Opinion: Feyi Fawehinmi reviews Buhari’s one year of handling the economy

by Feyi Fawehinmi

*This is the third of a 3-part series

Let us first set out the marking scheme. Anti-corruption carries 15 marks. Security carries 15 marks. The Economy carries 70 marks. To pass this exam, you must score 40 marks at least. Yes, because a bad economy cannot reduce corruption or insecurity — it must necessarily increase them.

To be properly fair, we must also take into account the president’s patrimony on assuming office. ‘Ordinary’ Algeria entered the oil price crisis with almost $200bn in reserves. Nigeria had maybe $40bn and more than 4 times the Algerian population. When oil prices were high, Nigeria earned high, spent high and borrowed high. Further, the unbridled theft of oil money in the go-go days also degraded all the institutions of government to the extent that Mr. Buhari inherited an apparatus of government that had been all but hollowed out.

You might argue that had the economy been booming, with nominal levels of corruption and even healthy reserves reflecting high oil prices, no voter would have had any use for Mr. Buhari. You will be right in making that argument — he was elected to fix a crisis.

They say you should not speak unless you are able to improve the silence. In that sense, we should judge the current government on what it has done to improve the mess it inherited.

What’s The Story?

Most people understand the economic problems facing Nigeria today. The country does not produce much. Oil prices have collapsed meaning that dollar earnings are now a fraction of what they used to be. The effect is like going to the supermarket to buy your basic needs and finding that you cannot afford anything on the shelves.

And how has the government reacted to this problem? It has made them worse.

Prices Clear Markets

Consider for a minute that a particular type of jeep sells for N15m. Those who can afford N15m go to the car dealer and buy it. At that price, there is no scarcity of this particular jeep. Now imagine you open a shop on Lagos-Ibadan Expressway and decide to start selling the exact same jeep for N8m. Not only will you attract the people who can afford to pay N15m for the jeep (they will now want to buy 2), you will also attract a lot of people who cannot afford N15m but can afford anywhere from N8m to N15m. That is, the demand for your jeeps will be higher than that of the person who is selling theirs for N15m. But you only have 2 jeeps to sell.

This is a simplification of what Nigeria has done in the last year as a response to the forex crisis. The Buhari government has adopted a strategy of selling a scarce resource at below its market price because… I wish I knew. On what is the official rate of N199 to $1 built on? There is no explanation for this. President Buhari has simply drawn a line in the sand at N199 and nailed his reputation to it? Why? If N199 is good, then N100 to $1 must be even better. So why not move to that rate? How do you run an economy by simply stubbornly refusing to use prices?

What this rate has done is to increase demand for a scarce resource that Nigeria is supposedly trying to conserve. People who do not need to travel now want PTA. People who really have nothing to import are demanding dollars. Alhaji Dangote has been getting roughly $15m every week allocated to him at N199 to $1. The arbitrage opportunities on offer are so great that even a nun will be tempted to try her luck. In an economy going through shrinking demand and weak consumer spending, this is the number one game in town. Over there you’re fighting corruption, over here you’re creating corruption.

Of course, there are not enough dollars to sell to the mass of people who are demanding it at N199 (investors will also not bring in their dollars under an unrealistic exchange rate). And since you have decided not to use pricing to allocate that scarce resource, you must bring in other arbitrary allocation methods. This one is patriotic enough to get dollars, that one is not. If you know someone at the CBN, you might get some. If you don’t know anyone, nothing for you. If you are travelling on holiday to go relax or even for shopping, you are ‘entitled’ to dollars at N199. But if you want to bring in tomato concentrate right now to alleviate the current tomato crisis, you can’t get dollars. Because tomato concentrate is not ‘approved’.

This is how a supposedly $500bn economy is being run — on whims and caprices. Glamorous dresses, no. ‘Raw materials’, yes.

Godwin Emefiele

To lead the Army in the fight against Boko Haram, the president appointed Lt. Gen Buratai to popular acclaim. To boost tax collection, he appointed Tunde Fowler to FIRS, a man who came to the job with a decent track record at LIRS. To clean up the mess that is the Nigerian Customs, he appointed Hameed Ali, a man the president himself clearly trusts and a strong reputation for looking corruption in the face and telling it where to go. To give life to the fight against corruption, he appointed the conscientious Ibrahim Magu to the EFCC. To restructure the NNPC, he poached Emmanuel Kachikwu from Mobil to run all things concerning oil.

