State of economy : Nigerians predict hope, despair in 2016


Despite the economic downturn of 2015, most Nigerians believe there is still hope considering the programmes and budget implementation of government. ABIODUN AWOGBEMI and JOHNMARK UKOKO report.

The Nigeria economy witnessed downturn in 2015 been an election year with high level of electioneering which crippled all forms of governance. Many Nigerians have aired their views on what they expect from government in 2016.

2016 budget: The budget according to many economic analyst believes that there is hope for the country if the budget was implemented to the letter.

The president anchored the budget on the introduced 2015 to 2017 Medium Term Expenditure Framework (MTEF) which was introduced by the ousted immediate ruling party.

The federal Government had proposed a budget of N6.7 trillion for the year 2016 which Nigerians said is much higher than the N4.6 trillion 2015 budget of the previous government

According to economy analyst, Mr Bamidele Ajibola was stated that the Buhari administration had to contend with two unfavourable factors inherited from the previous administration.

Ajibola said the administration had to contend with the unusual and the deleterious management of the economy during the past administration’s five years governance while the drop in oil prices, which accounts for high portion of government’s revenue which started dwindling from mid-2014, and reduced the country’s earnings from the sector by half.

“The challenge that could hamper the 2016 budget lies on how to revamp the economy via increased government spending despite the dwindling official government revenues.”

In the budget, N4.28 trillion was allocated for recurrent expenditure and N1.8 trillion for capital investments.

However, against the expected revenue streams, there is much to be worried about what is in absolute terms the country’s largest allocation for debt service.

However, it is doubtful that the current situation in monetary policy will aid the budget. Many commentators doubted that non-residents would willingly put money in an economy with no discernible outlets for repatriating earnings, which is one consequence of the Central Bank of Nigeria’s (CBN) current management of the nation’s foreign exchange space.

The Peoples Democratic Party (PDP) spokesperson, Olisa Metuh on the budget stated that, “Some people may be wondering why we raised the alarm about the budget. The reason is simple. When we analysed the budget, we discovered it is a misshapen attempt at a Keynesian economics of applying deficit spending to stimulate growth even when studies have proven that GDP growth rates decrease by over 50 per cent when debt goes from low or moderate to high. But then we know the borrowing here is to pay huge campaign debt and fund a political war chest.

The Abuja Chamber of Commerce and Industry (ACCI) said in spite of the bleak economic outlook and predictions for Nigeria, the 2016 budget proposal holds key to the nation’s economic recovery.

Its President, Tony Ejinkeonye, who spoke in an interview in Abuja, argued that that if the budget proposal is passed by the National Assembly and it is faithful implemented, it holds the promise of setting the economy on the path of quick recovery.

He said: “Despite the prediction that oil price may fall as low as $20 per barrel, there are still huge potentials for inclusive growth and sustainable development, notwithstanding the fact that about the 50 per cent revenue is expected from oil receipts to fund the N6.08 trillion budget together with the projected increase from internally generated revenue (IGR).

“For the country to actualise its goals, we need a measure of fiscal discipline and strict budgetary control monitoring and implementation.

Employment of 500,000 teachers: This according to expert was a welcome development to arrest the drift in the educational sector.

The president had during the presentation of the budget stated that on the issue of unemployment that the government would in the interim create employment for 500,000 teachers.

He said: “As an emergency measure, to address the chronic shortage of teachers in public schools across the country, we also will partner with state and local governments to recruit, train and deploy 500,000 unemployed graduates and NCE holders.

“These graduate teachers will be deployed to primary schools, thereby, enhancing the provision of basic education especially in our rural areas.

A public school teacher, Mrs Adijat Ogunfemi said the measure is the best to arrest the dwindling educational standard in the country.

Funding of N5, 000 welfare scheme: The government explained that N5,000 monthly welfare payment will be made to vulnerable Nigerians.

The government explained that beneficiaries of the N5,000 monthly payment would be required to meet conditions, including enrolment into the country’s development agenda.

On how the funding of the N5,000 welfare scheme would be achieved, the government explained that: “What we want to achieve by our social intervention of which the conditional transfer is just one part, is to move out millions of Nigerians from poverty. That is why we have this half a trillion naira social intervention.

“Part of what we intend to do with the half a trillion naira is to train market women, artisans and unemployed graduates in the art of management and also give them loans to start their own businesses. Part of our social intervention also includes the transfer of N5,000 to the most vulnerable people.

“And we are being partnered in this by the World Bank and other multilateral organisations. It has been done in many countries before and we believe that it can be done here. Many people have written ridiculously about N5,000 and claimed that it is not up to what they spend on recharge cards. And we said yes, those who are writing such things are not the average Nigerians we are seeking to help.

Nigerians across board agreed that the scheme will not bring up any possible result and impact on the people and the economy

Introduction of BVN: With the increasing incidents of compromise on conventional security systems (password and PIN), there is a high demand for greater security on access to sensitive or personal information in the banking system and to address existing challenges with identity management, the Central Bank of Nigeria (CBN), in collaboration with all Nigerian banks launched a centralized biometric identification system tagged Bank Verification Number (BVN).

