Mutiu Yekeen
Despite continuous fall in global oil prices and dwindling local and direct foreign investment notwithstanding initiatives adopted by the former administration, the Federal Government has been deliberately targeted for attack by many international news agencies over the economic policies adopted since June 2015.
Majority of the reports had emphasized that the country’s economy stagnated in the first two quarters of 2015 and only grew marginally in the third quarter. Reuters had in September last year reported that the annual GDP growth of Nigeria in the second quarter was less than half compared to 2014 because of low oil prices, combined with months of uncertainty around the March general elections began to materialize on the economy. It added that naira has lost around 15 percent in the last year, with devaluations in November and February.
The Telegraph, UK had also reported that President Buhari was more active as military leader than a democratic leader, particularly in the areas of economic management, fight against corruption and indiscipline among politicians.
Elizabeth Donnelly, assistant head of the Africa programme at Chatham House, the London-based international think-tank said; “Whether Buhari can actually do a better job is a very good question. He certainly understands the military more, and may also have more decisive leadership, but he is not a silver bullet, and there is no great evidence that his coalition has put a great deal of thought into questions of economic management.”
Bloomberg chided the ability of Nigerian leaders to pivot Africa’s biggest economy and oil producer. It reported that cash crunch faced by the nation has affected its foreign reserve, stocks and bonds, which are withdrawn because of lack of economic growth and reduced oil prices.
The medium noted that ‘financial specialists are wound down by Buhari’s five-month delay in picking his bureau, nonappearance of clear arrangement to restore development and outside trade controls went for safeguarding the naira, maintenance of endowments on petrol, declining income and the current fines imposed on foreign firms in the country.’
The major point of the criticism of the current economic policy direction of Buhari had been on his refusal to allow a full scale devaluation of the naira as well as restriction to foreign exchange market (forex) of certain goods and services. This followed the declaration of the governor of Central Bank of Nigeria (CBN), Godwin Emefiele in June last year that importers would no longer be able to secure hard currency on the interbank market to buy items ranging from rice, toothpicks and soap to cement and private jets.
Instead, government had decided to encourage local manufacture of such commodities, particularly, agricultural produce (such as rice, poultry, and fish), cement, automobiles policy, information technology etc. in order to provide employment to the teeming and increasing unemployed citizens.
Consequently, President Buhari ordered the review of economic policies before crafting 2016 budget so as to create more jobs for Nigerians. The President had told the executive members of the Manufacturers Association of Nigeria (MAN) that he had already directed the ministries of industries, trade and investment, finance, the central bank and other essential government agencies to develop new policies to boost domestic manufacturing.
He admitted the dwindling economic situation but emphasized the need for investment and upgrade on the current domestic manufacturing system. “We are in difficult times economically, but we’ll continue to do our best for manufacturing to pick up. We must begin to behave as if we have no oil at all. We will gladly have policy changes, if it will mean more jobs, particularly for youths. I campaigned on three major planks. To effectively secure our country, provide employment through revamping the economy, and wage a relentless war against corruption. I intend to keep faith with these promises.”
For instance, the textile industry that employed about 320,000 people is left with about 30,000 workers. The President said; “It shows the carelessness of past governments, if almost 300,000 people lose jobs in a single sector. We have a clear idea of how we can stimulate employment and we will work very hard to do so.”
MAN President, Frank Jacobs at the occasion appealed to the government to review policies that stifle the manufacturing sector because it is very crucial to the survival of economy particularly in the time of economic downturn.
Threats
Interestingly, all the attacks by Western news agencies aimed at forcing naira devaluation are skewed to the benefit of western investors. Some of the noticeable examples of the resultant criticisms that yielded unexpected result led to the action of JP Morgan in October, 2015- when it delisted Nigeria’s bond on its stock.
Another threat posed by these negative reports on Nigerian economy had consequently resulted in the recent massive withdrawal of funds by foreign portfolio investors from the nation’s capital market. Most of their reports had claimed that Nigeria’s economy was going worse and that President Buhari was taking the economy back to dark ages in terms of his economic agenda.
Another threat posed by these negative reports on Nigerian economy had consequently resulted in the recent massive withdrawal of funds by foreign portfolio investors from the nation’s capital market. Most of their reports had claimed that Nigeria’s economy was going worse and that President Buhari was taking the economy back to dark ages in terms of his economic agenda.
Realities
The same agencies had reported that the economy faced serious stagnation in first two quarter of 2015. By third quarter, they began to allow some grudging appreciation of the progress, which the economy had begun to witness even though it was modest. The economy grew 2.4 percent in the third quarter.
It is evident that oil prices have continued to fall since June 2014. From above $100 in late 2014, crude slowed to about $37 per barrel by the end of 2015.
Currently, the automobile policy of Nigeria encourages local assemblage of vehicles. Buhari’s government is working towards increasing its local auto content to 80 percent. More than five companies had started assembling vehicles in the country. Stallion, Nissan Motors, Peugeot Automobile Nigeria (PAN) Limited, Innoson Motor Company and Dana Motors are manufacturing vehicles for the domestic market.
Countries such as China and Malaysia were also backward 30 years ago. China rapidly developed because it forced citizens to consume locally made goods and products from food to IT. Over time, Chinese products rose from its notoriety of producing fakes and substandard products to an economy that is arguably the largest in the world today. It is now a global player competing for market shares in almost every country including Europe and the United States.
Also, Malaysia is the third largest economy in the Southeast Asia region after Indonesia and Thailand. It also occupied 35th position in the world, operating one of the most competitive economies in the world and ranked 14th in the global competitive index 2015. The affirmation action as Malaysia’s economic policy in 1971 helped regulate its system and encourages small enterprises as well as agricultural produce in large quantity.
Similarly, Singapore has done excellently in the last three decades with 14.2 percent Gross Domestic Product (GDP) growth and highest GPD per-capital in the world. It is a major Foreign Direct Investment (FDI) outflow financier in the world and was ranked as the most open economy. Singapore has less arable land for agricultural production, it relied majorly on agro-technology for agriculture and food consumption, despite that, it has a highly developed trade-oriented market economy in the world.
It is then a wonder that certain Western powers appear angry that Buhari is trying to steer Nigeria’s economy towards a path of self-sufficiency and inclusive growth. Nigeria’s foreign reserve stood at $29.33 billion as at December, 2015 but should government allow unbridled importation, this would be exhausted in no time.
Even with massive divestment from the capital market by foreign portfolio investors, the impact on jobs and employment has been most insignificant. There is an apparent conspiracy to force Nigeria to devalue her currency so that it would be cheap to acquire local assets. This has national and generational implications.
Real Benefit
There is serious danger in allowing for a free fall of the naira and allowing foreigners to practically buy Nigeria for a paltry sum. One of the dangers is that Nigerians may become second class citizens in their own country.
Despite refusal to allow for a free fall of the naira through subtle and blackmailing tactics by delisting the country from the JP Morgan Index and massive divestments by portfolio investors, the Nigerian economy has been showing visible signs of early recovery. The crude oil sales have been calculated at 2.2 million barrel per day for this year’s budget and government is ready to harness other sectors for economic development.
Is the West really a friend of Nigeria? The United States of America, United Kingdom, France and the rest have practically refused to help Nigeria in the fight against terrorism, whereas other African countries got the support.
The ban on rice importation has begun to change the orientation of local farmers. Government had already set up milling centres for rice and by 2017, things will start taking shape in rice production and other agricultural produce.
