Getting A Firm Grip Of The Economy
AFTER about five months of policy twists and turns since assumption of office, Federal Government, it appears, is still lost in the woods as to what to make of the Nigerian economy, in the wake of falling global oil prices.
So far, the lack of a definite economic policy has almost crippled businesses in the country and investors’ confidence is dipping, even as government is prepping to inaugurate what it terms a ‘lean’ Federal Executive Council — a few members of which are expected to serve as ministers — in a renewed tweak to shore up the short fall in revenue.
The President, Muhammadu Buhari, said that ‘the government is broke’ and as such there was no need to have more than half of the 42 ministers his predecessor, Goodluck Jonathan, had.
And it appears this reasoning is what may have informed the somewhat socialist posture of government in recent months. From the refusal to remove subsidy to state-controlled Forex regime; to the uncompromising stand on the need to devalue the Naira, government appears to be holding the economy by the jugular, even as local manufacturers are starving of imported raw materials for production.
The Central Bank of Nigeria (CBN), also, has been accused of indirectly steering fiscal policy, a situation that arose from the lack of substantive ministers of finance, trade and investments, and industry.
Government has argued that its decisions are intended to protect Nigeria’s poor, who constitutes about 60 per cent of the country’s 170-million citizens. Agood argument to sustain the subsidy debacle, which has been said to be skewed to favour less than one per cent of Nigeria’s elite.
Some of these choices have been severely criticised across the country and by the international community, just as falling confidence in the Nigerian economy has seen JP Morgan, an international investment bank, delist the country from its bond index. Barclays bank is threatening to do likewise. The International Monetary Fund (IMF) and the World Bank, also, have called for the devaluation of the Naira, asking that government allow market forces determine the exchange rate.
Former CBN governor, now Emir of Kano, Sanusi Lamido Sanusi has kicked against government’s stance and called for an end to fuel subsidy and wants a devaluation of the Naira. His reason is that falling oil prices would continue to diminish the foreign reserve and the only way out is removal of subsidy payments, increased taxes, as well as, devaluation of the Naira. But the Nigerian Labour Congress (NLC) says the consequences of devaluation and subsidy removal would be a hard pill for the poor man to swallow.
They argue that devaluation would lead to high cost of production, unemployment and, particularly led to general social unrest. But as some analysts find the criticisms by the IMF and the World Bank suspicious, they caution that government must get off its high horse and carve a new direction for the economy.
As government grapples to get a firm grip of fiscal and monetary policies, it remains to be seen how the actions and inactions of the present administration, especially as minister mount the saddle at ministries, would get the country out of murky waters.