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BUHARINOMICS; TANKING OIL TANKS, DEVALUED NAIRA

BUHARINOMICS; TANKING OIL TANKS, DEVALUED NAIRA

Americans need to understand the consequences of electing people who have no idea how to govern and have no interest in learning-  Michael Gerson

 

The challenges of keeping a regular column lie with narrowing your focus to a topical issue. While many issues call for your attention, there is the pertinence to give an expert’s view or a near-total submission on any you chose to remotely focus on.

 

Globally, as the world battles the COVID-19, it has set equilibrium far-etched, not only has it atrophied the economic fortunes of many commodity-dependent countries, it has set a template of long drawn unpredictability and social fragmentation. The leading research agencies and their donors are working hats off to find reprieve. While help appears far from the precincts of orthodox medicine, trado-medical specialists and religious teachers are not giving up the frenzy to get noticed.

 

Since the ascent of President Buhari, Nigeria’s economic policies have been far less realistic but much idealistic, incongruent and opposed to the much-vaunted progressivism of his politically inconsistent party, the All Progressives Congress. The president in his victory acceptance speech in 2015, appreciated his party, quite generously, as the vehicle that made him achieve his long-drawn ambition to lead Nigeria, democratically, after four attempts. On that podium at the National Collation Centre of the nation’s electoral body, he promised not quite a few things but the top of that list with the reinstatement of his campaign’s commitment to fighting corruption, revitalize and reflate the economy as well as to tackle insecurity which the previous administrations, especially, the Goodluck Jonathan’s administration which was accused of being tolerant of large scale corrupt individuals and handled cases of overt corruption with kids gloves.

 

The coinage, Buharinomics, is a faded description of President Buhari’s interpretation of economic issues. Today, we look back at the five years of a Muhmmadu Buhari presidency and one question stares unabatedly at us. Where has the APC-led government made a mark it can boast of? Nigerians were highly expectant of life-changing conditions under the Buhari government as exemplified by the religious donation of the Late Hajiya Fati Koko. Maitalla Tara, a nonagenarian from Birnin Kebbi in Nigeria’s northwestern state of Kebbi had in 2015 donated her life savings to the presidential campaign of President Buhari in expectation of a better governing style. She said it was in response to Buhari’s action in1983 where he saved her contracting job after she had spent N40,000 in 1983 on a government job and was left unpaid but for Buhari. “Yes at that time during Buhari’s regime, honesty and transparency were the order of the day”. Continuing, she said “Do you know why I still like Buhari? He stands for truth and bears the name of my late father”.

 

While there are replete testimonies as regards the president’s character, not a few Nigerians have doubted the authenticity of its transmutation. This hypothesis is much tested by his frivolous remarks and impolite bemoaning about the “slowness of democracy”. All these have aggregated slowly and unravelled themselves in the Brownian motion-like trajectory of Nigeria’s economy.

 

On assumption of office, the president promised diversification of the country’s economy with focal efforts on the non-oil sector, which was largely led by agriculture. An effort was made to encourage local content production through the formulation of stimulatory policies and the placement of FOREX ban on forty-one (41) imported items

 

In 2016, owing to the manhandling of the economy, no thanks to the communist-slant, vengeful and blunt attacks on certain Nigerians, the country recorded its first recession in over 20 years. The president and his handlers were quick to blame the erstwhile ruling party, which it accused of squandering the nation’s commonwealth and mismanaging the country’s till for 16 years. As common with the APC, little introspection was done to truly checkmate the excesses of the party and its appointed officials who had in rhetoric and sanctimonious classification of members of the opposition as a corrupt paved way for distrust by foreign investors, leading to capital flight.

 

The year 2020 has come with an unprecedented challenge. The throbbing pain of the moment is the killer virus, COVID-19. Nigeria is not exempt. With the virus permeating continents and embarrassing even the most advanced of countries, Nigeria’s index threat was the oil-dependent economy. For example, it costs the Nigerian government $23 to produce a barrel of oil as compared to Saudi Arabia’s $9, $10 in Iran and Iraq, $14 Norway and Russia which costs $19.10 ($11 if not for the associated taxes).

 

ALSO READ Politico-socio-economic spread of COVID-19

 

According to market analysis, the fall in oil price is not just a reduction in demand owing to the activities by the Chinese but a price war between the dominant players, non-OPEC Russia and Saudi Arabia. The price war has seen Brent Crude make a 16-year low to $20, then a correction up to $28.50, before tanking further to a market close of $23. Countries like Nigeria with a high production cost wouldn’t survive a further decline in the price of oil much more the price war. Having seen oil sell below the $57 benchmark and a further hundred percent drop in price, the Nigerian government shifted grounds and hedged at $30 which held until the market makers drove it further.

 

The Nigerian government responded to the crash in oil prices by reducing the cost of PMS and self-appraised the move for its “salutary effect” and its propensity to “provide a framework for a sustainable supply of PMS to the citizenry”. One begins to wonder about the Buhari administration’s rapid inclination to anti-free market, manipulative effects on the markets when issues like these arise. Firstly, the price reduction was supposed to reflect immediately without due consideration of oil marketers who would have oil stock, selling at the previous price or a caveat to that effect.  

 

On Saturday morning, the government, tired of its uncomplimentary and dark art of hedging the Naira against devaluation, succumbed to the debilitating bites of a failing naira. Without mincing words, this column’s prediction had favored devaluation in the coming days, as further commando-style (mis)management and unidirectional thoughts on the value of the country’s currency will fester a nest of wasps.

 

In ending the discussion about Buharinomics Nigerians are faced the realities of an uninspired economic style which is a hybrid of the imperceptions of Boris Johnson, the repressive regimes of Nicolas Maduro and Omar Bongo, the bloodthirsty and far-sweeping war quests of Racip Teyep Erdogan, the academic but unempirical efforts of Robert Mugabe, the unconscionable bloodletting and pathetic crisis-management of Jean-Bedel Bokassa not forgetting the ebullient but nondiscretionary flipflopping of Jacob Zuma. While three more years of a Buhari presidency won’t kill the Nigerian economy, will it make it stronger? That answer remains as elusive as his economic blueprint.

 

Follow me on Twitter @Kayce_Joshua

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