Buhari and the economy

Buhari-Assembly-CopyPRESIDENT Muhammadu Buhari would want Nigerians believe that his attention to the economy is total as he said the other day that he “cannot be distracted” from his “efforts to salvage and revamp the national economy.” Hence his various trips this year to London, Washington D.C., Paris and New Delhi. Relatedly, the administration has signed an assistance agreement with the United States Agency for International Development (USAID) while several foreign delegations have visited in prompt response to what appears to be the President’s alms bowl economic revival strategy.

The recent statement by President Muhammadu Buhari’s media adviser in response to the opposition party’s expressed displeasure over the handling of the economy thus far, however, portrays the President as the haughty know-it-all. It is the very mindset of the political leaderships before him that over the years “cannot be distracted” and was not “prepared to listen” to the supposedly not “serious matters” deemed to emanate from other Nigerians.

In the past 14 years, that self-deluding mindset led successive federal administrations not to listen to the painless solution to the national economic pain, which the President’s approach so far will make worse. Buhari should, therefore, stop lamenting the past and desist from doing so in foreign countries. And importantly, the Nigerian people deserve to know firsthand the President’s economic vision for the country before it is implemented.

Meanwhile, it is necessary to put the main issue raised in the statement in proper perspective. The plundering of the national treasury for personal gain by the entire political leadership dates back to at least the 1980s. The rape and mismanagement of the economy were advanced as the major reasons for the coup on December 31, 1983, which made Buhari Military Head of State. It is a blessing in disguise that sharp drop in crude oil prices and oil proceeds has exposed the stark economic reality. And the gospel truth: all economic problems besetting the country including heinous corruption were made possible by the decades-long flawed fiscal and monetary policy framework, the destructive factor which received no mention in the exchanged statements between the opposition PDP and the President.

When the verbiage and tasteless post-election mudslinging are sheared from the substance of “salvaging and revamping the national economy”, Buhari and his opponents are in agreement as both sides look up to foreign investment to drive national economic recovery. Sadly, they have merely refused to listen to history as well. Nigerians should not allow 45 years of self-inflicted economic under-performance to be repeated. Available data credited to the IMF/World Bank show that over the 43 years up to 2013, the value of foreign direct investment (FDI) net inflow in Nigeria as a proportion of (not contribution to) GDP ranged from minus 1.15 per cent in 1980 to 10.83 per cent in 1994.

Under Buhari in 1984, the indicator was 0.66 per cent (current US$189.2 million). From 1999 to 2013, despite the purported seductive packaging and marketing of the economy by the PDP administrations, the indicator ranged from 1.07 per cent (current US$5.6 billion) in 2013 to 5.5 per cent (current US$8.6 billion) in 2009. Compare and contrast the value of FDI and its other aspects with the yearly remittances to the country (it has steadily risen to $20 billion annually) by Nigerians in the Diaspora and it is obvious that the importance of FDI has been overrated. On the other hand, will Buhari’s pledge to remain true to plain-speaking by parading the stunted and kwashiorkor-like distortions of the economy before foreign investors in their home countries bring in the expected huge finances for development? FDI is not charity: foreign investors are hardnosed businessmen that are wont to create banana republics for wholesale exploitation.

Therefore, before he jets out to the capital of another successful economy for alms, Buhari should savour the meat of the TICAD Asia-Africa Trade and Investment Conference in Tokyo in November 2004, which is hopefully preserved in the Aso Villa Library. In his opening address to the conference, then Japanese Prime Minister Junichiro Koizunmi said, “In the last half century, Asia achieved unprecedented economic growth which was once dubbed the East Asian Miracle. In fact, this was not a miracle but the fruit of tireless efforts by the Asian people. The purpose of Africa-Asia cooperation is to share and make use of the experiences for African development.” He asserted that government’s role is to provide the conditions for the private sector to invest and create employment, trade and grow the economy and in the process remove poverty.

What is the lesson therein for Nigeria, which has been gathering dust for 11 years? In the world’s successful economies, domestic bank credit fuels the various economic sectors. For example, domestic bank credit disbursements to economic agents as a proportion of GDP exceeds 300 per cent and 200 per cent in Japan and USA respectively. For Nigeria, it was only 20 per cent in 2013. Yet the private sector deposit base in Nigerian banks (excluding public sector deposits that have finally and rightly been sequestered in the Treasury Single Account) is enough to raise the indicator to more than 70 per cent of GDP.

And so, the Federal and State Governments have clung to unpatriotic policy measures meant to perpetuate corrupt self-enrichment of the political elite while rendering uninvestable behind prohibitive interest rates domestic bank credit capacity proportionally in excess of 50 per cent of GDP to the disadvantage of the national economy but simultaneously to the benefit of foreign economies where they go to contract foreign loans and beg for FDI. It does not make a rational economic choice for the Buhari administration to pin hope for economic recovery and national prosperity on FDI when the FDI indicator since 1999 has been a negligible 5.5 per cent of GDP or less annually relative to expandable domestic finances currently exceeding 50 per cent of GDP but which deliberate federal policies have rendered inaccessible.

