From the border closure fiasco to the complex currency swap policy, there are at least five avoidable mistakes made by the administration of President Muhammadu Buhari’s administration, who has less than 100 days to complete its second and final four-year term.
In Africa’s biggest economy, residents are bearing the brunt of the naira redesign policy despite reassurance from the Central Bank of Nigeria (CBN) that the old notes remain legal tender until December 31, 2023.
So far, the hardest-hit are individuals, small businesses, transport firms and cocoa farmers who depend on Nigeria’s informal economy, which the International Monetary Fund estimates accounts for more than half of the nation’s gross domestic product. That’s about $220 billion — more than Ukraine’s GDP.
The mistakes made by the administration are partly responsible for the state of the economy, which has in recent years been growing too slowly to create new opportunities for a rapidly expanding population.
Here are five avoidable mistakes.
Late appointment of ministers
The first key misstep was the refusal to name a cabinet six months after being sworn in as president. Buhari was sworn in as president on May 29, 2015 but he did not swear in his ministers until November 11, 2015.
Analysts say the delay in appointing ministers cost the economy the growth momentum that is usually seen after elections and possibly set the stage for the economic slowdown that resulted in the recession of 2016.
“The uncertainty over the identity of Nigeria’s next batch of ministers has led some foreign direct investors to hold off on potential big-ticket deals while portfolio investors are beginning to redirect cash to other countries that are ready for business,” a chief executive officer of a leading financial house told BusinessDay in 2015.
While speaking to France24, a French television station on September 16, 2015 during a visit to France, when asked why he was yet to have a cabinet more than three months after being sworn in, Buhari described ministers as ‘noise makers’, saying that those who really do the work are the civil servants and ‘technocrats’.
But many analysts believe that the lack of ministers led to a vacuum that created policy inertia, which the country paid for dearly in the eventual impact on economic growth.
“These delays are becoming the norm in Nigeria and it shows how unserious we are as a nation,” a former public official told BusinessDay.
Delay in naira devaluation
The second major mistake was the stubborn refusal to devalue the naira in 2016 despite a significant decline in foreign exchange earnings from oil sales.
President Muhammadu Buhari is famed for his statement in 2016 that he did not want to “kill the naira”, yet the exact opposite has happened to the currency.
Buhari had said he would not kill the naira by allowing it to be devalued because a weaker currency will only result in higher inflation and hardship for the country’s poor and middle-class.
“I’m not convinced that Nigeria and its people will derive any tangible benefit from the devaluation of the currency,” Garba Shehu, senior special adviser to the President on media and publicity quoted Buhari as saying on January 27, 2016.
But the refusal to allow the CBN to devalue the naira meant that the apex bank had to introduce several unorthodox foreign exchange policies including dollar rationing, outright ban on 41 items from accessing CBN dollar for imports and restrictions on international payments.
The naira, which averaged N381 per US dollar in the black market in 2016, has lost about 50 percent of its value against the dollar compared to the current market rate of N755 per USD while inflation, which averaged 15.68 percent in 2016, has surpassed the 20 percent mark to hit a 17-year high.
“The policy led to less supply of food and since the demand is not going to reduce, food prices went up. This also increased smuggling of food items into the country,” Henry Ogbuaku, head of asset management at Growth and Development Asset Management Ltd, said.
Border closure
Without any formal notice, on August 21, 2019, President Buhari ordered the closure of the Seme border between Nigeria and the Benin Republic to check the smuggling of rice, wheat, petrol and other commodities by local and foreign traders.
In December 2020, he ordered the reopening of four land borders.
Before the border closure in August 2019, 50kg of rice cost between N16,000 and N18,000. A BusinessDay survey of some markets in Lagos found that a 50kg bag of locally parboiled rice now sells for N43,000, up from N28,000 in September 2022. The price of a 50kg bag of foreign parboiled rice rose to N45,000 from N31,000.
“That border closure killed my business,” said Onyenanu Ndidiamaka, who runs Debbies Cosmetics in Lagos. “When the decision took effect, sales dropped by 70 percent because I was unable to replace my stock.”
Read also: 2023 presidential poll: Buhari’s legacy of fraudulent elections
Petrol subsidy
“If anybody says he’s subsidising anything, it is a fraud”, this was a statement by Buhari in a 2011 interview while he was trying to convince Nigerians he was worthy of their votes.
Nearly eight years in the saddle as Nigeria’s President, his administration has spent over N10 trillion on petrol subsidy.
This is more than any other president since 1999. Between 2010 and 2015, the administration of President Goodluck Jonathan spent N4.3 trillion on subsidy, according to figures from the Nigeria Extractive Industries Transparency Initiative.
Lack of trust in private capital
There is ample data showing that no government in the history of Nigeria has accumulated debt as much as the current administration.
Nigeria’s debt stock has tripled under the Buhari administration to N44 trillion as at September 2022.
Expert say opportunities abound in Nigeria to raise equity capital, whether it’s relocating idle government assets like the Federal Secretariat in Ikoyi or Dodan Barracks, both in Lagos, from the prime locations they are situated before leasing the land out to private investors to generate substantial rental income like Hong Kong does, or selling some stake in government agencies like Nigerian Postal Service, among others.
“This move will not only yield revenue for the government and lighten its debt burden but will also ensure that some of the public assets, which are under-utilised, are fully utilised,” Niyi Awodeyi, CEO of Subterra Energy Resources Limited, said.
