One of the economic legacies of the Buhari administration will be high inflation. Even though he assumed office in May 2015 with inflation at 9%, poor economic decisions meant it peaked at 18.7% in January 2017, at the same time the country was in the grip of recession. In his five years as President, headline inflation has averaged 13.2%, while food inflation has averaged 15%.
A major reason for this high inflation is the unending quest to defend the value of the Naira. To control dollar demand following the crash of oil prices, the CBN banned 41 items from accessing foreign exchange in June 2015. Several capital controls were also put in place to prevent foreign exchange leaving the country. This widened the gap between the official rate and the parallel market rate, which was nearly ₦200 at one point in 2017. It also had the effect of driving away investment, and tipped the country into recession. In addition, land borders have been closed since October 2019, further strangling trade, a sector that is the second largest employer of labour in Nigeria.
A direct line can be drawn from these policies to the country’s dire unemployment situation. Data published on 14 August by the NBS showed overall unemployment at 27.1%, with underemployment at 28.6%. Investors who are unable to take duly earned profits out of the country due to the administration’s policies either shut up shop or stay away altogether. It reduces economic activity, which results not just only in jobs lost, but in jobs not created at all.
We think the raw numbers will drive this home: as of 29 May 2015, Nigeria had 54.4 million people in full time work. Today, Nigeria has only 35.6 million people working. Nigeria has 44.7 million people out of work. On the African continent, only the Democratic Republic of the Congo, Egypt, Ethiopia, Kenya, South Africa, Tanzania, Uganda, and of course Nigeria, have more people. Then add inflation. Simply put, a loaf of bread which costs ₦100 today will cost ₦115.84 in a year’s time.
With as little as 18 months before the race to succeed President Buhari begins to actively distract governance, time is running out for this administration to avoid being remembered as one that promised so much, but ultimately delivered so little.
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