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Missed opportunities of Buhari's government 14 Jun 2017

When President Muhammadu Buhari was sworn into office on May 29th, 2015, he pledged to usher in a new era of “change” as his government commenced the arduous task of fulfilling its numerous campaign promises. “Nigeria . . . has a window of opportunity to fulfill our long-standing potential of pulling ourselves together and realizing our mission as a great nation,” Buhari said in his inaugural speech.
    
But by the time it reached the midpoint of his four-year tenure on May 29th, 2017, President Buhari's administration has been characterized by its failure to take advantage of critical opportunities to radically improve governance in Nigeria. This accounts for the government's underwhelming performance in the past two years.

The only bright spot so far has been the containment of the Boko Haram insurgency, marked by significant reduction in the spate of indiscriminate attacks on both hard and soft targets, as well as the release of many captives, including about 116 Chibok girls.

On the economic front, Buhari's subpar performance is clearly evident. Under the president's watch, Nigeria slipped into a recession, inflation accelerated, and foreign exchange become scarcer. Although Buhari came to power during a period of low oil prices, his demonstration of lack of savvy aggravated the country's already dire economic circumstances.

Buhari's handling of the precarious situation in the Niger Delta counts as one of the biggest missed opportunities of his administration. At his inauguration, the president promised to stabilize the volatile region by “investing heavily in the projects and programmes currently in place.”

But in a counterintuitive move a few weeks after, the government indicated that it planned to terminate the Presidential Amnesty Programme by December 2015. The president also deployed troops to the region in a “fire for fire” approach against Niger Delta militants, who were threatening to cause mayhem to avenge the electoral defeat of former President Goodluck Jonathan.

These decisions broke the fragile peace that the amnesty programme had secured, allowing militants to resume their attacks on oil installations, especially pipelines. As a result, Nigeria's oil revenues declined drastically as production fell from over two million barrels per day (bpd) to less than one million bpd for a spell running into months in 2016.

If the Buhari administration had used dialogue from the outset and maintained its pledge on the amnesty programme, it could have secured peace in the Niger Delta and positioned the country to earn more revenue as oil prices rebounded. Owing to the resurgence of the Niger Delta crisis under Buhari, Nigeria remains one of the few oil-dependent economies that haven't recovered from the slump in oil prices given the country's low oil output.

In addition to the Niger Delta crisis, Buhari's prolonged insistence on a fixed exchange rate, as opposed to a market-determined rate, also caused a missed opportunity for the administration. For months after his inauguration, the president, at home and when he was abroad, seemingly was dictating the exchange rate policy to the Central Bank of Nigeria (CBN). He continued to state his objection to devaluation of the naira, even as oil prices reached record lows.

Buhari said Nigeria had little to gain from a devalued currency despite declining foreign reserves. “I will not support devaluation. When I was military head of state, I rejected similar advice by the IMF and World Bank to devalue the naira,” he said.

But foreign investors were not pleased. They saw the president's intransigence as an encroachment on the CBN's independence. The corresponding weakening of the naira in the parallel market became a proof that his stance made no economic sense. Consequently, foreign investors fled Nigeria in droves. Foreign airlines cancelled Nigerian routes, portfolio investors abandoned Nigerian stocks, foreign direct investment hit historical lows, and was about zero in the third quarter of 2016. Many international conglomerates postponed final investment decisions on Nigeria.

Although President Buhari later relented on his stance on foreign exchange policy – with the CBN finally abandoning its currency-peg in June 2016 – the damage had already been done. Nigeria's manufacturing and consumer sectors suffered a steep downturn as forex supply dwindled throughout the economy. The forex scarcity contributed to the sharp economic contraction that saw the economy slip into its worst economic slump in 25 years.

Even as Nigeria's macroeconomic conditions deteriorated, the policy environment became disjointed. There was a clear dearth of cooperation between the fiscal and monetary authorities on the best path to revitalize the stuttering economy.

While Godwin Emefiele, the CBN governor, pursued a tight monetary policy to combat rising inflation, Kemi Adeosun, the Minister of Finance, demanded low interest rates to stimulate growth. This apparent lack of coordination contributed in no small way to the country's weak policy response to the oil price shock – a fact that has been attested to by the top ratings agencies, the World Bank, and the International Monetary Fund.

Furthermore, the 2016 budget – Buhari's first spending bill – failed to live up to expectations after being touted as an infrastructure-focused, expansionary budget, aimed at returning the economy to high growth rates. Besides causing the delayed passage of the bill, owing to poor preparation and subsequent “budget padding” allegations, the Buhari administration was unable to raise the dollar component of the deficit financing. The ensuing cash crunch prevented the government from executing any significant project in 2016.

With the rejection of the PDP-led government at the polls in 2015, Buhari rode into office buoyed by a huge reservoir of goodwill and high expectations. Many Nigerians were willing to give the new government a chance, given the president's reputed stance against corruption and indiscipline. But Buhari squandered this momentum by failing to take decisive steps early in the life of his administration.

For instance, the president took seven months to form a cabinet of well-known faces and postponed other key appointments, ostensibly to get a first-hand information on all ministries, departments and agencies. He eventually earned the moniker “Baba Go Slow” as he continued to delay the launch of his economic policies while expecting the investment community to be content by the pledge to fight corruption and cut government waste. Buhari's slow pace of action drained investor confidence in the country and prevented his government from making an auspicious start to governance – causing dire economic conditions that would have been less severe.

The Buhari administration has missed several opportunities, in the past two years, to effectively deliver its mandate to Nigerians. Yet, all hope is not lost. Given that the preparations for the 2019 general elections are set to begin in earnest from next year, the government must step up its efforts this year to execute signature projects. This should begin by ensuring the 2017 budget is signed without further delay. Efforts at raising dollar loans to fund the budget should also start in earnest, building on the success of Nigeria's $1 billion Eurobond earlier this year. If this can be done, then the government can regain some of the lost ground.