It is too early in the life of president Buhari’s administration to judge whether it will be a successful administration or not. The most important thing in the life of a new administration is to analyze policies already in place to see if the government is laying a solid foundation for the future of the country.
It is gratifying to know that president Buhari’s administration are rightly building on some good policies of his immediate predecessor, President Jonathan and working on the areas he was deficient in, such as corruption. President Buhari made the right move in fully implementing Treasury Singe Account (TSA), an idea his predecessor came up with but lacked political will to fully implemented it. Bank verification number is another good idea the present government decided to fully implement in order to check corruption. The problem with Nigerian leaders have had in the past is lack of continuity of their predecessor’s idea even when the policies are good. Former leaders usually jettison their predecessor’s ideas and policies and goes ahead to reinvent the wheel. The beauty of democracy is that successive administration builds on their predecessor’s good policies and then develop and implement their own policies.
President Buhari’s policy on corruption is clearly succeeding. Wholesale corruption and the impunity that went along with it during previous administrations is clearly on the decrease. Recovery of approximately $9.1 billion of looted and unpaid taxes and duties is commendable. More important is that it appears that tolerance of corruption and wholesale looting of public fund is wearing thin on Nigerians. Not long ago in Nigeria do we usually hear hue and cry from ethnic brethren of any arrested corrupt public official that their arrest and prosecution in the court of law is due to hatred of their ethnic group by the government in power not due to alleged crime committed by the public official. I do not hear Senate president’s ethnic brethren screaming that he is been wrongly prosecuted or Yorubas or Igbos, Hausas or other minorities accusing president Buhari of unfair prosecution when anybody from their region or ethnic group is arrested or prosecuted for criminal activity. Nigerians appears to be realizing now that whoever is looting their state or federal treasury is indirectly stealing from them.
Security is another area where President Buhari’s administration have made extensive inroad especially in the fight against Boko Haram. Unfortunately for Nigeria, another bygone tragedy in the Niger Delta has reared its ugly head again in the name of Niger Delta Avengers (NDA). These group are destroying the oil pipeline and oil drilling equipment just when the oil prices is creeping up. The effect of their action on Nigerian economy few months from now will be enormous. All Nigerians will suffer consequential loss in federal, state and local government revenue. Decisive military action and amnesty will be required because it is impossible to reason with these groups. It is important to deal with them before they linkup with Indigenous People of Biafra (IPOB) and Movement for the Actualization of the Sovereign State of Biafra (MASSOB). They is a need for a permanent airbase in Niger Delta region because it is the life blood of Nigeria economy for now until there is more diversification of the economy. All groups have a right to demonstrate in any part of the country but their right ends when they use weapon to kill or destroy government or private property.
Fuel subsidy removal by Buhari administration is a good idea. Fuel subsidy has become another corruption and looting cesspool. However, it will be a tragedy of epic proportion if the money save from subsidy removal is mismanaged or looted. Long term solution for fuel problem in Nigeria is to build as many local refineries as possible by private businesses. Government has demonstrated that it is incapable of running refineries or other corporations since they have managed to run four Nigeria refineries into the ground. Federal government need to accelerate privatization of the four refineries. These refineries would be operating at over 50 percent capacity if former president, late Umaru Yar’Adua did not cancel the refineries president Obasanjo privatized few years ago.
Where the present administration is seriously lacking is in monetary policy. There is no reason whatsoever to peg Naira to a dollar as they have done since they came to power. Naira should be a floating currency. The cost of dollar and other foreign currencies in the parallel market is the correct value of Naira. Law of demand and supply should govern the foreign exchange policy and other policies of this government. Floating Naira will encourage Nigerians in diaspora and foreign businesses around the world to send foreign currencies to Nigeria through regular channel. It will also curtail conversion of Naira to dollars and keeping foreign currencies in domiciliary account due to uncertainty in the duel foreign exchange rate of the central bank. Why will anybody keep dollars in their domiciliary account when they can sell them and get fair market value for it. Floating exchange rate will stabilize Naira against foreign currency value.
Federal government via the central bank is rationing dollars in their reserve for essential raw materials. How are they sure that the allocations for raw materials are not been sent back and sold in the black market since it is more profitable that way than buying raw materials, spending more energy and money in production and end up with 15-20% profit margin. Floating Naira will eliminate the tendencies to round trip foreign currencies from the Nigeria central bank. Nigerian factories will completely shut down if the current monetary policy is not reverses immediately. Parallel market exchange rate is already priced into the prices of domestic goods and services because most importers are already using parallel market rate when setting up prices of their goods and services. So it is unlikely that prices of goods and services will rise further than the current prices which is exactly what happened when fuel subsidy was removed.
However, the federal government should license more bureau de exchange companies so the ones selling in the black market will come out of the shadow just like the liberalization of fuel importation license. What federal government must never allow in Nigeria is for any foreign currency to be used in domestic trade and services in place of Naira.
The wise course for this government is to be guided by the law of demand and supply in formulation and application of their policies and adherence to private sector driven economy. Centralized government run corporations and companies does not work. Nigeria have practiced government driven economy where they control organs of production since our independence and the result has been complete failure. The failure is everywhere for everybody to see. One just has to look at NITEL, NEPA, refineries, Ajaokuta steel company, African continental bank, Odua group of companies, state owned textile companies. Successful developed economies consist mainly of countries that moved away from socialized government powered economy to private sector lead economy and then uses effective taxes policy to generate revenue for the government.
President Buhari’s administration need to administer prudent unavoidable policies as they have done with fuel subsidy and must do with foreign exchange now that they still have political capital so things will settle down back to normal before the end of his tenure. Low oil price is the primary cause of the slump in Nigeria economy but bad economic policies have accelerated it. Time will tell if this administration will ends up as successful or failure. My hunch is that they will succeed if they implement good economic policies based on the law of demand and supply, and private sector driven economy, and will fail if they do not. It appears to me so far that former president Jonathan had more experienced and seasoned economic team but endemic corruption which was rampant during his tenure diminished their achievements and recognition.