When I first saw the headline yesterday, I thought it was a joke. All papers reported that President Buhari has just launched a long-tern national development plan three weeks before leaving the office he had spent eight years in. I read the story and he is indeed proposing an economic governance plan for the country until the year 2050. For the first two of his eight years in power, he refused to even appoint economic advisers. When he eventually appointed a team and they proposed a plan – the Economic Recovery and Growth Plan (ERGP), he refused to implement it on the grounds that the Central Bank Governor, a nice man, has been giving him trillions of Naira through “ways and means” so he does not need to take any tough economic decisions.
I wonder how deeply insulted the incoming president will feel when the man who could not implement a plan for himself, offers one to somebody who actually listens to experts and advisers. I am more concerned about the reality of someone who has been both a military and civilian president and has no notion of a mandate being tied to the period served in office and not beyond. We all recall that the other big economic governance policy measure that President Buhari has taken is that the fuel subsidy regime, which he has stubbornly refused to implement while in office, in spite of advice from all quarters, would be removed from first June 2023, a couple of days after he has left office.
Clearly, he does not even understand that such action is an insult and is deeply disrespectful of the incoming government. Above all, someone should have been bold enough to explain to him that his mandate ends on 29th May 2023 and that it is illegal, null and void to leave new plans for the next government. There is continuity in government but an out-going government cannot concoct new plans it cannot itself implement for another. It is also annoying that the tough decisions he MAYBE now knows he should have taken should be taken by others after him but he wants to take the credit for the decision-making. The 101 of policy implementation is that governmental decision-making is valid within the period the person in charge has a mandate, not before, not after.
The Nigeria 2050 Plan he is proposing is essentially fiction. It claims that it will ensure that Nigeria attains a GDP per capita of $33,328 per annum, placing the country among the top middle-income economies in the world by 2050. According to World Bank data, Nigeria’s GDP per capita was only $2,065.7 in 2021. President Buhari said him plan has the vision of a dynamic, industrialised and knowledge-based economy that generates inclusive and sustainable development for the country. Excellent words. The irony is that his own Plan were never implemented – the Economic Recovery and Growth Plan (ERGP), 2017-2020. The Plans lapsed in December, 2020 so there are no links between his own economic actions in the last three years – based on borrowing to pay for fuel subsidy and what he is proposing in the new plan without fuel subsidy. In other words, the new Plan is simply a public relations ploy for him to say he left a plan of action for the government coming after him. It’s pathetic because President Buhari borrowed so massively during his tenure that the government’s debt burden is so much that all in-coming revenue is now used for debt servicing with no resources left for development. How then would the plan be financed and implemented.
In seven years, President Buhari collected advances to the federal government which rose 2900 per cent to N23.8 trillion, an unprecedented rise that violated the law, stoked inflation and worsened the country’s debt burden. These so-called Ways and Means Advances, are tightly controlled by law as they can fuel inflation and distort monetary policy. In May 2015 when the Buhari administration came into office, the CBN’s loans to the federal government stood at N789.7 billion cumulatively. His government then went on a spending spree. For example, between January and October 2022 alone, the government drew N5.6 trillion. By comparison, between December 2012, the earliest date the CBN has released data for and May 2015, a period of two and half years, ways and means advances rose by N654.9 billion. This week, after a long hesitation, the National Assembly approved that the advances be wiped off by converting them to long term bonds.
Meanwhile, the law is clear. The CBN Act says the CBN may grant advances to the federal government to cover temporary deficit of budget revenue at such rate as the bank may determine. It however warns that the total amount of such advances outstanding shall not at any time exceed five (5) percent of the previous year’s actual revenue of the Federal Government. In addition, it stipulates that, ALL advances shall be repaid as soon as possible and shall, in any event, be repayable by the end of the Federal Government financial year in which they are granted and if such advances remain unpaid at the end of the year, the power of the bank to grant such further advances in any subsequent year shall not be exercisable, unless the outstanding advances have been repaid.
The law has therefore been violated repeatedly by President Buhari because there were no repayments for the eight years and the CBN under the – “you ask and I pay policy” of Godwin Emefiele of the Central Bank. If the regulation had been followed, the ways and means to the government for the entire 2022 should not exceed N219 billion (5 per cent of the government’s revenue in 2021). The National Assembly approval of converting the CBN loans to bonds with a maturity of 40 years and an interest rate of nine per cent, effectively transfers much of the bill to the next generation of Nigerians.
Meanwhile, the spending has significantly spiked inflation as the CBN became a massive pomp to inject cash into the economy. The most serious concern is that the Central Bank appears to have voluntarily given up its independence by pumping as much money as the government requests. The challenge now is to see if the in-coming government can wean itself from this path of easy money. Meanwhile, we still have three more weeks of President Buhari in power so we will see what other policy directives he devises for the in-coming government when he returns from the Coronation of King Charles III.
