EDITORIAL: How Buhari Helped Nigeria Into Recession and How He Can Take Us Out Of It

Muhammadu Buhari in an Aljazeera Interview
Muhammadu Buhari in an Aljazeera Interview

Painful as it has been for the vast majority of Nigerians, the country’s worst recession in 30 years is an opportunity to deeply reflect on the wobbly structure of our country’s economy and learn some basic lessons on how to move Nigeria forward.

PREMIUM TIMES believes that while it is important to focus on solutions that will get us out of our present economic difficulty, it is also necessary that President Muhammadu Buhari and his government, and indeed all aspiring politicians and technocrats that will form future governments, learn from and apply these lessons. These lessons and the solutions we hope will come out of them include fundamental issues of leadership, the formulation and execution of public policy, and national economic management.

Nigeria’s economic recession has remote and immediate causes. The remote causes are well known. They include: (a) the failure to diversify the economy over the years and a dangerous dependency on one commodity (crude oil) for 80 per cent of our national revenues and more than 90 per cent of our foreign exchange earnings; (b) the failure of the immediate past government of former President Goodluck Jonathan to capitalise on high oil prices to establish strong fiscal buffers by saving for the rainy day. It is important to point out in this regard that some of the politicians who opposed efforts by the then Finance Minister, Ngozi Okonjo-Iweala, to increase savings are members of the All Progressives Congress (APC) that is in power at the federal level today. It is simply a failure of leadership on the part of President Jonathan, and (c) the crash of oil prices that began in 2014 and reduced Nigeria’s revenue earnings.

The immediate causes of the recession lie in the leadership and policy failures of President Muhammadu Buhari and his government, as well as in the reduction of revenues caused by the sharp drop in oil production output as a result of the renewed insurgency and economic sabotage in the Niger Delta. PREMIUM TIMES notes the following:

First, despite all the signs that the economy was deteriorating and should have been his priority alongside security, President Buhari, on coming into office in 2015, ignored the looming economic danger and focused single-mindedly – and, in retrospect, unwisely  – on the fight against corruption and the recovery of stolen asset which had populist appeal. This could have proceeded hand-in-hand with a focus on the management of the Nigerian economy to prevent the present crisis.

On the policy front, President Buhari intimidated and blocked the Central Bank of Nigeria from performing its statutory duties of independently responding to challenges in the foreign exchange market. By continuously making public statements that Nigeria would not adjust the exchange rate for the naira, it became difficult for the Central Bank to respond without appearing to openly defy the President. The currency market is however determined by demand and supply, not presidential fiat and the President could not sustain his populist attempt to defend the value of the naira and by the time he succumbed to economic reality, substantial damage had already been done.

It is always unwise for presidents to make direct political comments about monetary and foreign exchange policy that are solely within the purview of the Central Bank, because this could undermine the confidence of the apex bank itself and the external confidence in its independence that is an important psychological factor for market players who seek to invest in the economy. If such investors believe that the playing field is not level because political interference could shift the goal posts in an arbitrary manner, the risk of investing in such a market rises in their estimation.

Goodluck Jonathan
Goodluck Jonathan

Secondly, President Buhari’s leadership style has not helped the economy because he has encouraged an over-centralisation of power in the presidency. A small group of his aides – whose competence, motivations and integrity have been questioned by critics – has clearly hijacked the exercise of presidential power and the judgment that necessarily goes into that process. This has created a mindset that shuts out competing views and ideas, and has struck anxiety and paralysis into President Buhari’s government bureaucracy.

The cabinet appears to be a mere window-dressing for minimalist, constitutionally required but disempowered political representation in the government. It is widely known, from the experience with the government thus far, that virtually all-important decisions are made by a very small number of aides in the presidency. The necessary tonic of initiative and intellectual ferment has thus been shut out of economic decision-making for far too long, as has the wide and available talent pool required to rejuvenate economic policy.

Moreover, the extreme inertia that has become the key definitional attribute of the Buhari Administration has stultified both decision-making and policy implementation. The formation of the cabinet was delayed for five months out of a four-year mandate. The delay made it very difficult to make a good and coherent 2016 budget. More importantly, the finances for the implementation of the budget were not secured and government finds itself today with a budget it cannot implement. Had governance started earlier, the bottlenecks and challenges would also have appeared earlier, giving the regime a better head start.

