May 29th 2024: Buhari’s first year out of Office as thr President

May 29th 2024: Buhari's first year out of Office as thr President
May 29th 2024: Buhari's first year out of Office as thr President

Abba Hamisu Sani

Africa-Press – Nigeria. 29th of May 2024 exactly marked one year of former Nigerian President Muhammadu Buhari out of Office as the fourth Nigerian elected President since the nation returned to the Presidential system of government in 1979.

He has been the most celebrated politician in Nigeria since he joined politics in 2002 as the Presidential candidate of the defunct APP which changed to ANPP.

After the party refused to anoint him as its Presidential candidate in 2011, the retired Army General formed his party Congress for Progressives Change -CPC which he contested the Presidential election under its banner. The former President emerged second even though his party was new then, this development prompted the Lagos-based politician and a major opposition pillar Bola Ahmed Tinubu the incumbent Nigerian President to facilitate the merger and alliance with Buhari’s party alongside his political party Action Congress of Nigeria-ACN which dominated the southwest states politics, ANPP, and some factional members of People’s Democratic Party ( PDP) and All Progressives Grand Alliance (APGA) in 2014.

This move resulted in the formation of Nigeria’s ruling All Progressives Congress-APC.

Buhari’s 8 years tenure plus his economic policies

The income generated by way of company income tax (CIT) between when President Buhari took office in 2015 and last December stood at N11.5 trillion, according to the statistics office. The government posted its biggest earrings ever from CIT in the four quarters of 2022, all summing up to N2.8 trillion for the year.

Tax and Fiscal Incentives for Start-upsUnder the Nigeria Start-up Act 2022, start-ups, as well as angel investors, private equity funds, accelerators/incubators and venture capitalists, are eligible for tax reliefs and incentives under the Pioneer Status Incentives Scheme.

They are also excluded from the payment of income tax under the Industrial Development (Income Tax Relief) for an initial period of 3 years and are not affected by the restrictions under the Companies Income Tax Act.

They are qualified to enjoy an investment tax credit equivalent to 30 per cent of their investment in the start-ups.

Road Infrastructure Tax Credit Scheme

The Buhari administration introduced the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme in 2019 with a view to enabling public-private intervention in the construction, refurbishment and maintenance of critical road infrastructure in Nigeria.

Nigeria, President Buhari said in September 2022, requires N348 trillion over the next decade to meet its infrastructure needs and, a functional road network is central to this aspiration.

Mondaq, the New York-based legal industry intelligence syndication service, estimates that given the N4.9 trillion (excluding statutory transfer component) planned for capital expenditure in the 2023 budget, it will take the Nigerian government almost 70 years to bridge the infrastructure gap.

The Road Infrastructure Tax Credit Scheme allows participants to use the total cost incurred in the process of building or refurbishing an eligible road as a tax credit against future company income tax liability until full cost recovery is achieved.

About 54 road projects across the country have enjoyed the scheme between 2019 and 2022 including Onitsha-Enugu Expressway, Bonny – Bodo Road and Apapa-Oworonshoki-Ojota Road. Some of the beneficiary firms are the Dangote Group and BUA Group.

Border Closure. The Nigerian government, in August 2019, partly shut its land borders and, two months after, totally embargoed trade via land borders. The move was aimed at curbing the smuggling of rice and other prohibited goods into Africa’s largest economy as well as the illegal exportation of locally subsidised petrol to West African neighbours.

Minister of Finance Zainab Ahmed said in October 2019 that the action was interventionist as “we have to protect our own industries.” she said

Between August 2019 and when President Buhari approved the reopening of Nigeria’s four major land borders in December 2020, headline inflation had spiralled to an almost three-year peak of 14.9 per cent.

Restriction on foreign exchange for food imports

In the same month during which it announced a partial closure of the country’s land borders, the Nigerian government ordered the Central Bank of Nigeria to stop providing foreign exchange for the importation of fertiliser and food items on its import bill.

That was in addition to the 41 items for which forex for their importation had already been banned in 2015. The government noted that those items could be produced locally and boosting their production would not only help conserve the foreign exchange reserve but also help diversify the oil-dependent economy.

One big impact of the policy shift was the launch in March 2022 of the Dangote Fertiliser Plant, which has an installed capacity of 3 million metric tons of urea per annum and is planned to export fertilisers to the US, Brazil and India.