The BVN gives each Bank customer a unique identity across the Nigerian banking industry that can be used for easy identification and verification at point of banking operations.

Biometrics refers to identification of an individual based on physiological attributes- fingerprint, voice, facial features etc.

The BVN according to banking experts said it would help reduce incidence of financial fraudsters who are daily stripping bank customers of their earned finances and savings.

Reduction in fuel pump price: The federal government has hinted that fuel pump price will hover around N85. 50K and N86. The reduction however minimal according to a commercial driver, Mr Sule Adewale stated that the quantum of the small margin if compounded together will be huge at the end of say a week considering the amount of fuel they buy daily.

Introduction of toll gate: Some Nigerians are in support of it while others do not see the rationale behind it owing to the massive fraud associated with toll collection before former president Olusegun Obasanjo dismantled them about eleven years ago.

Some Nigerians has commended the move saying it will be another way of generating revenue for the government to maintain all the dilapidated roads thereby reducing accidents and snarled traffic

The minister of Transport and former governor of Lagos State, Babatunde Raji Fashola informed the populace that there is every need to introduce toll gate in all federal roads as a means of generating revenue to the government since the revenue from the oil sector cannot service the expenditure of the government.

But a critical question arises on whether the money spent on and gained from it would be used for the benefit of all, and not get into certain private pockets, as often is the case.

Mr Sunday Ocheyenor, a public analyst insist that reintroduction of the toll gate system to Nigeria’s federal highways is a necessity that would prove to be effective should Babatunde Fashola, the federal minister of power, works and housing, ensure transparency.

He said those who are sceptical about the return of toll gates have a point, unless, of course, the government use the revenue generated from the toll gates to fix the highways which have long become death traps. Because of the poor allocation of funds to the works ministry over the years, 80% of the federal roads in the country are in dire need of repairs as they have exceeded their life span. Apart from poor maintenance resulting in huge craters, some of the roads, especially in the southsouth and southeast regions of the country, have been destroyed by gully erosion.

Ocheyenor said the toll gate operators must be carefully monitored. Electronic devices should also be deployed for efficiency and to prevent the toll gate operators from engaging in sharp practices which at the end would defeat the purpose of re-introducing the toll gates.

The federal government should also come up with a reasonable and affordable toll to be paid by all categories of vehicles so that the burden would not be too much on the motoring public who are ready to make the needed sacrifice for the roads to be in good condition and to safeguard their own lives and those of their passengers on the nation’s highways.

Increase electricity tariff: The issue has been argued forth and back as the Minister of Power said the increase in electricity tariff is to allow the investors in the sector to be able to make ends meet.

The Senate said the increase should wait until there is an appreciable increase in power supply while the consumers has rejected the increase on the basis that the products has not been stable while they have been paying for darkness all the while

The National Association of Chambers of Commerce and Industry, Mines and Agriculture (NACCIMA) cautioned the federal government against increasing electricity tariffs.

The National Vice-President of NACCIMA, Prince Billy Gillis-Harry, who gave the warning in Abuja, said there was need to involve stakeholders in the deciding what the consumer will pay.

He insisted that before the proposal for the increase in tariff, consumers have been paying more than what they consume because of the compromise in the system.

Certificates as collateral: The Central Bank of Nigeria (CN) directed that commercial banks can accept certificates as collateral for borrowing by the youths in starting an SME business.

The directive according to a banker, Mr Olabimbo Ilori said it is doubtful if the banks can accept the directive except the government can make available a separate funds for the process.

CBN forex restrictions/use of debit card overseas: Foreign currency restrictions will be lifted only when reserves have been built up to an appreciable level, the Central Bank of Nigeria (CBN) at the tail end of 2015 placed some restriction on foreign currency.

The decision by Deposit Money Banks (DMBs) to limit the use of their debit cards overseas, according to the CBN’s Director, Monetary Policy Department, Mr. Moses Tule, is not forever but the restrictions will be lifted “as soon as there is build up reserves;

Tule said the moment the reserves start to build up then most of the restrictions will be lifted, but for now every hand needs to be on deck. We need to earn foreign exchange. As a country you can improve your business processes in order to export and earn foreign exchange and that is what the country is calling on patriotic Nigerian businessmen to do.”

There have been criticism of the restrictions and banks’ decision to limit the use of debit cards overseas.

The CBN explained the rational as the limitation on the use of debit or credit cards outside the country was not a limitation that was placed by the CBN. They were restrictions that Deposit Money Banks (DMBs) placed because they have to settle whatever transactions you make with your debit cards with their corresponding banks in foreign currency and if the banks do not have the foreign currency to do that then you create a liability on them which will crystallise on their balance sheets.”

According to Ilori on the use of dollar card he said the currency legal tender is the naira, not the dollar; “you cannot expect carrying out dollar transactions over the counter in an economy whose currency is not dollar-denominated; we must learn to respect our systems and laws that govern our system.”