The President spends a lot of time visiting countries but ambassadors to key economic partner countries have not been appointed and there is no legitimate team to pursue the matters discussed. The boards of several key economic institutions have not been constituted, or have only just been constituted, sixteen months after President Buhari’s entry into duty as Nigeria’s chief executive officer. The impression created by this tendency is one of a lack of coherent, well-articulated policy direction for the economy.

Minister of Finance, Kemi Adeosun
Minister of Finance, Kemi Adeosun

Thirdly, the policy mistakes, inconsistencies and flip-flops of the CBN contributed heavily to the recession we face today. The Bank’s artificial pegging of the exchange rate of the naira for 16 months, in the face of all persuasive evidence of the harm being inflicted on the economy, reflected a political and ideological mindset instead of a rational economic one. If the argument is that they were intimidated by Presidential comments, then their leadership is not deserving of the autonomy that is guaranteed to them by their enabling law. The Central Bank must take responsibility for creating a thriving black market for forex, massive inflation that is now at 17.6 percent, scarcity of forex, as dollar liquidity shortages in the market increased, and difficulties with access to forex for manufacturing companies that have led to sharply decreased capacity utilization, factory closures and a spike in unemployment.

The recession is a direct result of this policy stance.  Alongside the failures of the CBN have loomed those of fiscal policy by the government itself. Fiscal policy, which is in the purview of the Federal Minister of Finance, has so far failed to rise to the occasion in a depressed economy. There is still no clear strategy for getting out of the stagflation the economy is suffering from.

In any seriously governed country, these failures would have triggered accountability by the apex of the leadership. What we are witnessing therefore is a leadership failure for which the buck must stop at President Buhari’s desk.

The upshot of all these is a massive loss of confidence in the management of the Nigerian economy by domestic and foreign investors. Addressing the question of this foundational absence of confidence will be critical to getting Nigeria out of recession and back on the path to sustainable growth.

With the foregoing in mind, PREMIUM TIMES believes President Buhari must act decisively and quickly on the following pathways towards a solution:

  • The Federal Government of Nigeria has no choice at present but to borrow internationally at concessional rates, but even more important is the need to spend such borrowed funds wisely over the next two to three years to stimulate growth. This requires both a prior economic analysis of how expenditures of borrowed funds will directly correlate to GDP growth, and a transparency by making such planned and actual expenditures available to the public in order to foster accountability in governance and public policy;
  • Nigeria’s internal revenue must be dramatically expanded without increasing existing taxes or adding to them; tax collection has to be expanded effectively into the informal economy;
  • The FGN needs to set out a more robust set of interlocking fiscal, trade, structural, and industrial policies that target the real economy, prioritise support for domestic manufacturing to create output growth and employment through fiscal duty, tax and tariff incentives to all manufacturing companies;
  • President Buhari must rekindle confidence by making changes in his cabinet and the leadership of the CBN. The CBN Governor, Godwin Emefiele’s uninspiring record of performance, as well as his numerous ethical and corruption scandals that appear to have been swept under the carpet, constitute a key factor militating against foreign investor confidence in the Nigerian economy. PREMIUM TIMES strongly believes that there is a need to bring in more renowned, experienced and highly reputed technocrats to lead the CBN and the federal ministries of Finance and National Planning;
  • Considering the dwindling confidence investors have in our economy, it is necessary that replacements for these positions to be persons with significant international name recognition, intellectual and professional stature and networks in international development finance and global capital markets; for this is what bolsters international confidence in practice;
  • PREMIUM TIMES does not support the call in some quarters for the sale of national asset to get Nigeria out of the recession. Without addressing the more fundamental confidence-building steps set out above, a sale of national asset will be a short-gun approach that may provide temporary relief but would fail to restore foundational confidence. National asset sales would also push us along the path of crony capitalism, as the kitchen cabinet around the President will unload valuable national assets to their cronies;
  • The CBN should reconsider the ban on access to forex for 41 items and remove the ban. This is an attempt to use exchange rate policy to make what should be fiscal policy. The policy should be scrapped and replaced with high fiscal tariffs for the importation of luxury or non-essential items, and raw material inputs for domestic manufacturing must be exempted from such tariffs;
  • Complete transparency must be put in place, and be seen to be in place, in the forex market. Anything short of this will continue to impede potential inflows of dollar liquidity that is required to stabilise the value of the naira. In this connection, PREMIUM TIMES calls for a transparency audit of the management of forex allocations by the CBN;
  • This newspaper recommends extreme caution in any move to give the President of Nigeria emergency powers to handle the recession through legislative amendments. Any such amendments, in particular relating to procurement, must be time-limited to not more than two years in order to avoid creating an open-ended avenue for possible abuse of the requirements of transparency and due process.

