Amid growing concerns over the implications of the continuous decline in global crude oil price in relations to Nigeria’s local economy and Purchasing Power Parity, the Federal Government had adopted a number of measures aimed at cushioning the negative effects of the hard times. Part of these measures was the imposition of restrictions on FOREX, a move
which [though] intended to protect the country’s external reserve
threatens to hurt a number of companies whose survival depend on importation of raw materials . This has clearly been a huge dilemma facing the administration, for businesses have to operate in order for the economy to survive just as it is important to protect Nigeria’s external reserves. Meanwhile, although this measure has certainly come with its disadvantages, perhaps the one that has elicited a lot more challenges for the President
and his team has been the increment in Value Added Tax on products and services. Already charges/prices of most goods have increased tremendously from electricity tariffs to bank deposition charges. These developments
have sparked outrage among the Nigerian Public because as it is currently the case, these measures which were adopted to tackle the economic hard times seem to be hurting the economy more instead of saving it. In the light of this therefore, the imperative question is whether President Buhari can indeed save the economy. To answer the question, two underpinning factors need to be closely considered.
Firstly, the Nigerian President does not want to ever have to devalue the value of the naira. He has consistently made this known ever since the current economic crisis began, even telling Reuters- “I don’t
think it is healthy for us to get the naira devalued”. The reason for this
decision is really not far-fetched as the Nigerian currency has been
consistently devalued in the past as a result of the same reason of
balancing the country’s Purchasing Power Parity due to fallen oil prices. Indeed the devaluations have not augured well for the country’s economy, and choosing not depreciates the naira would put further strain on the external reserve as Nigerians would have to carry out foreign transactions
involving foreign exchange. Therefore as part of efforts to prevent this from happening, the Presidency chose to salvage alternative measures to
keep the economy afloat, ones that do not involve devaluation of the
currency; hence the restrictions on FOREX.
Secondly, the increment in VAT is intended to sustain the economy while the government solves the all-important problem of diversifying the economy
as the monolithic nature of said economy has been the major cause of the problems we see today. The important question though is whether the government is actually determined in its efforts to diversify the economy. This notwithstanding, the truth remains that the increased electricity
tariffs and other charges on goods and services (as part of the increased VAT) will certainly hurt the average Nigerian most of whom are either unemployed or underemployed. These are sad realities, yet the government
wants us to believe that these are the only ways through which the economy can be saved. So can President Buhari really save Nigeria’s economy? One thing that
should be acknowledged is that most tough economic policies (such as the ones the president has adopted) usually and unavoidably causes unbearable
hardship among the people but ends up solving the problem for it was intended. Moreover, President Buhari strikes me as a leader who
understands the nature of the economic realities he is confronted with. He has recognized the main problem and is set to tackle it, not minding the discomfort of the minor problems. He has in the past (during his short-lived military administration) demonstrating his competence at tackling similar economic problems by refusing to accept IMF’s conditional loan but chose instead to undertake a number of reforms within the system which were not exactly welcomed by the people. And as many academic studies indicate the stance President Buhari took on the issue then would have yielded favourable outcome for the country had he not been overthrown. Well now he is a civilian president and nobody will be overthrowing him
anytime soon. Many Nigerian can only hope that the president actually accomplishes
what he has set out to accomplish.
(This article originally appeared on http://www.abarae.wordpress.com)