When President Muhammadu Buhari swept his way to power with the change mantra, many Nigerians were hopeful that things will get better. Buhari was talking tough and many felt he meant well. In fact, his stand on the economy of looking inward was well received. Many supported his position of not yielding to the devaluation of the naira. Yes, the economy was taking some bashing; Nigerians were going to have it rough and tough at the initial stage. Nothing good comes easy was the understanding of many. The government planned to jump-start production by injecting funds into the economy. To bring workers back to work, empower Nigerians to have enhanced purchasing power to oil the wheel of economic growth and progress.
There was a debate and pressure came on the Central Bank of Nigeria to devalue the currency. This, they argued, will bring in a lot of dollars from foreign investors. The push came to a head; the CBN has floated the naira. The foreign exchange that was being hoped for is not here, foreign investors are waiting in the wings. They are watching to see the currency go further down.
Nigerian policymakers seem not to have learnt from the past. This economy can only grow through the genuine efforts of Nigerians. Foreign investors can only be additional benefit not the core of growth and development of the Nigerian economy.
In the days of import licence, the argument was that once the economy was liberalised, the nation can go to sleep and things will fall in place. Nigeria undertook the Structural Adjustment pills. Policies and programmes were put in place. One of such was the introduction of the foreign exchange market. At that time, there were three separate markets for foreign exchange. There was the first tier, the second tier and the autonomous market. In each of these markets, different rates were applied for the same commodity. Along the line, foreign and local investors started agitating that the true value of the naira was reflected in the shadow market called parallel market. The IMF, World Bank and other self-styled experts kept asking the nation to adjust the naira value against the dollar. From about N1 to the dollar in 1986, the adjustment has taken the nation’s currency down to N395 to the dollar as at today.
The fundamental issues in the economy are not being addressed in each of these adjustment experiments. No nation allows its economy to become a guinea pig for testing the suitability of a theory in the market place. The primary problem in Nigerian economy is its weak production base. Nigerians must realise that the economy as well as the currency can only get better if every Nigerian makes up his mind to be productive. It is shameful that Nigeria imports virtually everything under the sun. This simply is unsustainable. There is a general need for a reorientation of the minds of Nigerians, a reorientation born out of the fact that there is dignity in labour.
Nigeria imports at least 70 per cent of its refined fuel, despite pumping 1.6 million barrels of crude a day in June according to the International Energy Agency, and faced fuel shortages as retailers struggled to get foreign currency to buy product during a 15-month naira peg that was removed last month. The currency’s official exchange rate weakened to more than N280 per dollar, compared with the fixed rate of N197-199, and the naira trades at around 360 on the black market, increasing prices for consumers.
National Bureau of Statistics in a recent statement said: “In June, the Consumer Price Index (CPI) which measures inflation continued to record relatively strong increases for the fifth consecutive month. The Headline index increased by 16.5 per cent (year-on-year), 0.9 per cent higher from rates recorded in May (15.6%). While most COICOP divisions which contribute to the Headline index increased at a faster pace, the increase was however weighed upon by a slower increase in three divisions; Recreation & Culture, Restaurant & Hotels, and Miscellaneous Goods & Services
“Year on year, energy prices, imported items and related products continue to be persistent drivers of the Core sub-index. The Core index increased by 16.2% in June, up by approximately 1.2% points from rates recorded in May (15.1%). During the month, the highest increases were seen in the Electricity, Liquid Fuel (kerosene), Furniture and Furnishings, Passenger Transport by Road, and Fuels and Lubricants for Personal Transport Equipment.
“While imported foods continue to increase at a faster pace, the Food sub- index on the aggregate increased, albeit at a slower pace in June relative to May. The index increased by 15.3 per cent (year on year) in June up by 0.4 per cent from rates recorded in May. The index was weighted upon by a slower increase in the Vegetables and “Sugar, jam, honey, chocolate and confectionery” groups.
Nigerians must produce what the nation feeds on. Nigeria cannot continue to import rice, beans, petrol and what not. Imagine if there is a Dangote in agriculture, another in auto manufacturing, another in petrol sector replicating the cement miracle, this economy will certainly grow faster and less dependent on import. The argument that the business environment is harsh is begging the question. If Dangote can succeed in the Nigerian environment, others with the same mindset can succeed.
Second issue in the country today is the question of sanctity of contract. Foreign investors are not responding to the Nigeria because they are not sure that the Nigerian government will keep its promise. Many are not convinced of the sincerity of those in power. There are too many conflicting signals coming from the principal officers of the current government. It is a matter of concern that after the CBN introduced the floating exchange rate, the President said openly that he does not see the benefit of the policy to Nigerians. Such statement in the eyes of foreign investors, connotes lack of policy cohesion and does not give hope for consistency. The question is; if this administration believes strongly in looking inward, it should come up with policies and strategies to implement its diversification policy. As it is, this government is on an economic roller coaster that is leading to nowhere.
As of today, the purchasing power of the citizenry is very low. Liquidity in the hands of individuals is paltry with several months of unpaid salaries in both public and private sectors. It is the ability of the citizenry to buy goods and services that gives signal to producers to produce more. It is the stimulation of production that generates employment, lead to industries expanding their facilities to cope with rising demand. This process when triggered, brings about moderation in the prices of goods and services. Nigeria is at the moment, is suffering from lack of economic growth and at the same time high level inflation. The economy is in what is known as stagflation.
It is unfortunate that the government instead of releasing money into the economy is locking up funds that should have been used to foster production in the CBN vault in the name of fighting corruption. It has also failed to release the money it promised it will release into the economy as soon as the budget is passed. Timely release of funds enables any economy to move to the next level. A breakdown of the total expenditure of government in the first three months of 2016 showed that the recurrent component accounted for 72.8 per cent, while capital and statutory transfers accounted for 18.0 and 9.2 per cent, respectively. A further breakdown of the recurrent expenditure showed that the non-debt component accounted for 72.7 per cent, while debt service payments accounted for the balance of 27.3 per cent. Thus, the fiscal operations of the Federal Government resulted in an estimated deficit of N725.18 billion, which indicated an increase of 178.6 per cent above the 2015 provisional quarterly budget deficit of N260.25billion.” There is no way the Nigerian economy can grow fast with this kind of government expenditure pattern. Enough attention need to be paid to the development of infrastructure in the country if Nigeria intends to attract the right type of foreign investment.
Nigerians are the problem of the nation. We must wake up from our sleep, roll up our sleeves and work, work and work to bail out our country.