    Godwin Emefiele, CBN Governor
    Godwin Emefiele, CBN Governor

We believe the assessments of the International Monetary Fund and other analysts that the Nigerian economy will begin to climb out of recession in 2017, with growth achieving targets of between 1.1 to 2.5 per cent. Getting a large economy out of recession will not be a sprint. We therefore consider the recent statements of the Governor of the CBN that Nigeria will come out of recession in the last quarter of 2016 as overly optimistic and not supported by deep thinking and concrete economic evidence.

Beyond getting out of recession, which is a short-term goal, Nigeria must remain focused on the longer-term goal of structurally transforming its economy. This requires a deep, well-thought and consistent strategy that should guide not just the present government but future governments as well.

It is the view of PREMIUM TIMES that President Buhari’s government and economic team, as presently constituted, are not optimally equipped for the fundamental tasks ahead. He must seek new actors that are fit for purpose.


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  • Nkem

    My People:

    Petrol per litre is how much today, after President Buhari increased the price few months ago? It is 145 Naira per litre.
    For 5kv generator, how many litres do you need per day to generate your own electricity, for just six (6) hours?
    You’ll need 10 litres. That is how much? It is 1,450 Naira per day.

    Now, since the zero megawatts Minister for Power Raji Fashola has no knowledge of how to supply electricity
    to Nigerians, how much do you need per month, to get six hours of private electricity a day? You’ll need ₦44,500
    a month.

    Follow me, please!
    What is the minimum amount you need today to cook a pot of soup for your four children, as a family?
    The minimum is six thousand Naira – with minimum ingredients. So multiply that by 15 days, if you will manage
    the pot of soup for two days. What will you get? You will need 90,000 Naira a month to feed a family of four.

    That means Naira devaluation by President Buhari plus the petrol tax by President Buhari have now made
    life impossible in Nigeria. Just to eat and have six hours electricity for a family now cost 133, 500 Naira per month,
    without doing any other thing, not even going out, or, even going to school. How many Nigerians earn ₦133,000
    per month? Answer me, please!

    • Public Record

      “We had used the Nigerian economy and Nigerians as guinea pigs in the
      futile experimentation with tried but failed policy—and the dead bodies are
      littered everywhere with a recession, escalating unemployment and factory
      closures, rising inflation and poverty and the consequent huge parallel market
      premia that is one of the highest in the world. The parallel market exchange
      rate has now become a very important leading indicator in the economy.

      There is a saying that “confidence grows at the speed that a coconut
      tree grows but falls at the speed a coconut falls”. Investor confidence is not
      like a tap you can turn on and off. Investor confidence is not like a tap you
      can turn on and off. Restoring policy credibility by swiftly correcting the
      persisting errors and demonstrating commitment to sound macro management
      rather than the “trial and error” mode will be the first important step forward.”

      ……….Charles C. Soludo

      [Former Governor of Central Bank]

      (September 26th, 2016)

    • okpada

      A litre of PMS in Ghana a country with a functional refinery and crude oil deposit which service the refinery and still export crude is #340 per litre with price increase in the first week of this month of September. Our fuel price is still the cheapest in Africa today, go make make research, and then come back and tell Nigerians.

      • UOU

        You are defending evil, backing someone who clearly tells you to your face to stop your sycophancy. Ok, how is electricity in ghana compared to nigeria plus other things mentioned along the line?Mr Nkem, related fuel price to electricity supplies, mind you and what of the exchange rate/$, in between both countries then the purchasing powers of, naira V cedi? you people should stop all these your heartless support and encouragement to a failed fake deceitful kite. I also know that, this Mr Nkem was before now an ardent buhari supporter but reality has influenced his wise decisions currently

    • None

  • Ifeanyi

    This is not the best editorial I have read on Premium Times. It’s contradictory to accuse the President of undermining the independence of the CBN and also the recommend that the President replace the leadership of the CBN. This is however not an excuse for the poor performance of both the President and the CBN since May 29th 2015.

