President Muhammadu Buhari appears to be held captive by the fear of bold economic reforms and continues to be indifferent to sound economics, thus pushing Nigeria along a dark alley of power, foreign exchange and fuel shortages which threaten to throw the country into a recession.

Africa’s biggest economy has the continent’s largest gas reserves, yet suffers daily electricity blackouts, is the largest oil producer but is currently enmeshed in petrol shortages, has a huge market that should in theory attract investment flows but now deals with dollar shortages.

GDP growth has slowed considerably, the misery index is worsening and the non-performing loan situation of banks and creating a new pressure point in the economy as beleaguered firms fail to service their credit obligations.

In a note yesterday dated “one year after Nigeria’s elections”, Bank of America said, “approximately one year has passed since President Buhari was elected. Since then, the oil price has fallen by 32%, the equity market is down 26% and spreads on the 2023 Eurobond are 220bp higher. Policy uncertainty continues to weigh on the markets. The Naira peg is overshadowing some significant reforms that have been made.”

Analysts say behind all these problems is the fear of letting market forces allocate resources efficiently and a stubborn fixation on discredited government command and control policies.

“President Buhari must take responsibility for the results of his actions,” a senior investment banking source speaking anonymously, told BusinessDay.

“The government has to take some decisions promptly. Removal of FX controls has to be one and fuel subsidies have to go.”

Business sources say a recession (two consecutive quarters of negative growth) may be unavoidable for Nigeria due to the damage being done by ongoing energy and forex shortages and there is also the real likelihood of inflation ramping up to 12% this month say economists.

Signs of the slowdown are evident everywhere in the megacity of Lagos that drives most of Nigeria’s economic output.

International flights into the city are recording half filled seats; while imports that drive consumption were down by 9.2 percent last year, data from the National Bureau of Statistics (NBS), show.

The manufacturing sector contracted again in March, as the Purchasing Managers Index (PMI) printed at 45.9 percent, according to a March 31 report from the Central Bank of Nigeria (CBN). A reading below 50 indicates contraction.

Some 80,000 manufacturing jobs are set to disappear in Nigeria, mostly as a result of the President’s FX policies, according to the Lagos Chamber of Commerce and Industry (LCCI).

“Across manufacturing people are beginning to shut down. It is happening across the sector” said Babatunde Odunayo, a former CEO of Nigerian conglomerate Honeywell Group.

“Family owned businesses are shutting down,” Odunayo said.

President Buhari’s policy of pegging the naira at N199 per dollar has exacerbated inflation and unemployment as traders and retailers base prices on the black market rate hovering near N320/$1.

Nigeria’s inflation rose by 11.4 percent in February and its unemployment rate pushed into double digits at 10.4 percent in the fourth quarter of 2015.

Economic growth dropped to 2.8 percent last year, the slowest since 1999 and will decelerate further to 2.3 percent in 2016, the International Monetary Fund (IMF) said March 31.

By comparison, the World Bank forecasts that Kenya’s gross domestic product (GDP) would expand 5.9 percent in 2016 nearly double Nigeria’s expected growth rate.

Across the vast country, fuel queues are now the norm as the President refuses to deregulate prices, while blackouts have returned with a vengeance.

“Lower oil prices should provide an ideal backdrop to deal with the fuel subsidy regime. Subsidies benefit the rich (who consume more fuel) disproportionately,’’ said Razia Khan, Managing Director, and Chief Economist for Africa, at Standard Chartered Bank.

The dollar shortage is linked to the ongoing fuel shortage because most major oil marketers cannot source dollars to import products, leaving state owned NNPC as the only major importer.

This weekend, the President heads to China which has devalued its currency four times in the last one year but Buhari insists on holding the Naira at an artificial rate and fixing the pump price of petrol in Nigeria at N86.5 per litre, even as no one outside the main cities of Lagos and Abuja is able to get it to buy it at that price.

The latest PMS watch from the NBS shows that the average price Nigerians purchased PMS in January was N109.59 per litter.

Today, with the ongoing scarcity, the retail price has shot up astronomically, making nonsense of the government’s policy choices.

“It’s N1, 500 last price for five litres,” a black market dealer tells BusinessDay in Lagos.

The calculations come to N300 per litre or more than 240 percent above the Government official price.

Government interference in the upstream oil sector through price fixing for gas and NNPCs ineffectiveness and inability to finance its gas JV stakes has made the country with Africa’s largest gas reserves of about 187 trillion scf, unable to generate more than 5,000 Mw leading to daily blackouts.

Actual power generation for some time last week hit a low zero megawatts for the entire country of 180 million people.

Investors have fled Nigeria as a result of the confusion and flawed policy choices.

JPMorgan Chase and Barclays have taken Nigeria off their emerging market bond indices; while the country’s benchmark stock index (NSEASI) has returned negative 11.04 percent ytd with N1.094 trillion in market capitalisation wiped off.

http://www.financialwatchngr.com/2016/04/07/power-fx-fuel-shortages-cripple-nigeria-as-buharimonics-continues-to-fumble/

Let's all pray for our country.

Let's be clear. FX is not crippling Nigeria it is crippling d dollar. Fuel has never been sold at the right price in did country bcoz PDP looters collect bribes from Western countries to use us milking cows. Don't know about light by I happy for the FX and Fuel. We must refine our own feul even if we have suffer we must refine it then sell.

enlightenedmind:
Let's be clear. FX is not crippling Nigeria it is crippling d dollar. Fuel has never been sold at the right price in did country bcoz PDP looters collect bribes from Western countries to use us milking cows. Don't know about light by I happy for the FX and Fuel. We must refine our own feul even if we have suffer we must refine it then sell.

