Nigeria
has several development research documents that speak of ways to better
manage the economy. But the problem has always been that leaders are
often misadvised to adopt policies that favour the upper class. In most
countries today, the economics of the middle class has taken the center
stage. This is because if the middle class is doing well, the purchasing
power in the hand of this class will make the economy to grow.
When
in 1986, General Babangida introduced the famous Structural Adjustment
Programme (SAP), it was with good intention. But half way down the line
of implementation, the programme was derailed by Nigerians who kept
crying of the hardship the programme was putting the nation through. SAP
failed because the visionary of the programme could not stick to his
conviction.
The lesson for President Buhari is
that it is better for a leader to stick with his or her convictions than
let opinion polls or emotional sentiments drive his or her economic
policies. Fortunately, President Buhari has the opportunity to meet with
President Barack Obama whose time and economic circumstance of coming
to power seem very similar to that of President Buhari.
In
2007/2008, the global financial melt down almost crippled the American
economy. Obama entered the American political space with the same change
mantra. He won. He introduced the famous Stimulus Package to bailout
ailing companies. Many Americans did not believe it will move the
economy out of the woods. Some pundits were dismissive and derisive of
Obama’s stimulus strategy when it was launched. But today, the American
economy is out of the woods.
The first lesson Buhari should
learn from his trip to America is to be his own man and understand that
just like Obama, he was elected during a period of economic turmoil and
distress. Buhari should realise that when Obama was elected in 2008, the
US economy was in dire straits and reminiscent of contemporary Nigerian
economy. With unemployment rate hovering around 10 per cent, the U.S.
economy was losing 800,000 jobs monthly.
Budget deficits were
sky- rocketing, pushing America’s debt profile to unsustainable levels.
Just as Buhari has claimed, Obama not only met an empty treasury, he was
also saddled with a whopping debt burden of several trillion dollars.
Buhari like Obama, has inherited expensive and drawn-out insurgency in
the North-East which he has pledged to end. Like Buhari, ending the wars
in Afghanistan and Iraq was a major mantra in Obama’s election
campaigns in 2008. Buhari also campaigned on the promise to end the
scourge of Boko Haram.
Just as Nigerians clamoured for change
during the last elections, Americans desperately wanted change in 2008.
It is a known fact that when nations clamour for change, they are taking
a risk. Nigerians took a risk in Buhari.
Given the striking
social economic similarities in both Obama and Buhari’s emergence as
presidents, Buhari from meeting with Obama would do well to borrow
Obama’s economic “magic wand” which both may have discussed in their
official engagement. If Buhari does, he will learn that Obama turned the
U.S. economy around not through austerity measures, but by spending
more. Obama introduced economic stimulus program by referring to the
severity of the economic challenges he inherited. Despite the challenges
he faced from Republicans in Congress, he managed to implement a
stimulus program. Fortunately for Buhari, his APC-led government has
majority in the National Assembly.
Buhari’s stimulus strategy
like that of Obama, could focus on cherry-picking projects that can
create jobs almost instantaneously, as well as on programs that can
deliver immediate returns to Nigerians. The projects and programs the
Buhari administration could get into include infrastructure, education,
health, and energy, unemployment benefits as he promised during his
campaign to pay N5, 000 unemployment benefits to Nigerians and other
social welfare provisions.
In the President’s economic blueprint
to be unveiled, he should resist the temptation of embarking on
belt-tightening as an end in itself. In the process of cutting costs,
those packaging the President’s Economic blueprint must not jettison
investments and projects needed to enhance the country’s productive
capacity.
Buhari’s economic managers should consider increasing
spending in sectors, projects and programs that boost the economy;
generate employment and promote inclusive growth. These sectors include
infrastructure, mining, labor-intensive manufacturing, agro-processing,
health and education.
Arguably, Nigeria is a country where a
massive economic stimulus programme is urgently needed. It has a large
stock of human and natural resources that are grossly underutilised. The
informal sector in Nigeria is very vibrant, with millions of
underemployed youths. Most of Nigeria’s graduates are unemployed or
engaged in menial jobs.
It is worthy of note that President
Buhari has the pedigree to shepherd a massive stimulus program. His
handling of the Petroleum Trust Fund attests to this. He is known to
abhor profligacy, which means that stimulus money will be spent
prudently. He detests graft and corruption, which implies that stimulus
funds won’t disappear.
However, this depends on whether Buhari
will be able to prevent those around him from corruptly enriching
themselves. The President could fund the economic stimulus package
through domestic borrowing and the funds to be recovered from those who
corruptly enriched themselves while in government. Borrowing money
domestically in one’s own currency is not as problematic as external
borrowing.
The increase in aggregate demand generated by
stimulus spending would subsequently crowd-in investment in the
production of goods and services. This ultimately will generate
employment opportunities. One of the usual concerns about stimulus
spending is the risk of inflation. But unemployment, economic
disempowerment and youth restiveness are bigger threats to stability
than inflation in the short to medium term. In any case, the Central
Bank of Nigeria has the necessary monetary instruments for reigning in
inflation should it become a challenge.
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