But despite the potential side effects these measures could have had, GDP grew by 4.9%, the naira traded at N150 to the dollar and the inflation rate was stable at 10.84%. Oil prices averaged above $120 per barrel and the then President Goodluck Jonathan, was elected for four more years.
But now, with President Muhammadu Buhari at the helm, Nigeria’s economic and financial situation is arguably worse. At time of writing, the naira was trading at around N490 to the dollar in the parallel market and, while it has slightly recovered, the oil price is less than half of its 2011 value, at around $52 a barrel.
At the same time, inflationary pressures have been on the rise. In November 2016, annual inflation rose to 18.48%, the highest in more than 11 years and the 10th straight monthly rise, data from the National Bureau of Statistics showed.
Prices of food items such as yams, cassava, palm oil, fruit, vegetables, water, along with the price of electricity, gas and petrol, have risen in the last 10 months. For Nigerian citizens, daily life is becoming more and more expensive and the country is now in recession.
Emmanuel Esim, a Lagos-based civil servant, knows that in Nigeria when prices go up they do not fall again. When inflation started rising at the start of 2016, he withdrew N300,000 ($947) from his bank account and bought household goods, foodstuffs and other consumables that would last him and his family until the end of the year.
Today, he would need at least N600,000 to buythe same quantity of products. The Central Bank of Nigeria’s Inflation Attitudes Survey Report for the fourth quarter 2016, which sampled households’ attitudes to inflation and interest rates, showed that respondent households believe that the economy would end up weaker if inflation continued to rise.
“It is a difficult time we are facing in Nigeria. It was not what we bargained for when the new administration came in. We are looking into the future with little hope. I doubt if we will survive these price increases unless something drastic is done,” says Esim.
A 29-year-old supermarket attendant, Alvin Okafor, says his daily turnover has nosedived by nearly 40%, as many people cannot afford the new prices of commodities in his shop. “We see people stroll into the shop and buy nothing because of high prices of goods. It is worrisome,” he says.
Okafor, who voted for president Buhari, says the President is yet to fulfil a single promise he made, especially on fixing infrastructure and the economy. “This president pushed the economy to its first recession in 25 years and inflation to an 11-year high. I wish he could return the economy to the state he met it on May 29th, 2015,” he says.
Economist Bismarck Rewane says the country is in dire economic distress. “We have found ourselves at the lowest point of an economic crisis and on the brink of changing global order,” he says.
Addressing the Monetary Policy Committee meeting in November, Godwin Emefiele, governor of the Central Bank of Nigeria, said that in addition to its price and monetary stability mandate, the bank is also tasked with supporting the government’s policies on economic growth and unemployment reduction.
“One of the objectives of the bank is to build public confidence and support for sustainable economic development, price stability, and public understanding of the Monetary Policy Committee’s roles. The understanding and support by the public towards attaining the objectives of price stability would provide a more conducive environment for achieving macroeconomic stability,” he said.
Emefiele said that foreign exchange shortage, low fiscal activity, high energy prices and the accumulation of salary arrears, especially at the state levels of government helped to raise inflation figures. The solution, Emefiele said, was to continue to engineer monetary policy in such a way as to give fiscal policy the required space to improve public investment in infrastructure.
President Buhari is promising that the 2017 budget of N7.298 trillion will stimulate the economy and pull it out of recession but many Nigerians doubt the possibility of making headway through the budget as very little was achieved with that of 2016.
Ike Chioke, managing director, Afrinvest West Africa, says household consumption expenditure, which contributes more than 60% of aggregate spending in the economy, continues to decline. “In June 2016, household and government consumption expenditure fell 21.5% and 18.6% year-on-year in real terms to N18.9 trillion and N1.6 trillion respectively.
“The sharp contraction in consumption spending reflects weak fiscal revenue and steep increases in consumer prices pressuring household disposable income. Consumption expenditure will continue to drop in the near term due to declining real wages and increasingly thrifty consumers wary of uncertain economic outlook,” he says.
He believes that policy measures to ease supply-side shortages in the economy – particularly for foreign exchange – and subsequent easing of monetary policy will go a long way in stimulating investment and consumption spending to support aggregate economic performance.
“It is a difficult time we are facing in Nigeria. It was not what we bargained for when the new administration came in. We are looking into the future with little hope. I doubt if we will survive these price increases unless something drastic is done”