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Saturday, December 24, 2016

BUHARINOMICS: WHAT GOES WRONG?

         After about nineteen months into the forty eight months tenure of President Buhari, the major challenge to his yet to be declared second tenure ambition is in economic front. Continuation of what happen in the economy in the past months into next year will prove costly for the government. What happen to agriculture is also important. For example, should Buhari take sectors like education, agriculture, infrastructures, etc., just like any other sector, NO. Agriculture shall be treated as a special area - a strategic sector. Without that what ever bad happen to the sector will spill over to the economy through higher inflation (high price of food) and lack of local raw materials. Up to now Buhari is yet to have concrete blueprint on how to turn the sector and if he has one at all he is keeping it to his chest. The earlier he and his team get a road map for the sector the better for every one. Now that Boko Haram crisis has been reduced to the lowest level possible (to use the President word 'crush'), Buhari focus shall turn to Economy! yes Economy!! Economy!!! because his 2019 electoral success depends on it. Despite these, rating agency Moody recently commended the government success in maintaining a strong balance sheet despite having turbulent economy, when compared with peers in the same condition. The banking sector need special attention in order to help make other government objectives achievable. The current lending level by the banking sector is below capacity, government must provide incentives to enable the sector to lend more. As we  enter 2017 CBN shall consider reducing interest rate during next MPC meeting.
         As many analysts have observed Buharinomics is old economic model that operated during the 1970s and 1980s central focus of which was nationalism and self reliance. Pursuing industrialisation and self reliance are not bad in them self, but where the problem lies is the method to be used in realising that objective in today complex world. A financial times article describe Buhari economic policies as replica of "Venezuela’s exchange rate policy and China’s failed equity market strategy
Source: https://thewhistler.ng/story/buhari-s-economic-policies-height-of-foolishness-financial-times
". Though, our foreign exchange problems will not just banish as we want them to do, Buhari needs to find an effective way of managing them in the short run so as to reduce the hardship caused by the scarcity of Forex in the wider economy. Thus, of priority shall be need to find solution to current rationing of Dollar. Our system as it is cannot be relied upon to distribute scarce dollar to those that need it, corruption, and bureaucracy will be in the way of achieving any desired objective. The unnecessary shocks that Nigerian economy has gone through in the last one and half years would have been avoided has Buhari plan well at the beginning of his tenure and did not take the economy for granted with appointments that can well be term as mediocre (learning on the job). Just like with any other human endeavor there is no alternative to recruiting the best hands, people who are experts in their fields to advice any government. Now that there is talk of cabinet reshuffle Buhari shall look for competent hands to manage the economic front, not any other person. Buhari's pre-inauguration state of mind that Nigeria of today can be put on rapid economic progress with 1970s and 1980s economic models, not minding that things have changed will not work. Economics as a discipline in itself is more dynamic than what Buhari thought it to be, models of 1970s/80s have been improved upon since. More advance successors who can handle today economic complexities better are available and President Buhari has no excuse for not looking for them.
        The link between economic growth and development of higher education sector has been emphasised by many past academic studies, recently a study by London school of economics noted that doubling the number of universities in a country resulted in increase in GDP of about 4.7%. Here it seems Buhari government's advisers are not aware of this connection, looking at their slow responds to the demands from the education sector. Just like Buhari saw the need to develop agricultural sector, he also must see the need to develop our education sector if we are to achieve economic growth and development. One of the immediate benefit of doing so is it will reduce pressure on foreign exchange as the number of Nigerians going abroad for higher education will come down. There is no alternative to having the right people to manage your affairs. Despite recent efforts by his government to respond to the growing cry on how the economy is being run, Buhari needs to get more experts on the economy on board to help advise him on the economy. Currently, there are insinuations in the media that the caliber of ministers Buhari recruited have failed him. It therefore, become necessary for him either to reshuffle his cabinet or appoint competent advisers to assists in handling the economy and other strategic sectors. The whole world must see Buhari fulfilling his promises to fight corruption no matter who is involve. Whether that person is in his government or outside of it, big or small.

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