Essentially, the argument over the extent of the Buhari administration’s culpability for the depths of our current economic crisis depends on how one answers to the question: Do we think 15 months in office enough time for the administration to have reversed the putrescence that was the Jonathan government’s bequest?
To be fair to those who immediately respond with a “No”, they do have a strong point. Despite the best efforts of the boosters of the Jonathan administration, it was as reckless as it was feckless. Not only did it earn more money than its predecessor from oil export earnings, it first squandered the nest egg handed over to it by the Obasanjo administration, and then failed to save any of its own. Now, this spending, reckless though it was, had positive (albeit, short-term) economic effects, no doubt. The government spent all that it earned on funding current needs; and at a point consumer spending accounted for almost three-quarters of GDP.
Almost inevitably, a rebalancing of the economy near the end of the administration put the domestic economy at the top of the continent’s log for the size of its economies. But this was not growth that was going anywhere. It was not dependent on developing new domestic capacity. Nor was it derived from a boost to the productivity of domestic factors. Despite the posturing of the Jonathan government’s finance and economic czarina, ours was still a difficult place to start and sustain businesses. Our much touted growth in the seven years to end-April 2015 depended entirely on strong oil prices, and stronger domestic crude oil exports.
It was a bubble waiting to deflate. And truth is that way back in mid-July 2014, this bubble burst. The Buhari administration is thus, in this sense, but a victim of the lag between when oil prices bottomed out and when an economy, addicted to oil exports, began to experience withdrawal symptoms.
It is not however, an innocent victim. For long before it came into office, the nature of the rot that it was going to clean was obvious.
And this is where the narrative diverges between those who answer “No” to the question over how much time the administration has had to remedy the situation, and those who think the right answer is an unequivocal “Yes”. At the fiscal level, we all know how long it took the administration to get off the starting blocks: both in terms of organising the personnel it needed and arranging for the funds that this cabinet needed to spend.
But by far the bigger failing was at the monetary level. The central bank squandered the nation’s foreign currency saving defending a policy that most folks described as wrong-headed. It funnelled scarce financial resources into the pockets of targeted individuals, in the hope that these would help curtail domestic prices, only to see the black market for the naira blossom, and domestic prices rise precipitously. The central bank then banned and restricted — to no avail.
The naira continued to tread deeper waters and domestic prices aspired to stellar heights.
It would have been okay, if all that the Buhari government then did was to twiddle its thumbs as it did while waiting to put its cabinet together. At the very least, it could then have cited the Central Bank of Nigeria Act of 2007 as its main let. Basically, the argument would have been that a government dedicated to running the economy professionally could not then be seen to interfere with a statutorily independent central bank.
But, no, the president waded in. “Depreciation” of the naira was, in the view of his government, akin to “murder”. And “inflation” was a no go area. In one breath, then, the administration decreed a capital offence on one hand, and lèse-majesté on the other, when it ought to have been busy freeing the economy to make it more resilient in the light of the new post-Jonathan administration shocks.
In a sense, then, while we may well cut the Buhari administration much slack for inheriting a decrepit economy, its delayed-responses to the challenges confronting the economy, including the infernal time it took to allow the market determine the pump-station price of petrol, were worrisome. To the extent that the reforms it later came to embrace had been put out even before it assumed office as essential to giving the economy a new lease on life, the administration’s lateness to the game is a strange call to make.
And this is where its fan base stutters. Can they admit that this government not just did not understand what its responsibilities were upon assuming office, but that it has turned out to be a slow learner in place? Or would they prefer to have us believe that while it knew what had to be done, it just was not minded yet to do it?
Any which way, this government long since became part of our problem.