractors, and international oil companies. When this government took over we had accumulated debt back to the level it was before the Paris Club Debt Forgiveness.

All these factors were building up to Nigeria heading for a major crisis if the price of oil fell. Nigeria did not have fiscal buffers to withstand an oil shock.

The oil shock should and could have been foreseen. When Islamic State of Iraq and Syria, ISIS crisis started, it was clear that the United States of America wanted to cut off funds to terror groups by crashing the price of oil. When America granted permission for exploration of oil on land ( Shale) the warning signs were evident, but these were ignored by Nigeria’s economic managers.

Such was the looting that even the goose that was laying the golden egg was being systematically starved. The direct contractual costs of oil produced, in the form of cash calls, remained unpaid. The incoming President Buhari’s welcome from the oil majors included demand for US$6Bn owed by Nigeria for oil that had already been sold or stolen.

At the inception of the Buhari administration, 21 States were unable to meet their salary bills and the specter of workers arrears had commenced. The PDP solution was to raid the Ecological Fund and selectively grant N2Bn each to the PDP States. It was only aggressive borrowing by the Ministry of Finance that prevented Federal Government from also owing salaries. The economic wisdom of borrowing to pay recurrent bills is a questionable one, particularly as those paid would have included over 45,000 that have subsequently been removed by the Buhari led administration as ghost workers. It also included the lavish costs of chartering private jets, first class travel and other wasteful acts that have been eliminated under this administration.

In summary Nigeria earned a lot of money when oil prices were high but there is nothing to show for it. Now oil prices have fallen we are suffering.

What could they have done differently?

 

They could have begun doing the very things that the Muhammadu Buhari administration is doing so painfully now:

Fight corruption.
Sanitize the huge salary bill by eliminating payroll fraud.
Reduce wasteful expenses like First Class Travel and Private jets.
Encourage State Governments to reform their spending and build savings or investments.
Increase spending on capital projects especially on infrastructure needed to make Nigerian businesses competitive and create jobs.
Block the leakages that allowed government revenues to be siphoned into private hands.
Focus on key sectors ( apart from oil) that can create jobs and or generate revenue such as Agriculture, Solid Minerals, and Manufacturing.
If these things had been done when the oil price was as high as US$120 per barrel, Nigeria would not be in the current predicament.

We would not be suffering now if we had no cash reserves but we had power, or a rail system, or good roads, or good housing. But we don’t have money and we don’t have the projects either.

Now that the oil has fallen below those levels, it is very difficult to do what is needed but they must be done to save Nigeria. There is no other way if we want to be honest.

If PDP were still in power they would have continued deceiving people, by borrowing to fund stealing and wastage and the problem would have simply been postponed for future generations to face.

 

One of former President Jonathon’s specific boasts is that dollar under him was N180 compared to today. With such a line of argument, it is clear why we are where we are. With oil prices as high as $120 the average inflow of dollars each month was high, making it easy to support cheap dollars. However, with oil price plummeting as low as $28, the fundamental laws of supply and demand dictated that the currency would need to adjust since oil was the sole export. It is instructive to note that virtually every major oil exporter has witnessed currency adjustments with the fall in oil price.

The Buhari administration has taken a long term strategic view of supporting a stable naira on both the supply and demand sides. President Buhari has driven Import substitution to reduce demand for dollars to buy things we can produce thereby creating thousands of rural jobs in rice and other staples. In addition, there is a credible plan to diversify our revenue sources away from oil, with a focus on export crops as well as solid minerals, with the release of US$100M fund to develop solid mineral extraction.

President Muhammdu Buhari has a positive and prosperous vision for Nigeria. A nation in which the natural talent and hard work of the people is being supported by an enabling environment for infrastructural development and policy reforms that will develop a firm future for our nation. Nigerians are looking forward and the PDP’s lurking in the economic rear view mirror only underscores the resolve of Nigerians, that as far as the economy is concerned it is ‘’never again.”

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