The jury is still out on all these appointments but you can say that the president cares about those roles and took his time and sound advice in appointing the best hands he could find.

Why then has he persisted with Godwin Emefiele, a biddable fool, at the CBN? Does the president not care about the economy? Does he not think that in a crisis such as Nigeria is currently facing, he ought to have the best hand he can find running the CBN. How has Nigeria been reduced to this?

Godwin Emefiele should never have been appointed to run Nigeria’s Central Bank in the first place. But Buhari now owns him and the mess he brings with him. And given the way the president has not been shy to make pronouncements on monetary policy, we must conclude that keeping Mr. Emefiele is deliberate on his part. I’ve previously written that keeping the CBN so close will come to bite him in the end.

The Trouble With Strong Men

Other than a tragedy, there is no other way to describe this. The problem with this ‘die on the line’ approach is that there is now no way to move away from the silly policy without creating new problems. If the president now comes out to say the naira will be devalued after all, people will rightly ask him what took him so long? And he will suffer serious reputational damage. This is the risk of strong men in politics. They are very useful when he enemy is clearly defined like corruption or Boko Haram. But when nuance and pragmatism are required, they are problematic.

So to get around this self-inflicted problem, here’s what the Vice President said a couple of days ago

What ‘current interbank rate’? No such thing exists and certainly not at that rate. Godwin Emefiele shut down the interbank market when it started giving him rates he did not like. Now, we have 3 exchange rates for the same dollar — 199, 285 and 320. The last country I know to have had such a shambles of exchange rates is Venezuela. It bears repeating that we have this mess purely to save Buhari and Emefiele — Messrs Cheech and Chong — the embarrassment of walking back their inexplicable vow not to devalue.


This exchange rate confusion is not an isolated event either. What was signed in China? Was it a swap or a wasp? We still do not know. Yet, we were quietly minding our business when the same government came out to tell us it had signed something.

And what can we say about the budget fiasco? It became a matter of jubilation when something so mundane as the president signing the budget was finally done. To be fair, a lot of the things which became issues during the preparation of this budget have always been there. You can go back to check budgets from previous years and you will be guaranteed to find basic addition errors in there. But no Nigerian could have been inspired by the handling of the budget preparation where the government elevated mediocrity to the level of high drama.

We gave the president the benefit of the doubt when he delayed announcing his ministers for 6 months. We now know he was wrong and merely wasted his and everyone else’s time. The civil servants he tried to infuse with confidence in the intervening period have badly let him down (as anyone could have predicted). This delay directly affected the proper functioning of government and in turn, the economy.

The finance minister first said Nigeria was going after Eurobonds to plug the budget. Later it became Panda bonds from China. And then Samurai bonds from Japan. Kangaroo bonds from Australia next? Who knows.

We can expect a new government to take its time in finding its feet. But for a government to take its sweet time for one year at a time of so much economic uncertainty is self-sabotage. These missteps inspire no one and help to shape a narrative that becomes difficult to change later on. Goodluck Jonathan became known as ‘clueless’ in 2011 and that tag stuck till he was kicked out of office in 2015.


For decades, the Nigerian government has lied to Nigerians that prices are things which can be controlled no matter the underlying forces. The Nigerian government has sold itself as the defender of the poor against the evil of market prices. If left ‘unchecked’, market forces will go out of control and hurt poor Nigerians. Up steps the Nigerian government, defender of the poor, to stop this from happening. The poor are to be incubated in their poverty where the government periodically throws them subsidised fuel and grains from the national reserve.

This is why, even though at N145 per litre there is no subsidy being paid by the government, the Vice President is insisting that subsidy has not been removed!

A broke government without a red cent to its name is still telling people that it did not remove a subsidy it clearly cannot afford. The same thinking is behind holding the official rate at N199 — the Nigerian government is doing it for you. To protect you from the nastiness of market forces. If they don’t do this, inflation will kill Nigerians and they will die. The Nigerian government is thus saving lives.

These problems predate the Buhari government. But President Buhari champions them with the belief of a new convert. He never met a market he did not distrust.

Such a high wire act is very costly because it leaves little room for manoeuvre. The government had better be right. But we know it can only be right if oil prices find their way back up soon.

