What Has Our President Done Wrong?

            

   




     Since Muhammadu Buhari took over as President and commander – in – chief federal republic of Nigeria, many have come out, ( both the uneducated or less informed and the so called educated and well informed ) to publicly condemn his government and his style of leadership. This is mainly because of the Country’s economy situation – people have blamed his government for the Country’s economy recession. But is president Buhari of his government really to blamed for Nigeria’s economy woes?

Now, let us consider some facts and truths before we know where to direct our criticism.

Both on the shores and off the shores of Nigeria, we often heard that Nigeria is “a corrupt Country”. We often heard “our political leaders embezzle government money through foreign accounts”. We heard “they have assets that runs into millions of dollars in foreign Countries”. We have heard that “Nigeria’s only major export product is crude oil”. We have heard that “Nigeria has made billions of dollars yearly from exporting crude oil but have failed to use the money properly or wisely”. And we have also heard and seen by comparison that Nigeria is an under-developed Country.

Right now, Nigeria, as a Country is in economy mess but why has it gotten to this sorry state? Come let us take a stroll into the past to help us answer this question.

The major reason Nigeria has experienced economy downturn is because our black gold, our brag, our happiness, our pain, our only major export product has lost its value. Its sales has witnessed an all time low.

Why is the oil price witnessing this pressure? This is because the unrest in places like Syria where militants steal crude oil and sell on spot market at any price. Russia is pumping more oil at will into the market. China, India, Japan has cut consumption. China’s consumption has dropped because of over supply of the product and its economy situation. India and Japan output has increased. The Islamic republic of Iran has returned to the market after the lifting of sanction imposed on them by the world powers. The united States who is one of the largest oil consumer no longer buy crude oil – they are now second largest crude oil producer after Saudi Arabia.

Why is Nigeria’s situation even worst?

Nigeria’s major buyers – China, India, and Japan have cut consumption. This is like adding salt to injury – the oil price is significantly low and Nigeria even find it difficult to make sales. China, Nigeria’s largest buyer has signed a deal with Russia who is pumping more oil at will into the market. Well, to handle this issue, Nigeria must source for other buyers and history tells they are not good in doing this. When the oil price is low, you increase your production and look for other buyers so you can meet your daily target. This is what other oil producing countries does when this situation arises. But Nigeria cannot do this because they do not have what it takes to increase their daily production.

Though Buhari is the current president of Nigeria, could he and his government be blamed for all these external factors?

We will look at where Nigeria really got it wrong later.

What Nigeria got as revenues from oil in the past years.

Nigeria Extractive Industries Transparency Initiative gave Nigeria’s earnings from oil and gas in 2009 and 2011 at $143.5 billion. In 2012, its earning was $62.9 billion. Further figures from 2012 shows mix earnings. The United States Department of Energy Information Administration gave Nigeria’s revenues from oil in 2010 to be $70 billion and $99 billion in 2011. The organization of petroleum exporting countries, OPEC gave Nigeria’s earnings from extracting crude oil in 2014 to be $77 billion.

These are huge figures earned from oil proceedings. The question is what has the government done on ground in terms of infrastructural development from such huge revenues? Are we going to blame Buhari’s government of yesterday for infrastructural development?

What other oil producer countries does to effectively handle times like this, when the oil price is low and where Nigeria has failed.

When oil price is low, you increase production and sell more barrels so that you can make profit. This strategy is not only used in oil market. It is a simple strategy use in any buying and selling business. This is what Saudi Arabia, Kuwait and other oil producing countries have been doing – they invest in the industry to boost their production.

It is a shame that the people who have been enjoying this oil money in Nigeria cannot also spare some money from the huge oil money to boost production – so that they can keep the oil money. The sense they have is to embezzle money but not the sense to invest in the same industry that has produced the money they embezzled. This is a cancer sense.

Would Buhari’s government of yesterday be blamed for not investing in the industry? What was the past government been doing all this while? Saudi Arabia, has a gross domestic product (GDP) of $748 billion and sovereign wealth fund (SWF) of $762 billion. Qatar, another Gulf State has GPD of $203 billion and SWF of $256 billion. Norway has a GDP of $572 billion and a SWF of $893 billion. These oil producer countries got this level because they managed their industries and revenues from oil very well. The oil price can remain low for years, it won’t affect these countries because they managed their well and saved for hard times. But Nigeria’s past government has never thought that days like this will ever come and so cannot think like Norway, Kuwait, Saudi Arabia, Qatar, etc.

What president Buhari’s administration is doing to remedy the situation.

The slump in oil price has weakened the naira because crude oil is Nigeria’s only major export product. Fall in the price of non – oil commodities has also exert pressure on the naira. But it has not stopped the high demand for foreign exchange in Nigeria. Though Nigeria’s revenues from oil has fallen, the demand for foreign exchange to finance Nigeria’s huge import bills has not fallen. This is because of Nigeria’s high import dependency. All these has exerted pressure on the naira exchange rate.

In an effort to safe the naira, the CBN in conjunction with the federal government has come up with measures to help the naira. CBN introduced an administrative measures that are aimed to limit access to foreign exchange. They have also banned 41 import items as a way of reducing the demand for foreign exchange. Where as, the international financial institutions like world bank (WB) and the international monetary fund (IMF) has advised Nigeria to devalue its currency. The CBN governor, with the support of the federal government has vowed to defend the naira against any devaluation. The governor prefer economic nationalism to the devaluation of naira. The devaluation of currencies has worked in the past for other countries including Nigeria. But as a governor of central bank of Nigeria, he has the right to try other measures.

Let us be reminded that our current president, Buhari, has been in this water before. In December, 1985, general Babangida replaced Buhari in a military as the head of State. The Country was still going through the same economy woe we are now facing. Babangida introduced a “structural adjustment program (SAP) which the world bank and international monetary fund had advised his predecessor. The introduction of SAP simply means devaluation of naira the Buhari’s government had rejected but Babangida embraced. Nigerian public rejected this, but Babangida stood firm and muddled through the harsh economic and financial reforms.

After a while, it paid off – imports fell and non – oil exports expanded. Nigeria again returned to fiscal balance and balance of payments equilibrium. Soon, Nigeria’s economy recorded a bit of growth. It is worthy of emphasis here that the naira bounced back and economy stabilized because there was a sharp rise in oil prices world wide. Buhari has witnessed this twice as the number one man in the Country – first, as the military head of State in 1985 and now as the democratically elected president. He rejected the devaluation of naira in 1985 and he did not have the chance to see if what he stood by would have worked. After the boom in oil price and the economy back to normal, what did the Nigerian leaders learned? What lesson has our leaders learned from the 1985 economy crisis?

I have this strong conviction that if people like Buhari were still in control the affairs of this Country since that 1985 economy crisis, Nigeria would not see that same economy crisis repeated again today. It is true that Nigeria lacks good leaders though blessed with natural resources. Since the turn of democracy in 1999, I have noticed that only one party ruled Nigeria. And I have also heard series of corruption – where government officials will loot government funds. And that is all we will ever hear – nobody will be brought to book or made to answer questions. In this Buhari’s government, we have all heard how top government officials have probed and put under trial, we have all heard how looted funds has been recovered – to the tone of billion of dollars. There is no government ever in the history of Nigeria to have done this. If things continue this way, irrespective of Buhari’s economy reforms, we will start to see the true dividend of democracy.