By Tony Eluemnor
I may not be an Economist but I don’t need an Economist to tell me that as the Naira tumbles in the foreign exchange (of currencies) market, thus Nigeria collapses. Or to put it in a proper perspective, thus the quality of the livelihood of Nigerians collapses, degrades, vanishes, disappears, is tarnished, is destroyed. I added that really needless second sentence because there could be some people out there that could claim that the country Nigeria is totally different from the citizens.
As strange as that may sound, some people actually think that the country Nigeria is different from her citizens, or that the health of her economy does not really impact on the lives of the citizenry. If not, the cost of necessities such as petrol, cement, electricity tariff, food, transportation, books, newsprint, even sachet water and bread, should not be rising every day and our leaders would be congratulating themselves for a job well done. Also, no government official has seen it fit to resign. Yes, they also tag themselves as “progressives”!
Were this not to be true, our leaders would not be borrowing and
borrowing and borrowing without caring about what the unnerving and suffocating
and debilitating amount of foreign loans they are bringing upon Nigeria. And as
the loans are not being used to shore up the non-existent manufacturing base,
it destroys the economy because it increases the debt-servicing load and
destroys whatever confidence one investor could have on the Nigerian economy.
Please, note that I didn’t write the confidence of the foreign investor because
even the Nigerian investor’s confidence has also been shattered.
A patriotic war is needed to save the citizenry from a
free-falling Naira, or better still, to save an ailing and collapsing Nigeria
and her currency that is increasingly becoming really and effectively
worthless.
As the Naira depreciates, and as Nigeria produces nothing the
demand of which could increase as a result of a devalued Naira, life will
certainly be likewise be draining away from Nigerians for their monthly wages
would be purchasing less and less with every new tomorrow. Unfortunately for
Nigeria, her only export good worth that name is crude oil, and Nigeria is a
member of the Organisation of Petroleum Exporting Countries (OPEC), and so has
a production quota to obey. And, this is important, as the local currency loses
purchasing power, the cost of imports appreciates – and Nigeria imports even
refined petroleum products, let alone pencil, toothpick, light bulb, the most
simplistic hair comb, etc.
Yes, how low should the Naira fall? It has been tumbling
downhill for decades, but since the inauguration of the Muhammadu Buhari
administration on Friday 29 May 2015, it has been on a free fall, from
N199.0151 to $1 USD that day to the Black Market (Lagos) rate of $1 USD = N565
on Thursday, September 16, 2021. Barely a week later on Wednesday, 22
September, the Naira had plummeted to N573.00 per $1 at the parallel market.
Haba!
Please, put down this reminder: Make it a point of duty to check
the exchange rate of the Naira this week Wednesday and you will surely be
alarmed by the fact that it must have depreciated further as though it is
tumbling into an abyss. Ah, Wednesday would be October 1, 2021, the anniversary
of the nation’s independence. Sorry, that check could bring you a cruel
independence gift.
What a steep decline! In January 1985, N1 fetched $1.2. Five
months later, Ibrahim Babangida’s economic restructuring made N5 to buy a
dollar, at the official rate and it was N7 to $1 at the parallel market. The
5.4 pre- SFEM inflation rate surged to 10.2 within a year. It took the Naira
decades to fall from N1 to $1 in the early 1980s to when N199 exchanged for a
dollar on May 29, 2015. So, why has the Naira been falling so freely since 2015?
Yet, it should be stated that all through IBB’s administration,
a lusty debate on the direction of the economy never ceased. Even during the
administration that preceded Buhari’s, which was the former President Goodluck
Jonathan’s, every aspect of that administration was criticized. But suddenly,
such wholesome criticism has dried up, though it is most needed.
Why? The answer was provided over a decade before Buhari became
President. Mallam Sanusi Lamido Sanusi, former Central Bank of Nigeria Governor
and former Emir of Kano, gave this most valuable insight in a Daily Trust
newspaper article of 22 July 2002. Title: BUHARISM: Economic Theory and
Political Economy.
Sanusi said that there has been a less than adequate debate on
the military government which Buhari once headed and that there had been little
or no discussion about Buhari’s economic policies because everyone was focused
on Buhari the man instead of his policies. He wrote: “There seems to be a
dangerous trend of competition between two opposing camps aimed at glorifying
him beyond his wildest dreams or demonizing him beyond all justifiable limits,
through a selective reading of history and opportunistic attribution and
misattribution of responsibility. The discourse has been thus impoverished through
personalization and we are no closer at the end of it than at the beginning to
a divination of the exact locus or nexus of his administration in the flow of
Nigerian history.”
