Even as we celebrate the victory of the All Progressive Congress’ presidential candidate over the effete People’s Democratic Party’s flag bearer at the March 28 polls, the one issue around which all descriptions of the economy’s near- to medium-term outlook are agreed upon is that the outgoing government may have spent the country out of pocket. Much of the available data on the current state of the economy support this view.
It all seems to have started with depressed oil prices in the international markets. True, the price of the economy’s main export earner fell from around US$116/barrel mid-June last year to about US$49/barrel today. But this was, according to the sales spiel issuing forth from government’s spokespersons, a rapidly transforming economy. Oil accounted for an increasingly smaller share of an improbably larger economy, where services and agriculture were the dominant play. So, why should falling oil prices matter so much?
An economy as diversified as government would have us believe ought to have had no need for the swingeing cuts to spending contained in the appropriation bill for this year, which the executive presented to the National Assembly. Nor should it have suffered balance of payments contractions as severe as that which has pushed both our external reserves and the naira’s exchange rate down.
In the end, much of the failure of the Jonathan administration as we moved towards the elections was institutional. Take the central bank. With one eye on the economic dashboard, and another on its sense of the fiscal authority’s preferences, it rapidly eroded both the external reserves and the naira’s exchange rate — the latter ended up falling by 7.8% over the last 3 months, and by around 20% in the 12 months to end-March 2015.
At the fiscal level, there was a vacancy of purposeful action that was so inconsistent with the elevated sense that the markets attached to the office of the Coordinating Minister for the Economy (CME), when this fancy post was first created. For the most part, the monetary authority drove the quasi-fiscal interventions that kept the economy stumbling along. Baring the odd “make-work” schemes, the CME’s office simply tried to talk up the economy over the last five years.
Yet, despite these, it would be wrong to ask that the incoming administration take shears to the central bank. Arguably, the whole point of granting it both legal and administrative autonomy was to ring-fence it from the tunnel-visioned focus on the electoral cycle, which it appeared to acquire as time ran out on the Jonathan administration.
The Buhari government will need to find ways to strengthen the bank further. On this count, its best contribution to sound macroeconomic policy making in the short-term would be to leave the central bank well alone. That way, the bank may be better able to focus on its immediate task of looking at rising domestic prices, including the naira, without further constraining domestic money banks’ ability to lend, or the economy’s growth prospects.
These “live and let live” sentiments do not hold for the office of the coordinating minister for the economy. This needs to be done away with as promptly as it was conceived. Final responsibility for the economy lies with the president, who may appoint a minister for this purpose. But we do need a finance minister with clear tax and spend remits, and who is able to tell us at the beginning of every year, how his/her budget proposals would drive growth in the economy, and in which sections thereof. The financial and economic ombudsman (the office of the CME) that was the last government’s contribution to policy making was a most inadequate fig leaf for doing nothing.
Then, there is the problem of counting. For us, it is largely a matter of what data there are. How many Nigerians access the internet, for example? And how do they do so? What would it cost to provide broadband connections nationwide? And by how much would the economy benefit therefrom? Would it make sense, based on these numbers, for government to “subsidise” the cabling (with fibre-optic) of the country? Clearly, we need to be able to count.
But the counting problem is also a matter of how we want to enumerate. The tedious process of collating voter numbers post-election point to a need to move some of our data gathering/processing challenges on to online real-time platforms. If the “card readers” deployed for the presidential vote were as important for the votes’ outcome as the punditry now claims, then the challenge is to move to strengthen popular support for, access to, and use of online, real-time resources.
On one level, the National Bureau of Statistics (NBS) matters as a part of this process. It is the nation’s preeminent number cruncher. But much of the data it releases is currently “paid for” by the central bank; and the central bank is paying for only such data as could help it drive its “price stability” goal. We do need more than the current data portmanteau that the NBS makes available. Data, in other words which could have helped us test the many claims of the Jonathan government’s ministers; and allow us over the next four years to hold the Buhari government’s feet a lot closer to the fire. Anecdotal evidence suggests that with appropriate funding the NBS could churn out more data on the economy than it is currently doing. It will matter, too, for the robustness of these data that we encourage third party provision of key numbers on the economy.
It would then seem that even as we focus on traditional “power ministries” (defence, finance, oil) in the assignment of portfolios in the next government, we cannot ignore new centres of power (communications and its regulation, for one) that have emerged over the last decade. While progress for this economy would mean that we deploy high-octane professionals to head these functions, the success of these “professionals” would, in turn, rest on how welcome they are of “crowd-sourced” solutions to our myriad national problems.
Mr. Uddin, an economic historian and finance expert, is a member of the editorial board of Premium Times.