By Omoh Gabriel
Nigeria has several development research documents that speak of ways to better manage the economy. But the problem has always been that leaders are often misadvised to adopt policies that favour the upper class. In most countries today, the economics of the middle class has taken the center stage. This is because if the middle class is doing well, the purchasing power in the hand of this class will make the economy to grow.
When in 1986, General Babangida introduced the famous Structural Adjustment Programme (SAP), it was with good intention. But half way down the line of implementation, the programme was derailed by Nigerians who kept crying of the hardship the programme was putting the nation through. SAP failed because the visionary of the programme could not stick to his conviction.
The lesson for President Buhari is that it is better for a leader to stick with his or her convictions than let opinion polls or emotional sentiments drive his or her economic policies. Fortunately, President Buhari has the opportunity to meet with President Barack Obama whose time and economic circumstance of coming to power seem very similar to that of President Buhari.
In 2007/2008, the global financial melt down almost crippled the American economy. Obama entered the American political space with the same change mantra. He won. He introduced the famous Stimulus Package to bailout ailing companies. Many Americans did not believe it will move the economy out of the woods. Some pundits were dismissive and derisive of Obama’s stimulus strategy when it was launched. But today, the American economy is out of the woods.
The first lesson Buhari should learn from his trip to America is to be his own man and understand that just like Obama, he was elected during a period of economic turmoil and distress. Buhari should realise that when Obama was elected in 2008, the US economy was in dire straits and reminiscent of contemporary Nigerian economy. With unemployment rate hovering around 10 per cent, the U.S. economy was losing 800,000 jobs monthly.
Budget deficits were sky- rocketing, pushing America’s debt profile to unsustainable levels. Just as Buhari has claimed, Obama not only met an empty treasury, he was also saddled with a whopping debt burden of several trillion dollars. Buhari like Obama, has inherited expensive and drawn-out insurgency in the North-East which he has pledged to end. Like Buhari, ending the wars in Afghanistan and Iraq was a major mantra in Obama’s election campaigns in 2008. Buhari also campaigned on the promise to end the scourge of Boko Haram.
Just as Nigerians clamoured for change during the last elections, Americans desperately wanted change in 2008. It is a known fact that when nations clamour for change, they are taking a risk. Nigerians took a risk in Buhari.
Given the striking social economic similarities in both Obama and Buhari’s emergence as presidents, Buhari from meeting with Obama would do well to borrow Obama’s economic “magic wand” which both may have discussed in their official engagement. If Buhari does, he will learn that Obama turned the U.S. economy around not through austerity measures, but by spending more. Obama introduced economic stimulus program by referring to the severity of the economic challenges he inherited. Despite the challenges he faced from Republicans in Congress, he managed to implement a stimulus program. Fortunately for Buhari, his APC-led government has majority in the National Assembly.
Buhari’s stimulus strategy like that of Obama, could focus on cherry-picking projects that can create jobs almost instantaneously, as well as on programs that can deliver immediate returns to Nigerians. The projects and programs the Buhari administration could get into include infrastructure, education, health, and energy, unemployment benefits as he promised during his campaign to pay N5, 000 unemployment benefits to Nigerians and other social welfare provisions.
In the President’s economic blueprint to be unveiled, he should resist the temptation of embarking on belt-tightening as an end in itself. In the process of cutting costs, those packaging the President’s Economic blueprint must not jettison investments and projects needed to enhance the country’s productive capacity.
Buhari’s economic managers should consider increasing spending in sectors, projects and programs that boost the economy; generate employment and promote inclusive growth. These sectors include infrastructure, mining, labor-intensive manufacturing, agro-processing, health and education.
Arguably, Nigeria is a country where a massive economic stimulus programme is urgently needed. It has a large stock of human and natural resources that are grossly underutilised. The informal sector in Nigeria is very vibrant, with millions of underemployed youths. Most of Nigeria’s graduates are unemployed or engaged in menial jobs.
It is worthy of note that President Buhari has the pedigree to shepherd a massive stimulus program. His handling of the Petroleum Trust Fund attests to this. He is known to abhor profligacy, which means that stimulus money will be spent prudently. He detests graft and corruption, which implies that stimulus funds won’t disappear.
However, this depends on whether Buhari will be able to prevent those around him from corruptly enriching themselves. The President could fund the economic stimulus package through domestic borrowing and the funds to be recovered from those who corruptly enriched themselves while in government. Borrowing money domestically in one’s own currency is not as problematic as external borrowing.
The increase in aggregate demand generated by stimulus spending would subsequently crowd-in investment in the production of goods and services. This ultimately will generate employment opportunities. One of the usual concerns about stimulus spending is the risk of inflation. But unemployment, economic disempowerment and youth restiveness are bigger threats to stability than inflation in the short to medium term. In any case, the Central Bank of Nigeria has the necessary monetary instruments for reigning in inflation should it become a challenge.