He continued: “I had no doubt in my mind that the position of
Buharism was based on a sound understanding of neo-classical economics and that
those who were pushing for devaluation either did not understand their subject
or were acting deliberately as agents of international capital in its rampage
against all barriers set up by sovereign states to protect the integrity of the
domestic economy. I still believe some of the key economic policy experts of
the IBB administration were economic saboteurs who should be tried for
treason.”
Treason? Strong word; especially, as the same economists and
sundry IBB supporters rallied recently to praise their champion as IBB turned
80 years old. But what about Buharism today? How has Buharinomics positioned
and strengthened or weakened the Naira? What really is Nigeria’s economic
battle resting on? In which direction is it heading?
If the intense and shameless borrowing Nigeria has been engaged in will lead Nigeria out of the woods, at what point should we cry “ENOUGH”? In March 2021, the unemployment rate in Nigeria reached 32.5 percent. I’ll turn to an Economist on how a falling Naira value affects Nigeria: “devaluation by a country whose exports and imports are not price elastic leads to the continued impoverishment of the nation vis a vis its trading partners.
The argument of Buharism, for which it was castigated by
global capital and its domestic agents, was that these conditions did not exist
clearly enough for Nigeria to take the gamble. First our major export, oil, was
priced in dollars and the volume exported was determined ab initio by the quota
set by OPEC, a cartel to which we belonged. Neither the price nor the volume of
our exports would be affected by a devaluation of the naira. As for imports,
indeed they would become dearer. However, the manufacturing base depended on
imported raw materials.
Also many essential food items were imported. We would end up
spending more of our national income to import less, in the process fueling
inflation, creating excess capacity and unemployment, wiping out the production
base of the real sector and causing hardship to the consumer through the
erosion of real disposable incomes. Given the structural dislocations in income
distribution in Nigeria the only groups who would benefit from devaluation were
the rich parasites who had enough liquidity to continue with their conspicuous
consumption, the large multi-national corporations with an unlimited access to
loanable funds and the foreign “investor” who can now purchase our grossly
cheapened and undervalued domestic assets. In one stroke we would wipe out the
middle class, destroy indigenous manufacturing, undervalue the national wealth
and create inflation and unemployment. This is standard economic theory and it
is exactly what happened to Nigeria after it went through the hands of our IMF
economists under IBB”.
That was Sanusi defending Buhari’s military government. Could
Sanusi assess the present Buharism for, according to the Cable online
publication of July 31, 2021, “On external borrowings, President Buhari
increased debt from $7.3 billion in 2015 to $28.57 billion as of December
2020”, adding “$21.27 billion on foreign loans to the country’s debt
portfolio”. Only an idiot could say that the devaluation rot did not precede
Buhari’s emergence as President. But it was because of faults such as the inability
of Dr. Goodluck Jonathan and his PDP administration to stem the Naira’s fall
and a worsening economy fueled by a blanketing national insecurity – even when
the insecurity affected North-Eastern states and not the entire country as it
does today, that justified the citizens’ rejection of the PDP and Jonathan at
the polls.
In 2002, Sanusi wrote: “I will vote for Buhari to say thank you
for the world view of Buharism, a truly nationalist ideology for all Nigerians.
I do not know if Buhari is still a nationalist or a closet bigot and fanatic,
or if he was the spirit and not just the face of Buharism.”
His wish came true in 2015 when Buhari became President and the
chance dawned for Buharism, especially Buharinomics to be established in
Nigeria. And after six years of Buharism, could Sanusi help us to understand
this new Buharism? He should pen another great article, as insightful as that
one of 2020 (19 years ago) and tell Nigerians who failed whom: whether Buharism
failed Nigeria or an ungrateful Nigeria failed Buhari.
Or, perhaps, has Buharism succeeded in making our long lasting
dream come true and Nigeria has achieved her manifest destiny and has at last
emerged the veritable giant of Africa…and some of us, very blind, didn’t see
the evidence?
*Eluemunor is a commentator on public issues
No comments:
Post a Comment