According to a report by Mr. Bismarck Rewane, Chief Executive Officer of the Financial Derivatives Company Limited in Lagos and a member of President Muhammadu Buhari’s Economic Advisory Council (EAC), which compared major economic indicators under the current administration with those under previous presidents since 1999, Nigeria has experienced the worst economic outcomes under Buhari’s leadership.
Rewane made the assessment in a presentation he gave during the August installment of the monthly Breakfast Session at the Lagos Business School, a copy of which THISDAY was able to secure yesterday.
By comparing the country’s average Gross Domestic Product (GDP) growth rate, average inflation rate, percentage change in exchange rate at the beginning and end of each presidential tenure, external reserves at the end of each administration’s tenure, external debt measured in billions of dollars, and the external reserve minus external debt under each administration, the economist came to the conclusion that Buhari’s administration has produced the worst economic results for Nigeria.
According to him, the average GDP growth rates during the administrations of Obasanjo, Yar’Adua, Jonathan, and Buhari were 7.7%, 7.1%, 5.5%, and 1.1%, respectively.
Additionally, under the administrations of Obasanjo, Yar’Adua, Jonathan, and Buhari, the average inflation rates were 12.19%, 13.18%, 9.70%, and 14.07%, respectively.
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Additionally, the percentage change in the exchange rate under each president was 26%, 27.4%, 63.5%, and 150.2% under Obasanjo, Yar’Adua, Jonathan, and Buhari, respectively.
Furthermore, Rewane’s study found that, at the conclusion of the administrations of Obasanjo, Yar’Adua, Jonathan, and Buhari, respectively, the external reserves were $43.17 billion, $32.34 billion, $28.57 billion, and $39.18 billion.
Additionally, under the administrations of Obasanjo, Yar’Adua, Jonathan, and Buhari, respectively, Nigeria’s external debt was $3 billion, $10 billion, $15 billion, and $40 billion.
The statistics he provided also revealed that under Obasanjo, Yar’Adua, Jonathan, and Buhari, Nigeria’s external reserves less external debts were $40.17 billion, $22.34 billion, $13.57 billion, and $-0.82 billion, respectively.
According to the data above, Buhari’s administration had the lowest average GPG growth (1.1%), highest average inflation rate (14.07%), highest rate of exchange rate depreciation (150.5%), highest external debt (40 billion dollars), and lowest external reserve (-0.82 billion dollars) after deducting external debt.
The late president Yar’Adua’s and Jonathan’s administrations amassed external reserves of $32.34 billion and $28.57 billion, respectively, while Buhari’s administration amassed an external reserve of $39.18 billion.
Rewane noted that a political leader could be fully hands-on and effective, aloof and effective, incompetent and ineffectual, or willing but unable in terms of leadership style and economic outcomes.
Furthermore, the economist made it clear that under Buhari’s administration, “Nigeria is approaching the fiscal cliff with a fiscal deficit of N3.09 trillion and actual debt service was more than revenue between January and April 2022. In addition, the excess crude oil account was depleted to $375,000 in July 2022 from $35.7 million in June 2022.”
The federal government was expected to generate N1.63 trillion in revenue between January and April, but Rewane’s data shows that it actually generated N3.32 trillion. It was also expected to spend N5.77 trillion, but Rewane’s data shows that it actually spent N4.72 trillion in the first four months of 2022.
In addition, the government only managed to implement N0.77 trillion in capital expenditures between January and April 2022, falling short of the N1.82 trillion it had intended to spend.
However, according to the report, the Buhari government spent N1.94 trillion on debt service, which was 37.11% more than the N1.22 trillion it had budgeted for between January and April 2022.
Rewane nonetheless asserted that the nation’s “debt level is still sustainable” despite his opinion that it would be conceivable for the debt levels to become unsustainable given the direction Nigeria has been heading in “towards high debt distress risk as debt service rises faster than fiscal revenue,” and “signaling a debt management problem.”
He also stated that higher oil prices boosted FAAC’s disbursement in July when, “FAAC allocation spiked by 17.86 per cent to N802.41billion in July 2022,” as “increases were (also) recorded in CIT, PPT, and import duty and oil and gas royalties.”
In the short run, he continued, an increase in taxes and non-oil export earnings would raise FAAC allocation.
According to Rewane’s forecast for the month of August, the price of oil would remain stable at around $95 to $100 per barrel, while “FAAC disbursement will drop again to N650 billion.”
He noted that since the “excess crude account is now dried up, the Naira will probably depreciate again towards the N695/$ to N700/$ range at the parallel market,” while the “CBN will allow for a partial crawling peg in the foreign exchange market, bring the I & E rate down to N440/$ in September and the interbank money market rates already surging, will test 18 per cent per annum to 20 per cent per annum.”