The axe of recession dangling on the Nigerian economy was pointed out by Godwin Obaseki, while the resolution of the NGF on review of pump prices of petroleum products turned on the red light, and the NNPC report of a 98 per cent drop in monthly earnings appeared poised to drive the nail into the coffin but the NBS report has it that the Oil & Gas sector contributed less than 10 per cent to the GDP in Q2 2020. Kenneth Eze writes.
The Nigerian economy has had the knee of the present regime of the All Progressives Congress on its neck, probably from inception. It has already officially surrendered to two recessions since the APC took over leadership at the federal level from the Peoples Democratic Party in May 2015.
As part of events marking the anniversary of democratic governance in Nigeria, on May 29, 2021, the governor of Ebonyi State, Dave Nweze Umahi, wondered if the country had experienced two or three recessions in the last six years that the APC had been in power.
“These six years have been quite challenging,” said he.
Enunciating his administration’s strong scores amidst numerous challenges, within the period, he wondered, “I don’t know whether we have had two or three recessions.” Other challenges that could stifle the economy and even governance as deducible from his speech, include “all kinds of disturbances, the devaluation of the naira,” among other things which in his reasoning have led to a “turbulent economy”.
Going by the scorecard presented by the governor for the period in which he had served, – May 2015-May 2021, there are not many states in Nigeria, who can count themselves, as lucky as Ebonyi.
Ironically, the deft mind engineering game and strategy that the party in power at the federal level is known for has left most people bemused. The common man is finding it increasingly different to sift fact from fiction. Despite the Freedom of Information Act being in force in Nigeria, no one can attest to the free flow of accurate information, at least, not as it concerns governance and the economy.
Unfortunately, the code of honour among team members, as inactive politicians, might prefer to refer to active politicians in Nigeria, hasn’t allowed even the opposition PDP to speak audibly. Probably the opposition is also conscious of the detest for criticism by the present regime, and is so guided. It is apparent that those who dare to speak the truth to power, do so at personal peril of being hounded by law enforcement agencies.
Everything Gives Under Pressure
It would appear that the bubble burst when the governor of Edo State, Godwin Obaseki, alleged that the Federal Government had been minting between N50bn and N60bn to meet the monthly allocations to the confederating units from Q1, 2021.
Part of his statement, made on April 7, 2021, which didn’t go down well with politicians, particularly those saddled with the responsibility of managing the economy, read, “Last month, we got FAAC for March; the Federal Government printed an additional N50 to N60 billion to top-up for us to share.”
Though the governor made the statement during a meeting with the transition committee members of his government in Benin City, as part of efforts to manage expectations, encourage internal revenue generation and encourage frugality by government officials, it was met with stiff resistance by key actors of the Federal Government, including the Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Central Bank Governor, Godwin Emefiele.
Ahmed, who addressed a press conference after a Federal Executive Council Meeting, spoke on the matter, on this wise. “The issue that was raised by the Edo State governor, for me, is very, very sad because it is not a fact. What we distribute at FAAC is revenue that is generated and in fact distribution (of) revenue is public information.”
Emefiele simply waved the allegation aside as being political.
Opinions are, however, divided on the matter, as is often the case on issues concerning the public.
But for interested members of the public, it is no more the mere opinions of three governors, two elected to govern their states and one appointed to support the Federal Government in managing the economy, as the Nigerian National Petroleum Corporation in a recent report appears to have directed the public whom to go with.
The NNPC in a recent report disclosed that there would be no remittance to the Federation Account for May 2021, because earnings from crude oil export fell by 98 per cent in April, in comparison to March.
In raw figures, total revenue from crude oil exports in April stood at N723m as against the N35.72bn generated in March, the NNPC disclosed in the report.
Part of the report explained that because of the present situation, there would be, “No remittance to Federation Account in April for May 2021 FAAC due to recorded value shortfall resulting from difference between the landing cost and ex-coastal price of Premium Motor Spirit recorded in March 2021”.
