Buharionomics: Reinstating the supremacy of the Nigerian state

For the first time since 2014, Nigeria’s gross external reserves will soon reach the $40 billion mark. Ordinarily, that should be cheering news as it shows signs of greater macroeconomic stability. But after learning from a member of the Monetary Policy Committee of the Central Bank of Nigeria recently that the CBN has been acting like a piggy-bank to the government, printing money to fund government expenditure while formulating policies that inevitably crowds out the private sector, one is left to wonder what kind of economic policy the government is pursuing.

According to Salami, CBN’s claims on the government rose twenty-fold to N814 billion ($2.26 billion) from the end of 2016 while its purchases of government’s Treasury bills increased 30 percent to N454 billion. “It is clear that the CBN has provided piggy-bank services to the federal government.”   However, the “massive injections of cash” to the government doesn’t reflect in higher inflation and currency weakness because the CBN through “special auctions” raised the cash reserve requirements for banks beyond the stipulated 22.5 percent thus skilfully crowding out the private sector.  “We thus find ourselves at a point where government borrowing from the CBN is neutralised by raising the CRR of banks, thereby limiting private-sector access to credit”, said Salami who later lamented that “Monetary policy management is presently about funding the federal government.”

Although Salami’s remarks have sounded the alarm about the CBN’s direct funding of the government, what worries me the most is the policy direction that the government is taking and which Nigerians don’t seem to realise or talk about – government’s desperation to retake control of the commanding heights of the economy.

We know from history that Buhari is an unapologetic statist. His military regime of 1884/85 was all about ensuring the state retained control of the commanding heights of the economy even at the risk of alienating the West and Bretton Wood institutions. However, at the campaign trails, and especially at meetings with members of the private sector, he laboured to convince Nigerians that he is a converted liberal democrat and would ensure that the country will continue to operate a free market economy.    Fortuitously, his rise to power coincided with the collapse of oil prices and bankruptcy of majority of the states. Clearly then, even if the government had statist aspirations, there won’t be money to implement them, some rational thinkers would have assumed.

However, since coming to power and despite his pledge to allow the private sector take charge of the economy his actions and dispositions have all been anti-business and pro state-led economy approach. From the retention of subsidy on petrol, the refusal to approve the privatization of the nation’s dilapidated and perpetually non-functional refineries – even as all experts voiced their doubts on the state’s ability to revamp the refineries and get them to operate at a profit, the mopping up of funds from banks and their concentration in the Central Bank even when the economy needs revamping, to the talk about a national carrier, national shipping line and other such relics of the 1970s and 1980s that are no longer fashionable, the president’s intentions are clear. Last year, when challenged on the decision to exclude members of the private sector from the economic management team, he did not mince words in his response: “We are averse to an economic team with private sector members” because such persons “frequently steer government policy to suit their narrow interests rather than the overall national interest”. Buttressing the president’s position further, the media adviser to the vice president, Laolu Akande further explained that the presidency considers economic management as purely “a government affairs”.

Well, how has the president solved the problem of low funds? Get a thoroughly complaint and shameless CBN to continue to print more money for the government to spend while restricting access to funds for the private sector. All the talk about Public Private Partnerships (PPPs) have just been only that -talks.

I am always ashamed and bewildered watching Nigeria always attempting to travel down an elevator that is going up.

CHRISTOPHER AKOR