I wish others will understand the way you do. They have turned their eyes away from the reality that we import virtually every thing we need. Oil is the main source of our forex.

enlightenedmind:
Let's be clear. FX is not crippling Nigeria it is crippling d dollar. Fuel has never been sold at the right price in did country bcoz PDP looters collect bribes from Western countries to use us milking cows. Don't know about light by I happy for the FX and Fuel. We must refine our own feul even if we have suffer we must refine it then sell.

amaechi1:



I wish others will understand the way you do. They have turned their eyes away from the reality that we import virtually every thing we need. Oil is the main source of our forex.

Good response..... but I need to question your administrative sense........ What happens to the "one-step-at-a-time" principle that negates "putting all your eggs in a basket"?

It is only not professional, it is also a wicked act for an administrator to want to restructure the administrations key component all at a single time, there are technical process to approach things. I can never shut down business operation of my clients all in the name of carrying out a maintenance or a troubleshoot, they will loss money and I won't get paid. If I will have to do that in worst case scenario, it means the client is spending money and not making money. Same thing applies to running a country, infact serious caution must come to play.

chriskosherbal:
Let's all pray for our country.

Heavens help those who help themselves

enlightenedmind:
Let's be clear. FX is not crippling Nigeria it is crippling d dollar. Fuel has never been sold at the right price in did country bcoz PDP looters collect bribes from Western countries to use us milking cows. Don't know about light by I happy for the FX and Fuel. We must refine our own feul even if we have suffer we must refine it then sell.

I doubt if you understood what you posted.

Isn't it ironic that the same western country
is where Buhari is going to beg for loans.

The fuel we are currently using please is it being refined in Nigeria ?

IT IS WELL WITH US ALL....

shangeeeee

What do you expect from a man who never had a pass in Economics to do for you! When the zombies wanted a Nepa bill certificate holder what more do we have to say?

Change Dole

May buhari RIP.

Buhari is confuse like hammatan weather in calabar.
Mechew

Please don't laugh at me oh!
See how I have been surviving fuel scarcity and lack of electricity:
1. I will go to my bank early enough
2. I will greet everyone with smiles plastered on my face,
3. I will plug my phone to charge, my power bank, and rechargeable lamp
4. I will drink water from dispenser,
5. I will sit for sometime to enjoy AC, while watching Buhari blab on CNN.
6. Then i will withdraw N1000
7. I will thank the bank staff and return home.
8. The next day i will go and join queue to pay back the N1000 into my account and repeat 3, 4, & 5.
Is not my fault, is CHANGE oh!

Meanwhile the useless dull@rd is travelling to china next week. LMAO what a presidiot!!!

#iflywithbuhari

It go better soon!

That is what you get with a bitter Fulani herdsman as your commander-in-crook.

Chai Baba!

CAN SOMEONE PLEASE TELL THIS LADY HOW FOOLISH SHE IS.

Buharinomics = Bad Economics

Ok

O God of creation
Direct our noble yet troubled course.
GUIDE OUR LEADERS RIGHT.

If this was America, half of the country would jave been in emmergency ward but Anyhow e be for naija We will survive...

Where are the change chanters?

The zombies were told not to vote this man,they said he his the messiah.

He and His families don't feel or care about what the masses are passing through,all the resources is in their power for usage,from power to fuel to security and forex,they don't give a damn about the masses.

He his fighting corruption or fighting against political opponents?

Despite all what we are passing through now,his next move is china.

Inconclusion,this man is purely heartless.

From the article....it is obvious that they want us to devalue....so that forex can flow.

Buharinomics is a bad choice. The problem is...the alternatives are far worse. If we devalue now...we would end up with runaway inflation, severely depreciated naira and suddenly we would be taking high amount of loans to balance the books.

What needs to be done next is simple. We must, as I have said here time after time...become a manufacturing power. I want to see this APC government spend more on generation, and work with the DISCOS and GENCOS to repair our outdated transmission system. I want to see more spending on technical education.I want to see an end to fuel subsidy....because we are just wasting money that could be used for better things, and we do not even have the money to subsidize fuel anyways. We should improve agriculture....by encouraging large scale farming. We should encourage our local industries to stop importing raw materials if they can be sourced in Nigeria. And we must fight corruption....no compromise.

That is what APC must do to leave a glorious legacy.

Modified: Re loans....if we have to take loans...why not in the form of infrastructure?

Eg...Germany gives us a ''loan''to build a power station that runs on refuse...by building the power plant and providing training and logistics.

This government must be in a state of euphoria because they live in a world of illusion and we exist in the real world.

FG is maintaining an artificial exchange rate for Naira
FG is maintaining an artificial price for PMS while we pay as high as N400/litre

Lemme me stop there for now...

holicalpha:
CAN SOMEONE PLEASE TELL THIS LADY HOW FOOLISH SHE IS.

guy your battery de 65% oh. You're really living large

Once a dullard is always a dullard. You all are welcomed to 1984.

neocortex:


I doubt if you understand what you posted.

Isn't it ironic that the same western country
is where Buhari is going to beg for loans.

The fuel we are currently using please is it being refined in Nigeria ?

I tire for the dullardino ooo. Some people just reason upside-down.. And it amuses me

bluaero:
Meanwhile the useless dull@rd is travelling to china next week. LMAO what a presidiot!!!

#iflywithbuhari

There was a country

Nizooria ntoor

What an adult sees sitting down, a kid can't see standing up.