Thursday, May 6, 2010

Umaru Yar’Adua’s Economic Legacy

Former President Umaru Musa Yar’Adua is a man with good wishes and intentions for Nigeria but whose debilitating health did not quite allow to make sufficient positive impact on the country. In the area of economy, the Ex-President ideas are embedded in two key initiatives viz. the 7 Point Agenda and the Vision 20: 2020. Quite unfortunately, he couldn’t see any of the two programmes to fruition. For instance, one of the indicative parameters under the Vision 20: 2020 was that Macro Economy will experience “A sound, stable and globally competitive economy with a GDP of not less than $ 900 billion and a per capita income of not less than $4000 per annum” this and the key infrastructural development that was meant to happen as part of his seven point agenda had not been achieved largely due to the global and domestic financial crises which started in 2008 and negatively impact on the nation’s Stock Exchange as well as the Banking and Insurance Sectors of the economy. Share price had lost between 70 to 80% of their value while the nation’s currency – Naira has depreciated against the world’s major currencies like Euro, Dollar and Pound Sterling.

There is credit crunch in the economy as banks refuse to lend money due to the Central Bank driven reform that saw to the removal of eight out of the 24 banks Managing Directors in August and October 2009. The financial sector is still undergoing reforms to enable them recover. The Niger Delta crises saw to the heightening of insecurity in the region and resulted in the country not being able to meet its OPEC production quota. There was also fall in the price of crude oil in the international market which translates to the inability of the government to fund its annual budgets. In order to tackle this Niger Delta crisis, Yar’Adua initiated the amnesty programme as well as the creation of the Niger Delta Ministry. However the inability to declare the state of emergency in the power sector and to also achieve the much touted 6,000 MW of electricity means the economy still runs on electricity generators with concomitant increase in the cost of production by manufacturing companies. This has necessitated the closure of many factories with some of them relocating to better climes.

There were also too many industrial unrests particularly in 2009 as different sectors of the economy went on strikes to press home for better condition of service and living. Yar’Adua’s administration was also plagued with energy crisis as the country witnessed perennial fuel scarcity as a result of over reliance on importation of petroleum products for domestic consumption. The late president attempted to introduce deregulation of the downstream sector of the petroleum sector. This has been put on hold. The introduction of Petroleum Industry Bill (PIB) sparked off huge controversies which has stalled the passage of the essential bill. It is noteworthy that Yar’Adua granted 10% equity to the host communities under the PIB however, the non-passage of the bill means the communities cannot yet enjoy the royalty.

In perhaps one of his last earthly assignments, Yar’Adua in a budget speech meant to be delivered while presenting the 2010 budget to the National Assembly in November 2009 said this about the Nigeria economy: “Notwithstanding the global economic crisis, the Nigerian macroeconomic environment has improved with macroeconomic stability maintained in 2009 due to Government's proactive response to the crisis.
As a result, economic growth has remained resilient, with real GDP growth for 2009 estimated to be about 5.86%. Headline inflation has fallen from 15.1% in December 2008 to 10.4% in September, with core inflation falling to 7.4% over the year to September 2009. The government's debt position remains sustainable, with an external debt stock of US$3.86billion as at the end of October 2009. Indeed, our total public debt is estimated to be less than 10% of our GDP, showing that it is still within acceptable and cautious limits compared to countries in our peer group. Our external reserves position is secure, with reserves increasing from US$43.19billion in early July to US$44.095billion at the middle of October 2009. The official and parallel market exchange rates have converged considerably as a result of further liberalisation of the inter-bank market by the Central Bank.”

If the above assertions of former President Yar’Adua is to be believed, then it will be safe to say that under his chequered administration, the country witnessed growth without development. According to a development theorist, Dudley Seers, to say that there is economic development, we must asked three pertinent questions: What is happening to inflation, what is happening to unemployment and what is happening to poverty? If any of these three is increasing, then there is no development. In my own opinion, under the administration of Umaru Musa Yar’Adua, what majority of Nigerians experienced is high cost of living rather than high standard of living.

My advise to the newly sworn in President Goodluck Jonathan is to pursue the infrastructural development, substantial increase in electricity generation as well as increase agricultural production to ensure food security. He must also see to the successful completion of the amnesty programme as well as put structure in place for security of the country against external aggression and internal insurrection. Goodluck to Jonathan, your time starts now!