Indications have emerged that new government of General Muhammadu Buhari will be greeted with high expectations and urgent need for overhauling of the socio-economic system. Economic watchers observed that fulfilment of financial obligations by the government amidst headwinds that are militating against the nation’s economic prosperity in the recent time may be challenging and tedious. It is also predicted that further slide in prices of crude oil at the international market may have necessitated a return to the drawing board by the General’s economic think-tank. The sentiment is that political reforms require better governance even in the oil industry that yields highest revenue to government’s coffer, such that on the longer term, there will be less need for product imports while higher production and exports will be made a premium.
Nigerians are really thirsty of the change the General promised during electioneering as many want their social and economic fortunes changed for the better as soon as the new government comes in. General Buhari is expected to perform miracle to heal the sick economy within short period of time.
Observers had thrown up numerous developmental scenarios to expect in the country after the May 29 inauguration of the new government. They made the case that should the new government succeed in staving off disruptions in oil production, (whether from a labour action, attack on oil facilities, or even oil sale contract cancellations) and avoid post-election violence, a breakdown in bargaining over allocation of ministries, unresolved tensions, then the stage will be set for economic prosperity.
Financial experts expressed their views and implored the new government to focus very quickly on structural reforms, fiscal responsibility and investment. They observed that Nigerian economy will quickly gain global acceptance if the cost of doing business is drastically cut and that policy thrust of the government should be economic growth revival and massive infrastructural build ups to help boost growth.
A financial manager, Prof. Chris Onalo submitted that ‘Nigeria must engage in free market economy in order to achieve overall resilience in economic activity, employment and fiscal performance. Abundance of credit availability in monetary and trade terms to fuel exports of made in Nigeria goods must become the major driver of the new government’s economic reform agenda.
“We must bring it to your attention that the poor attitude to credit, especially to public loans provided by government’s Development Finance Institutions (DFI), and lack of a robust regulatory regime for the DFI sector to operate is a fundamental threat to the health of the Nigerian economy. This government is expected to be committed to enhancing the regulatory regime; the government is expected to enhance credit regulations by providing greater protection for the country’s DFIs, Onalo observed’’.
However, regulation alone is not enough. In granting credit, both parties to the transaction need to be guided by a sense of values and ethics in their business dealings. The present situation of credit lax in Nigeria has evidenced the gaping hole that should be occupied by values.
Echoing similar sentiments, Dr Jonathan Aremu, an economist, holds the view that Buhari has a lot of socio-economic issues to contend with in the coming months. He said, though the country was touted as the largest economy in Africa following the rebasing of the GDP in 2014, in practical terms, things are not working. He observed that the much touted growth is faulty because the economy is still worse off, adding ‘everything points towards economic crisis in every sector. What we have is largely growth without development. Nothing seems to be working.’ Successive governments, he stressed, ‘have been pursuing growth at the expense of real and actual development. So, my advice is that what we need now is for the government to focus a lot more on development because growth without development is big for nothing.’
While commenting on the change in government and what would give, Aremu said “In terms of quick wins, l would say the government needs to address the problem of infrastructural decay. Our naira which has gone downhill needs to be fixed. There is also an urgent need to fix the manufacturing sector as well as address the problem of food insufficiency.”
However, there is speculation that it might no longer be realistic to have an exchange rate in the region of N160-N170 to a dollar within a foreseeable period. The argument was based on a number of prevailing economic challenges including oil price plunge and low external reserves. Some observers believed that the days of N160-170 are not coming back anytime soon as the quartet of oil price plunge, dwindling government revenue, low external reserves and thirst for high imports remain an issue and the interbank market remain relatively flat. It is also argued that there is still pent-up demand for dollars with limited supply that could still pose a significant risk for further devaluation. For example, our external reserves are thought not to be enough to meet up with the acceptable six months import bill.
Nigerians generally believe that the current situation is an opportunity to cut waste in government expenditure; judiciously use the lean revenue accruing from crude oil sales; put in place private sector led investment in refineries and petrochemicals; and focus attention on non-oil sectors of the economy to bolster government revenue as necessary measures are required to be put in place to ensure robust monetary policy.