Treasury Single Account (TSA): The account according to analyst will help bring accountability and curb excessive corruption in the MDAs. Federal Government under the leadership of President Muhammadu Buhari in accordance and compliance with sections 80 and 162 of the 1999 Constitution, ordered each and every Federal Government Ministry, Department or Agency to start paying into a Treasury Single Account (TSA) for all government revenues, incomes and other receipts.

The government stated that all receipts due to the Federal Government or any of its agencies must be paid into TSA or designated accounts maintained and operated in the Central Bank of Nigeria (CBN), except otherwise expressly approved.

The initiative was championed by the Federal Ministry of Finance with the office of the Accountant-General of the Federation serving as the implementing agency, in collaboration with the Central Bank of Nigeria (CBN).

A TSA is a unified structure of government bank accounts enabling consolidation and optimal utilisation of government cash resources. It is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.

Insurgency: The president promised the country that the Boko Haram will be wiped out before the end of the year. It was based on the promise that the military with newly acquired weapons laid siege and waged war against the insurgents. Most of the local government captured by the insurgents were recovered in November 2015, while the insurgents resulted to attacking soft targets by using teenagers as suicide bombers. This was equally reduced in December while the internally displaced person were promised to return to their homes in the first quarter of 2016.

Fight against corruption: The fight against corruption reached its peak with the arrest and detention of the former National Security Adviser to the immediate past President, Dasuki who named some of the beneficiaries of the $2.4 billion security votes. Some of the beneficiaries such as the owners of Daar communications, Thisday Newspaper, among others were equally arrested and detained before been released on bail to stand for prosecution. It was gathered that some politicians have opted for plea bargain by returning the alleged corrupt enrichment.

Petrol scarcity: Nigerians grappled with dilapidating shortage of petrol across the country as the year drew to an end while the Federal Government and the Nigeria National Petroleum Corporation (NNPC) gave sundry reasons for this round of fuel scarcity which led many Nigerians to continue to wonder on why a country so endowed with crude oil should on a regular basis experience petroleum products scarcity. But the government has said that with the production of the Kaduna refinery and Port Harcourt, it will end the incessant fuel scarcity and antics of the marketers

Transportation: The government has reiterated its resolve to revamp the railway network in 2016 to encourage mass transit of passengers and goods across the country.

The Minister of Transportation, Rotimi Amaechi, said the Abuja-Kaduna railway line would be completed in 2016 while work would also start in earnest on the standard gauge on the Calabar-Lagos and Lagos-Kano routes, the Calabar-Lagos line, which according to him, is to traverse Obudu Cattle Ranch, Uyo, Aba, Port Harcourt, Yenagoa, Otuoke, Ughelli, Sapele, Benin, Agbor, Asaba, Onitsha, Benin, Ijebu Ode, Ore, Sagamu and terminate at the Lagos seaport.

According to a transport management expert Mr. Adebayo Sobowale, explained that transportation is a serious business which can be a source of revenue for the government.

He said with the strides by the transport minister, the sector in 2016 will begin to be a real source of revenue for the government and a major driver of the nation’s economy,

A member of the Organised Private Sector (OPS), the Lagos Chamber of Commerce and Industry (LCCI), has painted an admixture of cautious optimism for the nation’s economy on the one hand, and a bleak outlook on the other for 2016.

LCCI’s Director-General, Muda Yusuf, in a statement, entitled, Economic and Business Review in 2015 and Perspective for 2016, said that the N300billion projected funding of the Small and Medium Scale Enterprises (MSMEs) by the commercial banks would boost lending to the sector, grow agriculture and create employment as well as increase the chances of the countries foreign exchange earnings in non-oil export, its thoughts on declining global oil prices and its consequence on government’s revenue, as well as firms honouring contractual obligations to their financiers, were bleak, suggesting that the economy may yet tread a turbulent trajectory in 2016.

The chamber warned of the likelihood of default across the business spectrum in 2016 due to cash flow hic-ups. “Risk of default in financial obligations in both public and private sectors will be high as macro-economic conditions and cash flow, remain tight,” Yusuf said.

The LCCI chief expressed optimism that in 2016, GDP growth is expected to rebound (as against its decline in the 3rd quarter of 2015, when it dropped to 2.84 per cent ), to about 3.5 per cent, if, as he put it, “the right mix of fiscal and monetary policies are put in place to stimulate the economy and attract domestic and foreign investments.” He said while the recovery is expected to be driven by increase in government expenditure, the growth in oil sector may be constrained still by low price and investment drive.

He said the exchange rate volatility is expected to persist fuelling high inflation of about 10-11 per cent, stating however that correction towards Real Effective Exchange Rate (REER) in the form of exchange rate adjustment is likely in the first quarter of 2016, suggesting that this will reduce the pressure on external reserves.

The Director-General, Nigeria Employers’ Consultative Association, Mr. Olusegun Oshinowo, advised the Federal Government to refrain from making policies that will further constrain the ease of doing business.

He emphasised the need for the government to give hope to Nigerians in terms of qualitative policies with long-term impact.