Highlights of the Financial Times Report on the current Nigeria Economy Under the Watch of Buhari
In his inauguration speech, the former military ruler, aged 72, said “careful management” would be needed to bring the Nigerian economy out of the “deep trouble” it was in. He also pledged to take action to tackle the Boko Haram insurgents who have terrorised the people of the impoverished north-eastern region and neighbouring nations.
Almost four months later, the country’s economic woes have deepened, while a rise in Boko Haram attacks has forced 800,000 people from their homes since June, according to UN figures published this month.
Mr Buhari is facing increasing criticism for not articulating a vision for Nigeria’s economy.
Economic growth slowed sharply in the second quarter to less than half the rate of a year ago.
The naira has lost more than 15 per cent of its value against the dollar in the past year. The central bank devalued the currency in November and February and has introduced capital controls and spent billions to avoid a third devaluation. Traders and analysts say this has caused liquidity to dry up and most are calling for a devaluation.
But because of the president’s relative silence and the lack of a finance minister or named economic policy team, the only person seen to be dictating economy policy publicly since Mr Buhari took over is the central bank governor, Godwin Emefiele, who was appointed by the previous administration. Mr Emefiele’s view that the currency is “appropriately priced” — despite the divide between official and black market rates and controversial measures such as effectively blocking certain imports, like rice — has bewildered economists.
If the currency is not devalued, market uncertainty and foreign outflows could cause foreign reserves to drop below the $30bn critical level needed to cover four months of imports, such as important food stuffs, says Mr Ebo.
“Nigeria is digging itself into a deeper hole as the days and weeks go by,” says Angus Downie, head of economic research at Ecobank. And, with oil prices unlikely to rise soon, Mr Downie says the government cannot rely on external forces to come to its aid.
This month, JPMorgan ejected Nigeria from its influential emerging markets bond index. The move triggered outflows, but some said the biggest implication of the exclusion was the hit to confidence about the management of Nigeria’s economy. “People will start asking questions about ‘do these people know what they are doing?’” says a Nigerian economic expert familiar with the administration’s thinking.
However, Nnamdi Obasi, senior Nigeria analyst at the International Crisis Group, says: “Clearly, there is a sense of anxiety and concern about economic direction, also because the president himself doesn’t have any economic credentials whatsoever and it’s not clear who is advising him.”
Highlight Culled From Financial Times: