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We need a coherent Buharinomics 05 Oct 2015

President Muhammadu Buhari's economic policies have been sketchy, at best. For instance, I pored over his 1,000-word op-ed in the Washington Post on July 20 and found zero mention of jobs or markets. Whereas “Boko Haram” was mentioned eight times; the singular mention of “economy” was in a passing reference to Nigeria's GDP size. After more than a 100 days in office, we are simply piecing together sound bites to get a look into what we might call Buharinomics.  
    
A wind of optimism blew across most parts of Nigeria – and in fact the international community – in the wake of Muhammadu Buhari's victory. But Buhari and his party, the All Progressives Congress (APC), have to admit that while elections may be won by a lot of bombast, you need finesse to govern successfully. Our dwindling macroeconomic fundamentals cannot be controlled by blaming the last administration.

The Central Bank of Nigeria has gone out on a limb to tackle some of these economic challenges. But the scale of what we are facing requires concerted monetary and fiscal policies to address them. The CBN has warned that Nigeria might slip into recession next year. Although this prognosis is highly debatable – since the CBN itself did not make significant adjustments to its contractionary monetary policy – real GDP growth in the second quarter of 2015 was a paltry 2.35 per cent, while inflation is inching up, nearing double digits. We haven't been able to tell if these ominous statistics have ruffled the president or his party.  

In an interview with France 24 English channel during the President's state visit to France last month, François Picard asked Buhari if the delay in appointing cabinet ministers was beginning to hurt the economy. The President answered rather sarcastically. He said: “We have a government, but we don't have a cabinet." The President's conviction that civil servants are technocrats and ministers “make a lot of noise” completely runs against the grain. Can anyone actually say the Nigerian civil service system has been run by “technocrats”? Well, that is a discussion for another column.

Given his military background, Buhari understands that national security is paramount. But the President must also understand that free enterprise and the protection of private property are central democratic tenets. Buhari's approach to prioritize the war against corruption and counter-insurgency has not boosted investor confidence. On the contrary, the markets have been further spooked by the ouster of Nigeria from JPMorgan's local-currency emerging-market bond indexes, which is tracked by more than $200 billion of funds. Embracing a dogma that we should not devalue the naira further is anti-markets. Anyone who was expecting the CBN to relax capital controls or follow other emerging markets and devalue the naira at the end of its Monetary Policy Committee (MPC) meeting on September 21-22 was not listening to the “body language” of the President, the current substitute for a coherent economic policy.  

Also saying that "the question of ministers is political" is completely disagreeable. What is actually political is the stance not to further weaken the naira. Using nonorganic measures to prop up the naira in the face of reduced oil revenue, restricting free trade and limiting competition, are recipes for contractionary economic growth.

But again, all this is contrary to the other matters he discussed during his visit to France; Buhari iterated what has become government rhetoric over the last few years when he said: “We are resolved and firmly determined to consolidate on industrializing Nigeria and diversifying its economy into sectors such as agro-processing, mining, manufacturing, petro-chemicals, food processing and textiles.”

To some degree of relief, this was the clearest glimpse into his thinking on the economy. Although security and Boko Haram remained top on his agenda, this visit also had the economy on the table.

While stating his recognition of the role of the private sector in creating jobs, he told a gathering of businessmen and investors at the headquarters of the Movement of the Enterprises of France (MEDEF), the largest French union of employers, that economic growth is indeed a national security imperative.

President Buhari's commitment to good governance is not in question. Even his toughest critics admit that. What is in conflict is his idealised approach to governance as evident in his defiance to an orthodox public policy system. For instance, his remarkable refusal to entertain even the remote possibility of a collateral damage to the economy arising from his decision to delay the constitution of a cabinet is incompatible with what he told MEDEF in France.

The Buhari honeymoon is effectively over as the squabbles in the APC confirm. But more important, Nigerians are beginning to ask questions and they deserve answers and a clear direction to the Promised Land the APC proclaimed they would take Nigeria to. Or at the very least, we need to see coherent policies from the government as it takes steps to address economic contingencies and make efforts to avert the CBN's forecasted recession in 2016.