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| Muhammadu Buhari |
BY JULIUS OBETA NWANGWU
Last October, Vice-President Yemi Osibanjo was
quoted as saying that the Buhari administration was planning to create a $25 billion
reserve fund with public and private financing to modernize infrastructure and
avoid economic recession. Many economists who hailed this decision as a good
response by the Buhari administration in the face of dwindling oil prices, considered
it on the strength of its timeliness and macroeconomic stabilization capacity. With
the oil price crash which has forced a major slide in the naira, Nigeria has no
alternative than slash its budget, and as Osinbajo noted, the way out of this
was for the government to spend more rather than to cut back on expenditure.
The need to stimulate real economic growth and
development in Nigeria and mitigate the growth rate which has declined to about
3 per cent as a result of reduced earnings, cannot be over-emphasised. With
this, government will ensure that private income and expenditure will not
decline while thousands of jobs and other economic activities that will be
created and stimulated.
This policy contrasts with the neo-liberal
economic orthodoxy of free trade, deregulation and privatization which would
have dragged Nigeria into real recession. Not only would government have cut
down public spending, collateral economic hardship would have become very
devastating on the private sector organization which might as well start
cutting down on expenditure and investments, and probably ending up with downsizing
of their workforce or bankruptcy.
Of recent, the International Monetary Fund has
been pressing for a further devaluation of the Naira, a position I consider
curious. The bank which was reacting to Nigeria’s decision to place import restrictions
on forty-one items and restrict access to foreign exchange, considered the
policy detrimental to the economy.
According to the Bank’s Africa Director, Mrs. Antoinette Sayeh, such a
policy was going to hurt the economy. Not only do many disagree with the IMF on
this position, it raises so many concerns and question about its past and
present activities and outcome of those activities on the economic wellbeing of
many developing nations of the world. It might not be out of place to ask if
IMF is anti-development or simply waging war against poor countries of the world
and her poor citizens.
For the IMF African Director to have raised such
concerns therefore reflects on the resolve of the global institution to ensure
that basic needs get entirely out of the reach of the average Nigeria by the
time they succeed again in forcing the government to further devalue naira.
Nigerians have suffered so much hardship based on the same prescription of neo-liberal
economic policies in
the past, and should simply ignore the advise.
Just within a decade from 1979 to 1989, prices of goods and services recorded
the highest rate of increase in the history of Nigeria. Within this period the
price of basic food items like rice increased by 1,700per cent, garri by 700
percent, beans by 1,350 per cent, frozen fish by over 1000 per cent and bread by
2000 percent.
Recalling Nigeria’s previous bitter experience
with the IMF which led to the worst case of devaluation, culminating in the Structural
Adjustment Programme of Ibrahim Babangida era, Buhari must resist the lure of
IMF and its negative policies. Considering that the IMF and the World Bank
failed in the campaign to get PMB to pick up another of their agents as finance
Minister or Economic advisers, all manner of prescriptions should now be
expected from them, regardless of how painful it will be.This is not to say
that neo-liberal economic policies are entirely bad especially at a globalized
setting; but it has presented so many square pegs for many round holes, where
developing countries are concerned.
Currency devaluation in a highly industrialized
and strong export based economy will increase the competiveness of goods
produced in such country; and could thereby stimulate sustained economic
growth. But as for Nigeria that is highly dependent on imported goods, such
prescription amounts to forcing a round peg in square hole, which ultimately
will exasperate economic hardship and poverty.
At the time of economic crises in the US few
years ago, the Obama administration’s bailout package stimulated the US economy
and it rebounced. Why then should the neo-liberals continue to dangle those
square pegs around those round holes? Were they out of reach to President Obama
and could not advise him advise him against his bailout package?
Through the World Bank and the IMF, the neo-liberal
economic policies have further widened the world income inequality and
inequality within countries especially the developing countries. At different
times, the IMF and World Bank through their agents have been pushing for the
removal of every form of subsidy and protection on industrial activities;
insisting that governments have no business in the running of enterprises. Fuel
subsidy has continued to witness pushes from the IMF and World Bank for its
total withdrawal, as if the United States, UK and other developed countries are
stupid for their continued subsidies to their citizens. Why then should Nigeria
with high rate of poverty and inequality continue to witness unending pressure
in this regard?.
In view of the level of inequality and poverty
rate that has climbed up to about
70% in Nigeria, the Buhari administration which
came into power with the
resounding promise of change needs to set its priorities
right in social and
economic policies. Rather than pander to the advise
of the IMF African Director about the forty-one items that the federal
government denied access to foreign exchange, the government even needs to look
more closely at the remaining, with a view to identify other luxury goods and expand
the list of items the country should not spend her scarce foreign exchange on.
While not totally disagreeing with David Ricardo’s
theory of comparative advantage which implies that there is no economic
justification for a country to be producing all that it needs, it still does
not make any economic sense for the country to continue to import goods that it
can easily produce. The PMB administration should therefore be bold in revisiting
Import substitution in selected sectors of the economy to fast track self
reliance, job creation, economic growth and development.
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