State Emissary, November 2017. Issue 1 2017 Edition | Page 25

SM | POLITICS
That is only recovery in a technical sense: a
recession technically happens when Gross
Domestic Product (GDP) growth in an economy
is negative for two consecutive quarters. This
growth was driven by the oil sector, not the real
economy, and remains fragile. If we continue to
record positive GDP growth, even from our
current very low base and no matter how small
this growth may be, we will have started
recovering from recession — technically. No
doubt, some of our leaders will flaunt such a
meager performance as evidence of progress.
with no protection for the rainy day as oil prices
began to decline in late 2014. We therefore had no
fiscal buffers to help us defend our economy from
the implications of the oil price fall for the naira.
The value of the naira depends on external
reserves built on the back of crude oil price sales
that bring in more than 90% of our forex earnings.
The second factor is that of weak economic
management by the present federal government.
The government refused to make the necessary
policy adjustments and has instead gone on a
borrowing spree. We have increased our external
borrowing by 46% (from $9.46 billion to $13.81
billion) in the past two years. We now spend over
60% of all our revenues, weak as they already are,
on debt servicing.
Make no mistake also: we have suffered economic
destruction on a massive scale in the past two
years. From a GDP of $568.5 billion in 2014 we are
down to $406 billion in 2016 — and that is if you
are using the official exchange rate of about 305
Naira to the dollar. If you calculate with the
We are where we are because of wrong political
parallel market rate of
decisions that have
N366 to a US Dollar, our
prevented us from
GDP today is well less
achieving real economic
than $300 billion. That is
development. From the
Our political leadership choices have
a massive erosion of our
very
nature of Nigeria as a
kept our economy down. The policy
petrostate on fiscal life
national wealth. Foreign
response of the present federal
support
from crude oil
investment into Nigeria
government only bred corruption and
sales for nearly 50 years
was $5.16 billion in 2016,
arbitrage in the management of forex
instead
of creating a
the lowest in seven years.
and negatively impacted manufacturing
productive
economy with
That figure was $9.6
companies, leading to declining output
diversified streams of
billion in 2015, and $20.75
and further job losses”
forex income, to the venal
billion in 2014. This
depletion of our savings
means that we have had
by politicians who
more than a 75% decline
insisted, against the
in foreign investment into
advice of technocrats, that we should not save for
our economy between 2014 and now.
a rainy day because “the rain is already beating
us”, and on to a rigid and statist approach to
Why did all this happen? And what should we as
economic management for political reasons that
Nigerian citizens do about it?
have served vested interests but not the poor
masses in whose name these misnomers were
This massive economic contraction has happened
proclaimed as “policy”, our political leadership
largely as a result of cumulative bad political
choices have kept our economy down. The policy
leadership. We know, of course, the story of the
response of the present federal government only
sharp decline in oil prices starting from 2014,
bred corruption and arbitrage in the management
which is a major factor. There are two other
of forex and negatively impacted manufacturing
important factors. The first was the depletion of
companies, leading to declining output and further
the Excess Crude Account by the Federal
job losses.
Government and State Governments that
insisted on drawing down from the account, from
Our nominal GDP per capita, which is the best
about $22 billion in 2007 to approximately $2
measurement
of the inclusive nature or otherwise of
billion as of December 2014.This left our country
NOV. 2017 |23