This newspaper has for over one decade pointed out repeatedly that the flawed handling of Federation Account oil proceeds and the attendant response with tight and contractionary monetary policy stance are to blame for not only the above oddities but also the accumulation of humongous non-investable national domestic debt for the unmerited enrichment of banks, preying foreign portfolio investors and few individuals, among other problems. Unless and until President Buhari directs the CBN to implement across the board its proposal on August 14, 2007 to reverse the improper treatment of Federation Account dollar allocations, which was arbitrarily overruled, the economy will remain in the woods. And pending that directive, any presidential orders such as stopping further naira devaluation is inconsistent as it will not stem naira depreciation with associated compounding economic distortions. That order may be likened to attempting to stop black smoke rising from a kitchen where damp faggot is being burnt to cook.

Having already sat out nearly six months of his four-year mandate, President Muhammadu Buhari should now hurry and embrace sound economic policies in full awareness of the normally lagged economic outcomes.

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  • AA

    “And importantly, the Nigerian people deserve to know firsthand the President’s economic vision for the country ”

    Unfortunately, there is NO vision. Everyone (both at home and abroad) has been begging, arguing, prodding and cajoling this government since May 29 and their continued silence on the matter just proves that they have none.

    As the bible says, “where there is no vision, the people perish”. God help Nigeria.

  • Ebaah Odibo

    I have often told the Guardian that these their ‘dogo turenchi’ analyses of the woes of Nigeria and articulating credible solutions to them – thereby ‘distracting’ the Incorruptible, Infallible Leader of the Clean World – will lead them into trouble again.

    Who are you Guardian to demand an economic blueprint from the frugal General? Is his body language not enough economic, social and political blueprint for you “distractors”? Listen you heady ones in that Editorial Boardroom. I remember the first incarnation of the General (sorry only Mr President), you dared to do what you are doing now. Pronto Decree # 4. And some people went to Kirikiri Maximum Security Comfort. You survived and even grew stronger.

    Then the Maradona – the one WITHOUT the beautiful round-leather thing that our U-17 taught the boys from the land of Pele a lesson few days back – came and banned you. You survived like the inimitable Beatle of VW. You even screamed in the first editorial right after the ban, “We dey kampe’ nothing go change; odeshi!”. Now listen, don’t waste your ink. The General knows all there is to know. APC knows A to Z of everything. Go write about garbage in Yenagoa, or fishing in Bomadi. Leave the General alone! He does not understand ‘dogo turenchi’.

    • Emeka

      Buhari and your APC know NOTHING if they refuse to listen to public opinion or if they are as brainless as you are. This analysis is fantastic but i must add that part of what will make Buhari’s globe trotting fruitless is the poor situation of the infrastructure in Nigeria. FDI will go to countries where things work, countries where the leaders have duly prepared for foreign investment: good roads,Steady electricity, portable water,well managed petroleum sector devoid of fuel scarcity and above all zero tolerance in the area of corruption. Why should a foreigner want to come and invest in Nigeria when we have not done the needful? The president and his team should first implement what this writer has suggested and also improve the infrastructure and watch if FDI will not blossom without going cap in hand to woo them. Let them not listen to hero worshipers and lying tongues like Ebaah Odibo who are praise singers with the singular selfish goal of self aggrandizement.

      • Ebaah Odibo

        Chei, Emeka, Chinekele Uwa! wetin I do you? You curse me say (1) I am of APC and (2) I am a fool. The first curse pain me pass. Because I rather work for Nigerian Railways than join APC. The second curse pain me less, because that is my middle name! The Guardian Editorial Board understood what I wrote. When they see a satire – a genre of writing – they know. All your points na correct ‘dogo turenchi”. However, Emeka, you don’t visit the lizard with the aim of sitting on cushion chair, as welcome seat. Aki ilu (bitter kola) is not for the teeth of the newborn. You plant seeds in arable land not on top of rock. And if you dare need the interpretation of my writing, Emeka, we will demand back your mother’s bride price. That is the punishment.

        • Emeka

          Ebaah Odibo,my apologies. This era of terrible economic pains has really tensed up a lot of us. In fact, if i had seen you at time with my korkoro eyes, i may have boxed you and probably realized myself afterwards. It appears this bad weather no reach your side because you sound so calm and composed. Well, i have learnt my lesson now so you must withdraw that punishment without delay. Have a good day.

          • Ebaah Odibo

            Thank you my brother; na ‘change’ to hard times!

  • Ifeanyi Nwoko

    Unfortunately, the folks that need to read (and respond) to this piece will not bother.

    Well written.

  • amador kester

    Sound write up, thoughtful,articulate,laconic but incisive if it gets to the right table

  • salele

    I expect better from a newspaper like the Guardian. Reading through this piece, I have the feeling that the author is extremely angry with the president. Starting this article with ” PRESIDENT Muhammadu Buhari would want Nigerians believe that his attention to the economy is total” . There is some skepticism in that statement – that the president will not live up to his statement about the economy. Also the phrase “Therefore, before he jets out to the capital of another successful economy for alms” . The use of the word alms, gives fact to the mind set of the author. Do presidents travel to other countries for alms ? A use of a more appropriate word would have been better.
    About three quarter of the article is reminding us of the damage that has been done by past leaders and there is this feeling that the president can come and do some magic in six months to have investors running to invest in the country. There is also this idea that just having an economic vision solves everything. While having this vision is a starting point, it doesn’t necessary solve anything. Because those who are asking for a vision will next ask to see a direction, implementation and so on.
    A lot of damage have been done to virtually every sphere of the Nigerian nation. The government of the day needs a lot of patience, goodwill and prayers to come out of the woods. And these I expect will be taken into consideration when criticisms and advice is given by my esteemed newspaper the Guardian.