Buhari’s Economic Shock Therapy
I have always wondered why a shock treatment is administered on a patient whose heart has stopped and before anyone says, it is done to revive him or her, I am seeing things from the effects of allowing volts of electricity into and until the veins of a human soul, as for one, it would be extremely painful, in fact, when not administered correctly, it would ‘kill’ the rest of the functional heart.
But, what am I implying here, it is simply that the President Muhammadu Buhari administration inherited a comatose economy, which has almost blade to death, because of wrong or rather, bad economic diagnosis, and despite whatever accolade may heap on the last administration’s Economic Management Team, it failed spectacularly in the area of strict financial discipline and acceptable prudential management, thus allowing financial leakage within the system, so much that it threatened the whole national economy.
What it is inferring here, is that the revival of the Nigerian economy is bound to be extremely painful, but just like a medical shock therapy, it is simply done to make Nigeria well and economically healthy. It is within these context, you can understand the creeping high inflation in the economy, where prices of goods and services has disproportionately increased, which is as a result of the scarcity of foreign exchange currencies or United State’s Dollar, to be more specific, most notably, in an import dependent or rather, import reliant economy like ours.
Generally, human behavior is usually constant, repetitive, habitual and perpetual, thus, individuals hardly change their attitude through mere persuasion, rather, people have to be ‘weaned’ from a certain negative character, as in legal psychology of a penal sanction, also, the society is ‘discouraged’ from a particular habitual characteristic, in economic policy terms, through customary higher import tariffs, where the prices of imported goods are made to be more expensive than the locally manufactured goods, but in a country with porous borders such as our, where smuggling has became an acceptable communal vocation and in a country notorious for government import waivers to a few selected importers, how on earth could curtailing goods entry reduce craving for foreign imports.
Economically, the only way Nigeria could ‘discourage’ foreign consumption is not through traditional means of higher tariffs and more secure borders, which Nigerian business men and need I say, women, have grown adept at beating the system, it is through a way or method, where such entrepreneurs ‘only’ get access to forex on higher (parallel market) terms or monetary value. It is most noteworthy that this policy by default, has negatively impacted on the volume and value of imported goods into the country, which painfully, it has increased inflationary rates on consumables but, our foreign imports cravings attitude is as well affected.
However, this economic vision would easily be defeated, were the government to suddenly devalue the naira, but like policy projections, it is susceptible to abuse like round tripping, which could be addressed by a more rigorous supervisory regulation by the Central Bank of Nigeria. Of course, it is an economic distortion, in an economy in need of expenditure funds for development, thus, were $1 US dollar to be exchanged for say, N300 Nigerian naira (parallel market rates) it would immediately provide more money to various tiers of the government for much needed infrastructural development. But, it not need a clairvoyant economic prophet to predict, that such increase in revenue volume for the government, a substantial portion of it, would most likely be deployed in chasing and putting more pressure on a highly limited forex or more specifically, United State’s Dollar, because, Nigerians usually spend to satisfy their cravings for foreign consumption tastes.
From: Nasiru Suwaid
Follow me on twitter: @neeswaid
