Age-old ideology drives Buhari’s food-import ban amid hunger
Economic rationality is about actions that maximise utility or welfare. Thus, when a country bans food imports when it lacks the capacity to meet its food requirements locally, economists would describe its behaviour as utterly irrational, especially amid widespread poverty and hunger. To ban food imports in those circumstances would certainly hike food prices, thereby further deepening poverty and hunger.
But economists also know that not everyone acts rationally. For instance, you would not expect a president driven purely by ideology and utopia, rather than by evidence, to pursue rational, welfare-maximising policies. The renowned economist John Maynard Keynes famously said that “when the facts change, I change my mind”. But those driven purely by ideology never change their minds even if the facts change. They are path-dependent, totally resistant to change!
That, let’s face it, is the best way to explain President Muhammadu Buhari’s recent decision to ban the imports of all food items into Nigeria by denying their importers access to foreign exchange from the official window. It’s path dependency; the old Buharinomics is making a dramatic comeback. Anyone who wants to know why Buhari would ban food imports, despite the excruciating poverty and hunger in this country, must understand the stubborn persistence of his age-old economic worldview. And what I want to explore here is the staying power of the old Buharinomics, despite its demonstrable failure and the fact that its ideological root, communism or Marxism, died as an organising philosophy after being totally discredited in countries where it once held sway.
So, what’s the trajectory of Buhari’s economic belief that lies behind his food-import ban? Well, let’s from the mid-1980s when, as a military dictator, General Buhari first imposed his economic philosophy, Buharinomics, on Nigeria. As many would recall, General Buhari’s regime controlled what Nigerians ate, what they wore, how much money they could take out of Nigeria, what products could be imported into the country, what exchange value the naira could have, how much goods could be sold for in the market, well, how Nigerians could live their lives. It was a pretty closed, command-and-control economy.
Truth is, Buhari’s military regime denied Nigerians what Adam Smith, the father of economic liberalism, called the “system of natural liberty” under which citizens could pursue, without undue state interference, their aspirations for a higher standard of living. After all, as Aristotle said, politics is “primarily concerned with the development and actualisation of human flourishing” and “the pursuit of the higher good of living well”.
But Adam Smith’s philosophy of human liberty and Aristotle’s doctrine of human flourishing were alien to Buhari’s ideological orientation, derived from his fondness for the then Soviet Union. In fairness, Buhari believed he was acting in the best interests of the nation and of the common man. After all, so, too, did the Soviet Union, which believed that by owning the means of production and controlling individual liberty and economic freedom, the State could serve its interests as well as those of the proletariat.
However, in 1991, the Soviet Union collapsed, thanks to the internal contradictions of its economic and political systems. Mikhail Gorbachev, the Soviet’s last leader, precipitated the collapse with his policies of glasnost, “openness”, and perestroika, “restructuring”. Russia, its successor, abandoned the collectivisation of agriculture and state planning. Far-reaching market economic reforms followed, including privatisation of the so-called commanding heights of the economy, floating of the Russian currency and trade liberalisation. Russia soon became a strong and growing market economy. One scholar described the post-Soviet Russia’s market economic reform as a “capitalist revolution”!
President Buhari said that he became a “converted democrat” after seeing the collapse of the Soviet Union. Presumably, then, the collapse of the Soviet Union had a transformational effect on him. But if you look for any lesson of the Soviet collapse that Buhari has imbibed, you will find none; not glasnost or openness, not perestroika or restructuring. And certainly not market economy reform. But why? Well, the reason is that Buhari is driven by ideology and nostalgia about the past. He hankers after the time when one naira could have bought you one dollar; he dreams of a past when Nigeria was a net exporter of agricultural products. And he wants to bring back those halcyon days.
In 2016, Buhari said in an interview that he was “shocked” when he learnt that “what we’ve been buying with foreign exchange is all food items”, adding: “I didn’t believe it and still didn’t believe it”. Of course, Nigeria has not been spending all its foreign exchange on food items, but President Buhari, a mercantilist, is ideologically opposed to Nigeria importing any food item. He believes Nigeria should be self-sufficient in food production, and he wants to achieve this not through market reforms but by dirigiste diktats, particularly through Soviet-style collectivisation of agriculture and import substitution. Of course, collectivisation and import-substitution are key elements of the old communist or socialist policies that failed to produce efficient and welfare-maximising outcomes in several countries, including the old Soviet Union and in Latin America.
But these failed policies, designed to drive local production and lead to self-sufficiency, were the rationale behind the Central Bank’s decision in 2015 to classify 41 items as “Not valid for foreign exchange” and ban their importers from accessing foreign exchange from the official window. The CBN forex exclusion list was later expanded to 43. Now, however, driven by the same policy of self-sufficiency, President Buhari has decreed that all food importers must be denied access to foreign exchange through the official window!
According to a statement from Buhari’s spokesman, Garba Shehu, the president “ordered” the CBN: “Don’t give a cent to anybody to import into this country”. And why? Well, he said “Nigeria has achieved food security.” But really? Where is the evidence that Nigeria is food secure? Recent analysis by this newspaper shows that local productions of many food items, such as chicken, wheat, tomato and fish, fall well below 40% of the requirements.
And where is the impact assessment to support the food-import ban policy? In a statement, the Manufacturers Association of Nigeria, MAN, said that the Central Bank “will have to do assessment of where we are in practical terms and realistically weigh its options before embarking on such a far-reaching policy”. The fact that President Buhari decreed that policy without an impact assessment underlies the problem of having an ideologically-driven president who makes policies on a whim without considering the evidence or their impacts.
Of course, everyone knows that Nigeria is nowhere near being food secure. Indeed, which country in the world is so food secure as to ban food imports? Brazil is the world’s most efficient agricultural country, yet it imported $10bn worth of food in 2016, about 7% of its total import. Britain, another efficient agricultural country, imports nearly 50 per cent of its food requirements.
Yet, despite Nigeria’s lack of capacity to meet its food requirements locally, and despite widespread poverty and hunger in the country, President Buhari puts ideology above evidence to self-declare Nigeria as food secure and to effectively ban all food imports. This is a wrong-headed way of making policy and it would hurt more Nigerians.
The Brookings Institution said six Nigerians drop into extreme poverty every minute! Sadly, Buhari’s food-import ban would force more Nigerians to join their ranks. How any president could put ideology above the welfare of his people defies economic rationality. But with President Buhari, a path-dependent, socialist ideologue, that’s hardly a surprise!