The government wants Nigeria to produce all sorts of things locally to save foreign exchange. It wants ‘self-sufficiency’ in tomatoes, fish, rice, wheat and all sorts of other things. Leave aside how dangerous a mantra of self-sufficiency can be for the very poor you want to help —Philippines tried it with rice and ending up creating shortages. The economic planning minister then said openly that it had been a mistake.

But if you insist that you want these things, why not let pricing do the work for you? What is the logic behind proclaiming that you want to reduce imports while subsidising dollars for all sorts of things at the same time?

Getting Serious

You enter into office with all sorts of plans and dreams. But if the economy does not cooperate those plans will all come to nothing. By not treating economic matters with the seriousness and urgency he has shown elsewhere, President Buhari has badly let down millions of Nigerians who voted for him. One by one, his economic shibboleths are being destroyed. On the streets, Nigerians are demonstrating an understanding of why petrol prices had to go up. What is the government telling Nigerians? That the president is a ‘strong’ supporter of subsidies. In other words, he cannot wait to bring them back once there’s money to burn.

Yet Nigerians broadly trust the man and would have given him enough room to manoeuvre if he simply told them he had to take a difficult decision and blamed it on Goodluck Jonathan. It is not as if the government is averse to blaming Jonathan for things so it remains unclear why it won’t use its considerable political capital to do so on economic matters. Again, the only conclusion that can be drawn is that the president does not take the economy as seriously as he ought to.

Under the conditions created by President Buhari, it will be practically impossible to get any kind of economic growth. It does not have to be this way

1 Down, 3 to Go

I supported President Buhari and the APC in last year’s elections. I contributed my time and also donated my money to the campaign. I could not be in Nigeria at the time but I asked for phone numbers of people who were wavering and called them to convince them from here on my own account.

One guy sent me his mother’s phone number in Kaduna. He said she was an elder in her church and her main concern was the religious angle to some of Buhari’s supporters. I spent about 15 minutes on the phone with the woman asking her not to vote based on her fears but to be hopeful in the possibility of Nigeria rising above its worst instincts. She kept quiet the whole time and thanked me for the effort. A few minutes after the call, her son called me excitedly and told me that I had managed to convince her — she would be voting for change.

Thankfully, her worst fears have not come true concerning religious violence. But every now and again, I think about that woman. Was it an either or situation — no religious violence but you get budget confusion and exchange rate shenanigans? Did she vote for the government to take 1 year to find its feet in exchange for religious harmony? Does it hurt less because it’s ‘only the economy’ after all?

The only positive thing that can be said now is that ‘only’ 1 year has been wasted. That is, there is still time for the government to get into gear and finish strong. Of course, I want President Buhari to succeed. I like the man. He has qualities which are useful in other aspects of governance. He has a spine and I am yet to see any evidence that he does not genuinely want to make Nigeria better.

You might inspire soldiers to battle with the force of your character. You might even alter people’s attitudes to public funds by the strength of your personal integrity. But you cannot whip an economy into shape with body language. It is not easy to understand how an economy works said Larry Summers, a man with 2 brains. Intransigence will not cut it.

We all knew he was no Milton Friedman when we supported him. We did it anyway. On the understanding that he would hire knowledgeable people to advise him on his economic blind spots. We did not expect him to surround himself with people who all think like him and treat the economy so shabbily like something that is no big deal. We did not expect him to take advice only from people he ‘trusts’ and to allow himself be captured by them.

We expected a vision for the future of the country that can inspire people not a bleak future involving people bent over tilling the ground on their farms — which country on this earth has ever ‘gone back to agriculture?’. Things like mobile technology have done wonders for the Nigerian economy in the last decade and hold a lot of promise for the future. We did not expect him to treat such a growth engine so shabbily by appointing a clown to head that ministry.

It is too late in a 4-year cycle to start charting a new ‘vision’ for the country. But it is not too late to start walking away from paths that only lead to pain and regret.

In 1983, Nigerians cheered when he took office. In 1985, when he was kicked out by Babangida, they also cheered.

Surely, President Buhari is not planning to be cheered out of office in 2019 again? Surely!


Op–ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija

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  1. we should appreciate God for the previlege given us to be part of this great nation called nigeria

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