Former President Olusegun Obasanjo on Wednesday lambasted President Goodluck Jonathan’s administration over the state of the country’s economy, saying government was deceiving Nigerians with its claims of fantastic economic growth.
“What the public know or see of the economy is not what the economy truly is,” the former president told guests in Abuja at the public presentation of an autobiography of the former Chairman Independent Corrupt Practices and other related Offences Commission, ICPC, Mustapha Akanbi.
“The economy is in the doldrums, if not in reverse. The often-quoted GDP (gross domestic product) growth neither reflects on the living condition of most of our people, nor on most of the indigenous industries and services where capacity utilization is almost 50 per cent,” he added.
The Finance Minister, Ngozi Okonjo-Iweala, had said during a recent media briefing in Abuja that “in spite of global uncertainty, the country’s economy continues to evolve with dynamism, stability and resilience riding on sound macroeconomic management, even in the face of oil price and quantity shocks.”
According to Mrs. Okonjo-Iweala, the government’s strong macroeconomic management capacity had resulted in the country’s GDP growth (estimated at 6.5 per cent in 2013) being one of the fastest in the world (26th), with the recent GDP rebasing making the country the largest economy in Africa ahead of South Africa.
But the former president said the recent developments around the economy as a result of falling global oil prices are indications that such claims of superior economic performance are a farce, particularly the management of the proceeds from oil and gas resources, which shows the country did not adequately prepare rainy days.
He blamed the poor economic situation in the country on corruption, adding that the non-investment and disinvestment in the oil and gas sector by the major international oil companies had added another dimension to the issue.
Nigeria’s continued heavy dependence on oil resources, he noted, had not adequately prepared the country against any shock, pointing out that with the $78 per barrel benchmark proposed in the 2015 budget, it was clear the country would be in a bind if oil price fell to $75 per barrel.
“We had not adequately prepared for the rainy days in the management of proceeds from oil and gas resources. With crude oil purchase by the U.S. from Nigeria going down by some 30 per cent in the last three years as a result of shale oil revolution, things are not looking up in the oil and gas sector, and hence, in the economy,” he noted.
Referring to the prediction by the International Energy Agency, IEA, that global crude oil price would continue to fall through the first half of 2015 and even to the end of the year, Mr. Obasanjo said with the shale oil revolution and U.S. self-sufficiency in energy as well as possibility of her becoming a net exporter, the country must re-strategize to survive.
If nothing is done to check the situation, the former president said the country may in future find it difficult to fund its budget and may have to borrow to pay salaries and allowances.
Revenue allocations to states and local governments, he noted, had already drastically reduced in recent times, with capital projects at all levels drastically cut or stopped.
Though the Central Bank of Nigeria, CBN, on Tuesday announced the immediate devaluation of the Naira by 8.38 per cent to stem crashing value of the national currency, Mr. Obasanjo warned that sooner or later the country may be compelled to drastically devalue again without any benefit to the commodity economy.
“We will all sink deeper in poverty, except for those who have corruptly stashed money abroad and who will start to bring such illegal and illegitimate funds back home to harvest more Naira. All the economic gains of recent years and the rebuilding of the middle class may be lost.
“In the end, more businesses will close down, business men and women, entrepreneurs and investors will incur more debts. Foreign investors may temporarily stop investing in a downturn economy. Because of the Naira depreciation, workers, particularly in the public sector, will ask for pay increase, which may be justified, but will sink us deeper in the swamp.
“The scenario, which may sound alarmist, is hard to imagine, but the signs are there, and it would appear that those who should act are dancing foxtrot, while their trousers are catching fire,” Mr. Obasanjo said.