With the NNPC going public on its current state of affairs, and oil remaining the mainstay of Nigeria’s economy, it is becoming more glaring that everything would give, when the requisite pressure is mounted.
With no certainty that the Federal Government could be held by her words that revenue shared was what was generated, it would ring true that Umahi and Obaseki were sharing perspectives that could not be swept under the carpet. After all, now that the NNPC would not be making the giant contribution to the revenue that would be shared, at least momentarily, how does the Federal Government intend to make up for the shortfall?
As how the shortfall would be managed and other issues engage the attention of well-meaning Nigerians, it appears that a critical segment of the active political class, had woken up to the fact that the economic game must be tinkered with. The headwinds in the oil sector has come so strong against the Nigerian economy that it has become tougher than imagined to continue playing the ostrich.
No wonder, the Nigerian Governors’ Forum rose from a recent virtual meeting with a recommendation of an upward review of the pump prices of petroleum products in the country, from the present rate of N162.50 to between N385 and N405 per litre.
Interestingly, the NGF arrived at the resolution after a receiving and reviewing the report of a six-man committee set up by the Vice President, Yemi Osinbajo, in his capacity as the chairman of the National Economic Council, to consider the issue of dwindling revenues.
The Committee was made up of four governors, namely, Nasir El-Rufai, (Kaduna State), Godwin Obaseki (Edo State), Kayode Fayemi (Ekiti State) and David Umahi (Ebonyi State). Other members of the committee were, Godwin Emefiele, Governor of the CBN, and Malam Mele Kyari, Group Managing Director, NNPC.
Of these six members, four have spoken, publicly.
While Obaseki called for caution on borrowing, Umahi decried the state of the economy, wondering how many times it had experienced recession in the last six years, and Kyari (through the NNPC report) averred that there’s no more money to be shared.
Little wonder the El-Rufai committee had the courage to recommend an upward review of pump price of premium motor spirit, as a way of ameliorating Nigeria’s economic fortunes.
The above scenario and many more that the public might not be privy to might have informed the NGF resolution backing the recommendation of the El-Rufai committee to the jerk-up in pump price of petroleum products.
However, it would appear that for obvious reasons, the APC government considers tampering with the pump prices of petroleum products contentious. And as soon as the news broke out, organised labour sounded a note warning that any attempt at increasing the pump prices of petroleum products would be resisted.
There are indications that for a government contending with internal wars on several fronts, it would be risky to add organised labour to the long list of antagonists. Little wonder, this has left the government in a dilemma on how to tackle the economy.
So, how would the government sustain daily running and debt servicing?
It appears the simple answer is borrowing, borrowing and more borrowing. The Federal Government is busy pilling up debts.
Mortgaging the Future?
While the government is busy negotiating loans internally and externally, the public is more concerned as to what the fate of the economy would be in the mid to the long term.
While borrowing in itself is not entirely bad, some of the things that give well-meaning Nigerians sleepless nights include the level of borrowing and what the borrowed funds are applied to.
A manager with one of the financial regulatory agencies, who does not want his name in print, volunteered in an interview with The Point that “borrowing is most suitable for investment or in the case of nations, infrastructural development. But it appears that in the Nigerian situation, the government is borrowing for consumption and to fuel corruption, which can amount to mortgaging the country’s future.”
On the likely impact of the NNPC report on the economy, he said, “only those in charge can tell if the figures they are dishing out are true. But their body language is becoming increasingly difficult to discern.”
Urged to give his opinion on the likely impact, he said, “the impact would depend on the percentage contribution of the NNPC to the country’s GDP.”
However, the National Bureau of Statistics, Gross Domestic Product Report Q2 2020 has it that the oil sector contributed 8.93% to the national GDP for that period. Major drivers of the GDP according to that report at Services 53.49%, Agriculture 24.65% and Industries 21.87%.
On why the Nigerian has been meandering in and out of recession under the APC government, he said that “the general notion is that Nigeria’s major foreign exchange earner is the oil and gas sector, backed by the Diaspora remittances.”
