Oh no, Shikena!

I can imagine it may be no longer fun to work at the National Bureau of Statistics (NBS), and even more “miserable” to be Yemi Kale, the Statistician General and head of the organisation. As the data on growth, unemployment and inflation released recently by the NBS now demonstrates, it appears that institution is now a carrier of bad news.

About two months ago, the NBS had released a trinity of disappointing data on the same economic parameters, and I sincerely thought it could not get worse. But last week, it did, after the delivery of a triple whammy. In the first quarter of this year, the economy recorded a negative growth of 0.36, the first negative growth rate since the second quarter of 2004. Unemployment and underemployment were 12.1% and 19.1%, respectively, the fastest increase in unemployment in the last decade. The third version of the whammy is the increase in inflation from 12.8% in March to 13.7% in April.

These figures mean that growth has been declining steadily until it was negative since the second quarter of 2014. The growth in the manufacturing and construction sectors has been following the same pattern, with manufacturing experiencing significant decline from the third quarter of 2014, and negative since q1 of 2015. At this rate, the economy is only not absorbing those entering the jobs market, such as the 1.52 million in quarter one of this year, but shedding jobs in huge numbers, was over 500,000 during the same period, compounding an already bad unemployment situation.

Though not surprising, it was a shock all the same. Given the incessant fuel crisis, foreign exchange constraints, non-passage of the budget, power shortages, and of course severe collapse in business confidence, it was widely accepted, but nonetheless continued in our “Holy Ghost fire” prayers.

My take is that this reinforces the fact growth matters. Given the growing discontent about the potency of growth to impact unemployment, christened “jobless growth”, we now consistently see data from NBS that demonstrate how unemployment can quickly rise following collapse in growth. This is important because in the past, we had data for growth on a quarterly basis but that of unemployment on an annual basis. So now, we can begin to recognize the impact of past economic growth on employment in the last decade. More importantly, it is both surprising and delightful at the same time that Nigeria’s rate of unemployment is very sensitive to growth, which means that the response is elastic. It thus mean that just as unemployment has started to rise dramatically in response to fall in growth, it can quickly be turned around if we get the growth ingredients right.

As President Muhammadu Buhari marks one year in office at the weekend, his Presidency, in relation to the management of the economy, has so far been defined by non or poor preparation for fall in oil price, policy division and confusion, and a preponderant mindset that the expansion of the State is the panacea for our growing economic challenges. It is this poor understanding of what is required and poor evaluation of how government has been working in the last fifteen years that led to error in the five-month delay of appointment of ministers. This delay meant that the budget preparations started late, and the critical policy discussions that should underpin the budget also started late. That delay and poor pronouncements at the early days meant that the President squandered the enormous goodwill for economic reforms, strategic thinking and actions that followed his election in March 2015.

Another defining characteristic is the worst kept secret in the Presidency that there is division and confusion as to the direction of economic policy. While the President believes in the expansion of the Stateas the panacea for solving Nigeria’s economic challenges, the Vice President believes in the efficacy of the markets. This policy division played out just last week when the Vice President publicly suggested that the Naira should be devalued, the same way the President had repeatedly and publicly suggested otherwise, both undermining the independence of the Central of Bank of Nigeria (CBN). Overall therefore, the progress made by the President in the fight against corruption, as important as that is, is now been overshadowed by the poor performance of the economy.

All these, combined with the declining fortunes in the international economic environment, as mirrored in the price of oil, are reflecting in the figures we now see.

In essence, data do not lie, and Yemi Kale and his team are doing a fantastic job letting us know how we are doing from time to time. I am sure if we serve them the right ingredients next time, they will come up with the right dish. I thank you.

 

Ogho Okiti