  • River-of-Life

    All these write up’s are good but cannot stop what is written (which people don’t believe) to happen; For those who believe they will disappear in a RAPTURE, they will be shocked that they will face the GREAT TRIBULATION (War, Famine and plagues) because they did not believe in him that said…..”Take heed, let NO MAN deceive you”, but having been swimming in a delusion. Now the reality of that delusion is showing up.

  • Bigtin

    Oya Technical Lai Mohammed over to you!

  • Opekete

    We are fond of looking for economic solution by isolating the corresponding political solution. Progressive political policies are the key driver of a virile economy. Notwithstanding the brilliance of the economic experts, if there is no confidence in the socio-political system of the country, there cannot be any meaningful economic progress. I believe the time is now to explore some deep political restructuring of the nation to remove this unreasonable over-centralization of governance in the center. Nigeria cannot continue to look over its shoulder at the civil war of five decades ago to insist on a socio-political system that has not advanced the interest and the progress of the federating units. Patriotism is a major driver of economic progress because no nation with deep political division and ethnic suspicion can advance towards economic fulfillment even if the head of the federal government as currently constituted is the Pope. I think the people managing the business of the government at the center are archaic and that is dangerous for the progress of a nation in a hurry to join the community of developed countries.

  • PLAN A

    Premium times stopped short of requesting for the President’s resignation as virtually all the issues raise puts doubt on the competence of Mr President to respond to the current conflagrating issues. The President appears to be confused and not in charge and it is becoming suspect if all the issues raised appeal to him. It is amazing how a government elected to correct the ills of the previous government spends precious time and resources blaming the previous government! Everywhere you go to in Nigeria now,confusion rages! It is amazing that some members of Buhari’s circuit describe current suffering of Nigerians as ‘exaggerated’. Friends,the President is in dire need of HELP! For reasons unknown the President chooses to retain his current failing cabinet; the CBN and d the Ministry of Finance disagree on whether to call this a recession or a Stagflation; our reserves are dwindling by the day and the President choose to instead fight Saraki, Ekweremadu and others; various Unions are warming up for a large scale industrial action,IPOB and MASSOB plan secession and it’s the time APC fight dirty in the public! What will be the LEGACY of MOHAMMADU BUHARI?

  • Teflonjones

    Premium times good morning and in addition to those recommendations, uninterrupted power supply is key to any economic rejuvenation.

  • utolason

    This editorial fails to recognise the real issues facing Nigeria, which is unique to Nigeria. Firstly is Nigeria’s over dependence on oil for revenue and foreign exchange earnings. And the second issue is the deliberate deconstruction of the nation’s oil pipelines at a time when oil price was already low. Other issues are secondary and couldn’t have helped much.

    I support the call for the removal of the CBN governor, who appears to be out of his debt. As for the minister of budget and planning, there is always going to be problems when you appoint a lawyer to do the job of a professional accountant or economist.

    The constant attack on the minister of finance is so far unjustified and not supported by evidence. Nigeria does not lack policies on anything but the will to implement them. This may explain why certain imports are banned from getting foreign at official rate rather than use high import tariffs that will be subverted by custom officials!.

  • UOU

    Sack CBN governor, all the ministers, bring soludo, ezekwesili, utomi, usman,rewena, edu, peterside, aigbeinhon, elumelu, adebowole etc, the problems will continue or even double BUT Impeach Buhari, instantly, the problem will be halted and a turn around will be achieved and things will start getting better, masses will start laughing again, market will start booming and the country will become like a real life space again

  • Ahmed m sabitu

    This is the kind of views that we expect this government to review and see what’s its cabinet will formulates out of it,though the economic team more precisely the finance minister and the CBN governor are just tax collector and common commercial banker respectively whom they are grossly inconpetent and lack economic exposure internationally like soludo,ngoni,ezekwesilike.this government should call real economic professionals inrespective of their political affiliations to come and contributes and get us out of this mess bcos they are also Nigerian,so that this government should stop blaming past government

  • Gary

    PT, thanks for telling it as it is to the govt. of the day. Also for ending censorship and returning to the professional ethics of allowing the free flow of comments and debates on your reader forii.
    It’s up to the people and their elected leaders to heed the advice and recalibrate their policy miscues and priorities to make economy and nation whole again.
    The challenge is whether President Buhari will see the light to acknowledge his limitations and expand his circle of trust to the truly competent and knowledgeable about governance beyond his party and kinsmen.
    There is nothing wrong with Nigeria that Nigerians do not have the capacity to fix. And we can fix the economy and also restructure the political system. We need to return to the economic system practiced in the First Republic with the federal govt doing less and the regions doing more with resource control. There was corruption then too but Nigeria was recognized for a functioning education and health systems and on a trajectory for development. All that ended with the events of 1966 and Nigeria has been in the wilderness ever since.

