• Friday, March 01, 2024
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Nigerian policymakers are impoverishing Nigerians


It is often expected that public policies should be formulated in the best interest of a nation’s citizens as well as the sustained and sustainable growth of a nation; and not for the personal aggrandizement of policymakers nor as a conduit for corruption and waste of scarce resources. Sadly, this has hardly been the case in recent times in Nigeria.

Otherwise, how does one explain the myriad of policies whose effects on Nigerians and the Nigerian nation have been all but positive?

Take for instance, the recent closure of the nation’s land borders. When the Nigerian government announced the closure of the country’s land borders to all goods a few weeks ago, the decision was severely criticized by economic experts. Nevertheless, the Buhari administration justified the decision as a tactic to stem the influx of smuggled goods from neighbouring countries.

In reality however, the effects of the border closure have been damaging. Since the announcement of the border closure, the nation’s inflation rate has been on an upward trajectory. Already, basic commodities including food, transportation etc. have become more expensive, with the severest effects suffered by the nation’s poor. This does not bode well for a nation which was only recently adjudged the poverty capital of the world. Furthermore, the border closure has also had severe effects on local production as factories and traders have struggled to import key raw materials and have had to devise alternative routes for their exports.

That the closure of the nation’s land borders has not boded well for the Nigerian populace and economy is not in doubt, yet the nation’s policymakers have bizarrely doubled down on this policy.

Another inexplicable policy which has had far reaching consequences is the Central Bank of Nigeria (CBN)’s policy on the exchange rate of the Naira to other currencies. Following a slump in global oil prices in 2015 which depleted public finances and dried up the nation’s dollar supplies, there were wide expectations that the Naira would be devalued. A devaluation of the Naira in 2015 would have allowed the CBN design policies which could have laid the foundation for future sustainable growth. Nevertheless, the CBN and President Buhari resisted calls by experts to devalue the Naira but instead undertook numerous measures to maintain the impression of a strong exchange rate to the continued detriment of the nation’s economy.

Basically, by implementing a monetary policy geared towards maintaining an artificially strong Naira, the nation has found itself in an unpalatable but totally preventable economic situation characterized by mass exodus of foreign direct investments, low GDP growth and high inflation. Given that the nation is also straining under the weight of its debt which currently stands at over N24 trillion, it is unconscionable that economic administrators are systemically rendering the nation insolvent by spending massive sums just to maintain a high value of the Naira. Such policy defies economic logic and is not rooted in any proven economic theory, and despite disastrous effects on the economy, the CBN has inexplicably failed to backtrack.

Another similar policy which has been of no significant value to Nigerians is the nation’s continuous subsidy of petroleum products. While this might be controversial, the reality is that fuel subsidy, which was initially introduced as a stop-gap measure to cushion rising international oil prices in the seventies, has mainly been a subsidy for middle-class and rich Nigerians and hardly for the poor, for whom they were designed.

In fact, rather than being a ‘dividend of democracy’, Nigeria’s fuel subsidy policy has been a constant source of multiple corruption scandals, while consuming a significant chunk of the nation’s resources. Moreover, the fuel subsidy policy has been a highly inefficient and expensive way of promoting equality and tackling poverty in Nigeria. For instance, Nigeria spent over ₦1.4 trillion on petroleum subsidies in the past year, a figure more than double the proposed 2018 budgetary allocation to education. This is illogical in a nation with one of every five of the world’s out-of-school children.

Overall, Nigerian policymakers have over the years formulated policies which have had nothing but disastrous consequences for Nigerians and the Nigerian nation. Nevertheless, not only do these policies remain in place, similar disastrous policies are formulated and implemented constantly.

Sadly, every policy has a cost – financial and otherwise, and these costs are borne by the Nigerian masses. For instance, the billions of Naira wasted on the subsidy of petroleum products could have been invested in the nation’s education of its youth or the provision of health care facilities. Also, rather than strive to maintain a high value of the Naira, the CBN could have focused its effort on sounder monetary policies which could have lifted the nation out of the economic quagmire it has found itself.

Policymakers ought to formulate policies in the best interest of public good and for the sustained growth of the nation. Unfortunately, this has not been the case in Nigeria, and perhaps explains why the nation has remained stuck in the hamster wheel of underdevelopment for decades.