Nigeria in 2018
Nigeria’s economic trajectory in 2018 is fairly predictable-after exiting recession in Q2 2017 with revised growth of 0.72% and consolidating with GDP growth of 1.4% in Q3 2017, Nigeria willbe likely to continue incremental improvements in GDP growth in 2018. The government targets 3.5% output growth in its budget projections, but the IMF’s projection of 1.9% is more cautious. The bad news is that the exit from recession and modest 2017 growth were almost entirely driven by oil sector developments-oil prices reaching over $60 per barrel, and improvements in domestic crude production to around 2 million barrels per day, due to relative calm in Nigeria’s volatile Niger-Delta.
The broader Nigerian economy is less encouraging, with the non-oil economy remaining in recession as at the end of the third quarter, contracting by 0.76%.Most economic sectors-trade, financial services, manufacturing, construction, transport, public administration, real estate, telecommunications, education and health continue to contract rather than grow at least as at the end of September 2017. The growth rate of agricultural output has declined from 4.5% to just 3% over the last one year. So Nigeria’s economy remains vulnerable and any shockto either oil prices or production could conceivably send the economy back into recession, or delay substantive economic recovery! The government is unclear about its policy direction for both the upstream and downstream sectors and has been unable to take the simple decision of deregulating the downstream! The policy confusion is compounded by leadership squabbles between the minister of state for petroleum, Dr Ibe Kachikwu who doubles as NNPC board chairman and Dr Maikanti Baru who is CEO of the corporation, we do not expect significantly better policy, so the country is left to the vagaries of global oil prices and the mercy of Niger-Delta militants!
The other thing that is virtually certain about the Nigerian economy in 2018 is that it is likely to be expansionary! The budget proposed by President Buhari of N8.6trillion ($28.24billion) is a 16% increase on the approved 2017 budget and almost $4billion increase in dollar terms. 2018 will be substantially devoted to politics and the budget proposals reveal a significant increase even in recurrent expenditure projections, suggestive of a likely wage increase. The government late in December appointed over a thousand persons into federal boards and statutory corporations! In effect Buhari and the APC will spend more on the Nigerian elite and people in 2018 in order to retain power in 2019!!! So we can expect monetary authorities to face a difficult struggle to constrain inflation and lending rates, as well as to sustain the official exchange rate of N305/$. The president will of course reject any attempt at an official devaluation so we might expect larger margins between official and market exchange rates. The president will also insist on current prices for gasoline so expect queues to continue at petrol stations! On the other hand, excess spending may fuel some diffusion of oil effects into other sectors and lead to higher growth.
It might already be obvious that political decisions will get in the way of sensible economics in 2018. Buhari’s intention to get a second term in 2019 is evident and he is pursuing a strategy I’ve previously described as the 4 Rs-reconciliation with the ruling party “leader” Bola Tinubu; rapprochement (as much as is possible) with the South-East and South-South regions which remain an opposition bastion; rewards and re-integration for disillusioned party loyalists (as exemplified by recent federal board appointments and a promised expansion of the federal cabinet); and retribution for those with the audacity to challenge him, such as ex-Vice President AtikuAbubakar who has returned to the PDP to run for presidency. Buhari’s biggest “opposition” may be his health,dire social conditions as poverty, unemployment and insecurity worsen and deep disappointment across the country with his performance, and his most formidable challengers may be Atiku Abubakar, current Sokoto governor Aminu Waziri Tambuwal (who may also cross to the PDP), former Kano State governor Rabiu Kwankaso and former Jigawa governor, Sule Lamido. The current governor of Gombe State, Dankwabo, former Senate President David Mark, parliament leaders-Senate President BukolaSaraki and House Speaker Yakubu Dogara, and former Head of State Abdulsalam Abubakar could be wildcard possibilities. There is increasing possibility of a third force composed out of civil society as many younger and middle class Nigerians tire of the two main parties, which increasingly appear like two sides of the same coin!
The most influential political platforms in the short-term will however remain the ruling APC, now essentially composed of a Northern Muslim “CPC” core around Buhari; a Southern Pentecostal Political Action Committee which I describe as RCCG PAC led by Pastor Enoch Adeboye and represented in government by Vice President Yemi Osinbajo (who has appointed many adherents into influential positions in government); some Southern current and former governors including Rotimi Amaechi, Adams Oshiomole, Rochas Okorocha, Babatunde Fashola and Kayode Fayemi; and Tinubu who after equivocating on Buhari’s 2019 aspirations, may have resolved (at least publicly) that his interests are best served by supporting the president!
The resurgent PDP has improved its viability after getting rid of the treacherous Modu Sherrif as chair, but didn’t help its 2019 chances by seeming to exclude the large South-West voting bloc in its convention calculations-it may yet remedy this weakness?; and civil society formations may revolve around the agitation for “restructuring” with the South-West “Afenifere”; leading activist Professor Pat Utomi and lawyer Olisa Agbakoba; some progressive Igbos who want a “handshake across the Niger”; Northern and Middle-Belt Christians who have suffered from the hands of “boko haram” and now “Fulani herdsmen”; and the disaffected Northern Shiite Muslim movement whose members will oppose Buhari’s re-election as payback for his brutality against the group; leading the effort.
2018 will of course be the year the 90 minutes is played, with the actual election year next year amounting to no more than “extra” or “injury time”-most of the action and confusion will happen this year!
Opeyemi Agbaje