Monetary Policy Performance Review

The 8 years of the former Nigerian President Muhammadu Buhari 2015 to 2019 were characterised by ups and downs as far as fiscal and monetary performance is concerned ,even though the negatives seem to outweigh the positives.

Apart from the oil price crashes in 2016 and 2022 ,which plunged the crude dependent economy into a recession in both years,there were other factors that pressured Nigeria’s fiscal sustainability and also made monetary policy decisions particularly difficult.

From record inflation and high exchange rates to steep subsidy spending and oil theft ,the country’s fiscal framework has grown much more fragile ,and the by the government to source debt to fund its spending plan piles on the agony.

Since the administration began in 2015,the Nigerian government has missed its revenue targets without ceasing ,with only the official figures for 2022 still outstanding.Debt servicing devoured almost all the revenue last in 2022.Also the record indicated that string of rate hikes is was suppressed inflationary pressures and put more strain on browsers ,while dollar crunched back to 2020 made things difficult for importers in a country which heavily depend on foreign goods.

The Positive polices of Buhari’s eight years

The list of the economic downturn seems to be endless but a commendable impact was made through policies like Tax and Fiscal Incentives for Start-ups as well as the Road Infrastructure Tax Credit Scheme.

According to the World Bank’s Macro Poverty Outlook for Nigeria: April 2023, the country spent 96.3 per cent of its revenue for 2022 on debt service, the culmination of a fiscal crisis that has built up for years.

That compares to 83.2 per cent one year prior, taking public debt stock to 38 per cent of Growth Domestic Product, just shy of the 40 per cent threshold set by the government.

“Nigeria is in a more fragile position than before the late 2021 global oil price boom.In 2022, the cost of the petrol subsidy increased from 0.7 per cent to 2.3 per cent of GDP. Low non-oil revenues and high-interest payments compounded fiscal pressures.”The World Bank said.

It also expects Nigeria’s fiscal deficit to surpass five per cent of GDP until 2025 in the absence of a substantial increase in crude oil earnings and tax reforms.

Nigeria’s debt is on track to surge by half after the National Assembly endorsed President Buhari’s move to convert a 23.8 trillion Naira overdraft into bonds repayable over 40 years. That is projected to shoot the country’s debt to at least 69 trillion naira.

The temporary financing from the Central Bank of Nigeria, called Ways and Means Advances, could be availed by the bank to the government subject to a maximum of 5 per cent of the previous year’s revenue, with the funding expected to be repaid within the same year.

Financing the government’s fiscal deficit through Ways and Means Advances has in some way dampened the impact of increasing the benchmark interest rate to rein in inflation, experts say, given that it has rather expanded the supply of money.

The Central Bank of Nigeria (CBN) overdraft had soared by 2,900 per cent from 790 billion naira to 23.7 trillion naira within the first seven years of the outgoing administration.

Fuel subsidy Spendings 2015 to 2020

Nigeria committed 5.5 billion to petrol subsidies between 2015 and 2020 ,according to the Breakfast Meeting report of The Economist ,while 3.8 billion dollars was spent on the same purpose in 2021.

Data from Nigerian National Petroleum Company -NNPC Limited showed fuel subsidies cost the country 9.7 billion dollars in 2022 taking the total for the last seven years to 19 billion dollars.

The Buhari’s administration earmarked 3.4 trillion (7.3 billion dollars) for fuel subsidy in 2023 which ended by June the same year with no provision for the second half of the year.

Much as ecomists and analysts have called for subsidy removal over the years to ease the strain on revenue ,the subject remain sore point among past governments ,and the fear that abolishing it could spark protests cause the Buhari’s Government to abandon its initial plan to remove it but leave it for the new administration under Tinubu which implemented it on it first day.

The Revenue Performance of Buhari’s administration

Data from the Budget Office of the Federation Indicated that ,the Buhari’s leadership set out to achieve 6.8 trillion naira revenue ,but ended up earning 4.7 trillion ,translating to a shortfall or an underperformance of 43…2 per cent.

Both the oil and the non-oil components of revenue missed the mark ,so much that revenue shrank by 23.9 per cent year on year.

For 2016 ,revenue of 5.7 trillion was projected but only 3.7 trillion naira was achieved ,reflecting a deficit of 35.7 per cent.An oil crash that year created fiscal difficulty for an economy for an economy that relies on crude oil earnings for more than half of its revenue ,setting the Buhari administration up for the first of its two recessions.

