Inflation, monetary policy rate, foreign exchange differentials and shrinking foreign direct investment punctured President Muhammadu Buhari’s eight years of administration, a finance expert and development economist, Kelvin Emmanuel, posited at The ICIR weekly Twitter space programme on Friday, May 19.
The ICIR Twitter space was created to discuss topical issues in the economy, politics, health, governance, and other matters of national interest.
Emmanuel, it’s guest speaker on Friday, addressing questions on the topic, ‘State of the Nigerian Economy under Buhari’, submitted that Nigerians could weigh Buhari’s economic achievements based on the realities on the ground.
“It is quite unfortunate that the government believes that they have done better in the last eight years,” he said, “when the realities on the ground proved otherwise.”
Emmanuel added, “People are struggling to eat, inflation is at an all-time high, and foreign direct investment has fallen below in record time.
“I struggled to understand how they claimed they have done better in the last eight years.”
According to him, the reality is that inflation was double-digit at 22.04 per cent as of April this year, a far cry from a single digit of 9.0 per cent in May 2015.
The MPR, too, had throttled to 18 per cent at the last monetary policy committee meeting in March.
“If inflation is at 22.04 per cent and MPR is at 18 per cent, by the time we add management, appraisal, facilitation, and documentation fees and others, the commercial lending rate would have gone to between 28 per cent and 31 per cent.
“How can a company, for example, borrow money at a 31 per cent interest rate and still be in business?” Emmanuel questioned.
He also noted the exchange rate disparity between the naira and dollar, which had surged from N196 to a dollar in 2015 to N461/$1 at the official window, and is hovering around N745 to a dollar at the black market rate.
On the Central Bank of Nigeria (CBN) advancing N22.7 trillion borrowing to the Federal government, Emmanuel said, “We notice that since the CBN embarked on the quantitative easing, through ways and means, we have seen corresponding devaluation between 2019 and 2023.
“We have seen the naira drop significantly, inflation has accelerated over this period, and that has affected the monetary policy committee position on the MPR.”
He expressed worries that Nigeria is in a “wholly messed-up situation” as the purchasing power of the people continues to drop.
“As inflation keeps rising, per capita income will continue to drop, which means that the purchasing power of the masses will keep shrinking by the day,” he said.
Emmanuel faulted the model used for calculating the consumer price index (CPI), asserting it was outdated.
The National Bureau of Statistics (NBS) still uses the National Economic Survey of 2004 against the recommended National Living Standard Survey of 2018, which has a more elaborate basket for calculating inflation.
Emmanuel said that the 2004 model for calculating inflation captured only food and energy price.
“Times have changed; that basket is broader now. So, it is left for the NBS to adapt to the times and widen the basket to better reflect the realities on the ground.
“Inflation in Nigeria is more than 40 per cent, but the NBS official inflation rate is 22.04 per cent,” he said.
According to his thoughts, the outgoing government should have focused on stimulating economic growth by improving the people’s human development index (HDI).
Buhari’s ideology of closing the borders, widening the budget and relying on the central bank to provide the deficit financing of the budget “was a hit missed”, the economist added.