As if we needed reminding?
For those who have not paid much heed (especially by ignoring the signals from reading between the lines of official statistics on the economy), and others who may have forgotten, the return of fuel queues across the country remind us of how apt a description of the Nigerian situation, Jean-Baptiste Alphonse Karrs’ observation was. “Plus ça change, plus c’est la même chose”! The one gain from the nearly four years of the incumbent administration is how it has helped us realise that you need not be a dibia, a babalawo, or a bōkā to know that the more things change in this country, the more they appear to remain the same. And it wouldn’t matter a jot if you were only born in 1999 — for the change cycles that the country suffers from are shortening, remarkably.
To appreciate the extent of this stasis, all you need do is pay attention to the numbers on the economy. These tend to provide a foil to the Panglossian narratives that regularly spew forth from the throne. Of late, one of the more seductive of the latter accounts is the one that describes how the economy has returned to growth off the concerted effort of the Buhari administration. Much of the underlying conversation is technical. Two consecutive quarters of contracting growth in an economy usually means it’s in a recession. A “recovery” is, thus, more than one quarter of growth after such “recession”.
Two quarters, then? Waste of time really. Most commentators on the Nigerian economy have it growing this year and next. So, there is much to recommend the government’s argument about the economy’s recovery. Besides, not only has the central bank managed (through less-accommodative monetary policy) to stabilise the external price of the naira. Even the naira’s “internal” price (a function of inflation) is on the mend, as domestic prices rise ever more slowly.
Were unemployment numbers more cooperative, government could even have touted a fall in the misery index (the sum of the seasonally-adjusted unemployment rate and the annual inflation rate) as one of its many achievements. Beyond this point, though, chilly winds begin to blow, and the petals fall off government’s roses. As indicated by the queues at the filling stations, key parts of the economy are not working as well as they ought to. Most importantly, both business and consumer spending are still treading deep waters. All of the current recovery, is therefore, the result of improvements in government spending and in the net exports position (i.e. the difference between what we export and what we import).
In the first three quarters of this year, the economy’s total trade was up by 42.2% from ₦11.89 trillion in the first three months of last year to ₦16.91tn. Despite the naira’s recent travails vis-à-vis other traded currencies, imports rose by 13.7% to ₦7.23tn over the same period. Exports, on the other hand, grew by ₦4.15 trillion to ₦9.68 trillion (from ₦5.53tn). In other words, net exports, at ₦2.45 trillion (along with government spending) was a major contributor to domestic output growth in the nine months to end-September 2017.
The story told by the incumbent government begins to thin when you consider that of the six export sectors for which data are gathered on the economy (crude oil, manufacturing, other oil products, raw material, agriculture, solid minerals, and energy), only crude oil delivered a positive trade balance in the January-September period. Supported by elevated prices in the global market, and improved domestic production, the trade balance for crude oil was up by N7.77tn in the first nine months of this year against the N4.56tn recorded in the same period last year.
Unable to claim responsibility for improvement in global crude oil prices, is government allowed at least a few Brownie points for improvements in the domestic market for crude oil production? Yes. But only in the extent to which it has kept the militants in the oil-rich Niger Delta region pacified. Alas, evidence of the improvement in both domestic productivity numbers and in installed capacity across economic sectors — both of which are necessary if the current recovery in the economy is to be meaningful and long-lived are scarce across other sectors. Although the fall in the naira’s exchange rate did boost total exports of manufactured goods from N115.51bn in the first nine months of 2016, to N229.92bn in the same period this year, it did not have a sufficiently correspondingly moderating effect on imports. The latter fell marginally to N3.44tn from the N3.55tn recorded last year.
If imports were of capital goods, then the size of the trade deficit in manufactured goods wouldn’t have mattered much. All we would have been required to do would be to exercise patience enough for the lag between planting factories and the assembly line beginning to churn out products to play through. Nonetheless, we already have evidence that the foreign direct investment component of our capital importation was down in the review period. An analysis of the source countries for our imports (China, 22.3%; Belgium, 13.0%; United States, 8.0%; the Netherlands, 7.6%; and India, 5.1%) confirm that much of these items are consumables.
Put differently, as we have done since 1960, we have sold more oil than we have any other product from the domestic economy; and we have used the proceeds therefrom to import all the economy’s needs. Thus, both increases in government spending and net exports (the main contributors to the output growth that we currently bruit about, and against which we have borrowed hand over heels) are but derivatives of improved performance in an exclave of our economy. One, whose operation successive governments have recognised as pernicious to the sustainable growth and development of the country.