Nigeria, an economy on autopilot

Six months down the line, even with a newly constituted team, opinions are divided as to whether the President Muhammadu Buhari-led administration has what it takes to move the economy forward.
The reason for this is not far-fetched: so far, some of the policy initiatives of the Buhari government have created confusion in the system. Even the recent cut in benchmark interest rate to 11 percent from 13 percent has not helped much to convince analysts that the administration has mapped out a policy direction to navigate.
Points to ponder
The skepticisms come from the fact that not much has been done to address other challenges that stifle growth in the nation’s economy. Central Bank of Nigeria (CBN) governor, Godwin Emefiele said that the decision to cut both the policy rate and the harmonised cash reserve ratio, was to engineer growth by increasing the flow of lending to critical sectors of the economy like agriculture, solid minerals, critical social infrastructure and manufacturing.
However, analyst remain cynical, wondering how such initiatives, though commendable can drive economic growth in the absence of critical infrastructures and amenities, especially power and recurring fuel scarcity, which businesses still have to provide for themselves, cutting deep into available resources.
In the view of analysts, the policy pronouncements of the APC-led administration including the CBN policy on import restriction, forex restriction and fixed exchange rate among others, which were expected to bring succour have resulted in regulatory headwinds.
Nothing to cheer about
In the week preceding the CBN announcement, Nigerian equities bled profusely as a combination of foreign exchange crisis, policy uncertainties and weak corporate earnings sustained pressure on the share prices of most quoted companies. Most transactions at the Nigerian stock market highlighted investors’ concerns and lack of appetites for aggressive risk-taking.
In the view of The Economist, the popular English newspaper, some of those saddled with the responsibility of managing the economy under the administration may not have what it takes to do the job.
In its assessment on the ministers of President Muhammadu Buhari, the newspaper defined Okechukwu Enelamah, the Minister for Trade and Investment, as “a respected businessman”, but stated that he “may lack the clout to stand up to the president.”

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According to the publication, “Africa’s biggest economy, which relies on oil for 70% of its revenue, is sputtering as prices fall. Economic policy has been adrift since Mr. Buhari came to power, and investors complain about the central bank’s use of trade controls and import restrictions”.
For Kemi Adeosun, the new Finance Minister, the paper said she is poorly qualified to manage the country’s economy.
“The new finance minister, an accountant who cleaned up the books of one of Nigeria’s smaller states, is poorly qualified for the job.”
The review cited Shehu Sani, senator representing Kaduna central senatorial district, as saying: “It’s a government with local professionals and without superstars.”
Adeosun, who is considered to better Ngozi Okonjo-Iweala, the immediate past coordinating minister of the economy, has over two decades experience in finance and capital management.
Adeosun was the commissioner for finance in Ogun state, from 2011 to 2015, a post she was to retain, before Buhari’s appointment.
One man who holds the view and very strongly too that the government is merely going through the motions is the former CBN governor, Prof. Charles Soludo.
The erstwhile boss of the nation’s apex bank, who spoke at a public forum recently, was unsparing of economic policies of the federal government, saying their implementation won’t take the economy anywhere.
Specifically, he said the Treasury Single Account (TSA), the CBN’s foreign exchange (forex) policy, and bailout funds for state governments are all in bad taste.
Besides, he believes the removal of fuel subsidy should be done immediately just as he argued that the capital controls policy of the apex bank is chasing away investors.
Soludo who spoke on the theme: ‘It’s the Nigerian Economy, Stupid” an event in Lagos, said the CBN’s forex policies are not in the best interest of the economy, arguing that fixed exchange rate is a disincentive to investors.

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“The economy has always done worse in fixed exchange rate regime. Capital will fly out. Such policies do more harm than good. Capital flight in a country that is in dire need of capital is bad. Private capital is on the run,” Soludo said.
He also condemned capital control policy of the CBN, saying it does nothing good to the reserves. “CBN thinks capital control saves reserves. But that is not true. Capital flow works on reverse psychology. If you make it so difficult for investors to take out their money, it will be difficult for them to invest,” he said.
Speaking further, he said CBN’s bailout fund to states was a mistake that should not be repeated arguing that the Fiscal Responsibility Act should be implemented fully.
Soludo said a sitting governor can decide to bankrupt his successor and will be applauded at the moment. It is the next government that feels the pain of the bailout fund.
The former CBN boss said the proposed N5, 000 welfare package for the unemployed is a good idea, but not for this time. He explained that although promises have been made, the welfare payment cannot be sustained, unless government wants to overtax the private sector.
Like Soludo, Olu Ebun Adegoruwa, a lawyer, is not convinced that the government has the proverbial elixir of life to change the already worrisome situation.
As far as he is concerned, everybody is at a quandary and searching for answers, which are not forthcoming.
Setting agenda for ministers
Following the eventual inauguration of the new ministers by the Federal Executive Council (FEC) on November 11, 2015, and acutely aware of expectations before the new team, President Buhari urged them to hit the ground running.
In a related development, Nigeria’s foremost human rights law firms, Gani Fawehinmi Chambers, called on the new ministers appointed to work hard to live up to the expectations of Nigerians.
In a statement signed by Mohammed Fawehinmi, the son of the late civil rights crusader, Chief Gani Fawehinmi, the firm identified finance, science and technology and education as three key areas of the economy whose ministers have their work cut out.
It is believed Buhari has taken certain important steps and actions since assumption of office that should have sent a clear message to Nigerians, including the new ministers that he is, indeed, out to effect change in the system, and put Nigeria on the path of sustainable growth and development.
But whether the much anticipation economic turnaround promised by the Buhari government will come to pass, time will tell, as Nigerians were made to believe during the electioneering campaign period that an APC-led government, with Buhari at the helm would take Nigeria to the promised land.
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