Again both oil and non -Oil revenues lagged behind targets compared to 2015 , revenue slid by 22.4 per cent as the government planned to generate 8.5 trillion naira naira or 58.1 per cent.Year on year revenue improved by 34.3 per cent but both oil and non-oil components of revenue fell short of projections.

For 2018 ,the then government set it self a revenue target of 10 trillion naira but was able to achieve only 7.1 trillion or 68 percent of that.Both oil and non-oil revenues fell below targets.However revenue was 43.7 per cent greater compared to the previous year.

The projection for 2019 was 11.8 trillion.Never the less ,just 6.2 trillion or 52.6 per cent was achieved.Again both oil and non-oil revenues missed the targets.Year on year ,revenue dropped 12.9 per cent.

For 2020 8.6 trillion was the target for revenue but 6.5 trillion on 76 per cent was achieved.While the government missed its projection for non-oil revenue.However revenue contracted by 27.1 percent year on year.

The projection for 2021 was 8.4 trillion even though 6.4 trillion or 75.6 percent was achieved.Oil revenue beat forecast during the year.Year on year revenue diminished by 2.4 percent.

Available data shows that Buhari’s administration generated 10.1 trillion in Value Added Tax (VAT) from inception to the end of 2022, according to the National Bureau of Statistics data.The boost in VAT rate from 59 to 7.5 per cent in 2020.

Zainab Ahmed is the former Nigeria’s Minister of Finance.He said Nigeria has the least Value Added Tax worldwide.

She stated this in 2023 towards the handing over from Buhari’s administration to his successor President Bola Ahmed Tinubu.

“VAT is one of the ways to increase revenue and we still have to increase it because ,at 7.5 per cent ,Nigeria has the lowest VAT rate in the World ,not in Africa,in the world” the former Finance Minister said.

Zainab also identified the nees for its increment to 10 per cent which inturn some analysts described as an additional burden to Nigerians and it could hamper the economy of the nation at that period.

Musa Yusuf is a business and economic analyst and the Chief Executive Officer of the Centre for the promotion of Private Enterprise. He said the revenue performance from VAT during Buhari was excellent.

He advised the then government not to add the tax especially in the light of all the challenges that businesses are facing at that particular time.

The analyst said the income generated by way of company income tax (CIT) between when President Buhari took office in 2015 and December 2022 stood at 11.5 trillion naira, according to the statistics.The government posted its biggest earnings ever from CIT in the four quarters of 2022, all summing up to 2.8 trillion naira for the year.

Negatives plus Positives under Buhari’s watch

Abubakar Abdullahi Gwandu is an economic analyst and a lecturer with Kaduna Polytechnic.He said Buhari inherited a bad economy but there is no government in Nigeria that injected the kind of funds Buhari had injected in to the economy through various interventions.

“Analysing economic issues and the situation of this country ,one has to take many variables into consideration;situations ,event ,developments and circumstances ,otherwise ,you form a judgement which may eventually appear to be somehow wrong an unfair ,you see the major problem of Nigeria is not even the individual but we focus attention mostly on who is a leader.Certainly a leader have a very important role to play i n shaping the economic policies by making them very effective ,what ever policy he may have designed that policy hardly work if it is not considering the fundmental issues on the ground.

When Buhari took over ,the economy was already on shamble ,we are aware of a statement made by the Dr. Ngozi Okonjo Ewela ,the former Nigeria’s Minister of Finance which says at that time ,if proper action was not taken the Nigerian Economy would crash.I think she made a very strong opinion and fact and the statement made by the reinstated Emir of Kano Sanusi Lamido Sanusi then as the Governor of the Central Bank of Nigeria which stated similar opinion ,This is nothing other than over dependence on one economic factor ,on one source of income ,on one means of survival ,which at that moment there is shake on it ,there entire economy was quite shivering ,this what was happened in Nigeria ” Gwandu said.

The analyst added that Nigerians were aware that at the time the Buhari took over in 2015 the economy was not in good shape which was as a result of falling of the prices of the crude oil in the global market ,then in 2019 corona comes in as we were yet to recover from oil price fall ,all this put more pressure on the economy.

The analyst said that Buhari’s administration introduced different programmes with the aim of revatalising the economy by pumping money into it but corruption was the main stumbling block for their achievement.

He added that no development can take place in Nigeria under what ever government when corruption is not tackled.

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