  • prevail

    On point, but will pride allow APC? Playing politics with the welfare of Nigerians.
    There’s God oo!!

  • GusO

    Good editorial but I believe that the recession will have occurred anyway due to the sharp drop in oil prices regardless of who was in power. The delay iin appointing ministers was necessary to enable the President to selectively pick people from states who he did not personally know who may have had corrupt skeleton in their cupboards. Previously, Presidents relied on the party who invariably colluded with corrupt individuals to pick corrupt people who would reward them for being picked for cabinet positions. Regarding sales of government assets, I believe that they should be partially sold with government holding about 51% of the assets. Even so, the management of the company should be private and not government. Government should nominally be the majority holder and have two members in the board of directors. That way it won’t be run down as happened to many strategic companies such as Ajaokuta Steel, NNPC, etc.

  • samG60

    Is premium times just waking up? everybody has been playing ostrich since last year. Everything in this editorial was being said since last year but people were being insulted for saying the truth and holding alternate views. The president should have started assembling his team from the moment his victory was announced and should have had his cabinet in place from his first week in office. It took him one year to appoint an economic advisor, which shows the economy wasn’t important to him. It was obviously more important to have Adeshina and Garba Shehu performing the same role as image launderers on his team than having an economic team in place. The man came into office with no policies and had absolutely no idea what he wants to do in office. He lacks vision and has not been able to show any grand idea of where he wants to take the country to, always talking about the past and not his plans for the future or how to achieve them.

  • Simeon Nigel

    “President Buhari’s government and economic team, as presently constituted, are not optimally equipped for the fundamental tasks ahead. He must seek new actors that are fit for purpose” (Statement by Premium Times).
    This is absolutely a perfect and an excellent write-up and a wonderful tips for our President M.Buhari to take right now onboard by this highly esteem Premium Times online today’s News in trying to resolving the present Nigeria’s economic deep recession serious quagmire eating up the country fast and sliding down badly. But unfortunately, President M.Buhari is only bent upon concentrating more than anything else in his sole energies in championing his Islamic doctrine agendas in all over the country and he doesn’t understands pretty well the huge in-depth economic variables problem that is now affecting every facets of the Nigeria populace. His present frame of mind and those that he singly did hand picked by his regime for ministerial positions, presidential aides, advisers, military top chief commanders, Secret services organs, Airforce, and Navy were all aims towards achieving Islamic induced power agenda. Until his type or brand of demons and evil mindsets about Islamic top priority should only be always at every helms of affairs in his top Government agenda is push aside, it is only then that he will fully realised the serious in-depth and enormous ‘deepest-water’ economic problems he is now facing as the president of Nigeria today.

    • Well capture

    • Opekete

      While I agree that the body language of the president as perceived through his appointments may look more like a regional agenda than religion agenda, it is also important to understand that the president will not be naive enough to be so parochial in his political views. Nigeria of today is far more different and sophisticated than the Nigeria of 1967. The president will be making the greatest political mistake of his life if he holds that view. I think that the president lacks the intellectual sophistication required to confront the challenges facing the nation. No progressive political leader will ever close any option in a political debate because socio-political dynamics is ever changing. When the president ruled out restructuring of the nation political structure and foreclose even plebiscite on Biafra, I think that portrays him more like a dictator than a democrat. He was not elected to think for us but to serve us and to align his policies to our aspiration as a people. To look at himself as the ‘father knows better’ will not only be disastrous for his administration and may also jeopardize the fragile unity of the nation.

  • Muhammad

    Though laced with political naivety the greatest challenges of reasonable responsiveness between the period of political mandate and the positive valuables inherited against the poverty of philosophy for the party and the polity by the leadership is TRUE.
    That should assist the ruling party as a friendly reminder for urgent action .
    Well done Premium Times .