The President Muhammadu Buhari led government is triumphing on safeguarding policy crisis, or policy contradiction or policy kerfuffle. This has manifested in several ways. An exemplar is a contradiction over the government’s vista of using a counter-recession expansionary budget(s). Through such fiscal stratagem, they intend to improve Gross Domestic Product performance and counter infrastructure-deficit. They also intend to raise disposable income, and spur demand & production. Paradoxically, the government is also pouring out an avalanche of several minacious mechanisms to raise taxes, and tariffs [in its import substitution agenda].
The latter is showcased through bans on the importation of some goods so as to reduce pressure on FOREX and amplify domestic production. Last year, the Central Bank banned 41 items and recently planned to increase tariffs on other goods such as anti-malaria drugs etc. However, import substitution can really be counter-productive. It skyrockets prices of goods, amplifies smuggling, frustrates Small and Medium Sized Enterprises. That is, it miffs demand & production, reduces disposable income – the primacy of the expansionary budget idea.
Import Substitution VS Export Oriented industrialization strategies was an imperative factor that occasioned the divergent economic outcome of East Asia and Sub Saharan Africa (SSA). While SSA countries such as Nigeria (1962 – 85) were employing import substitution, East Asian countries were implementing its contrapuntal. A key example is that while Singapore policymakers were hovering all over the world courting investors, the Gowon led government started indigenization decree through which many non-oil sector foreign investors were chased out of the country’s economy. The outcome of this is run-off-the-mill.
One at this time, fails to understand what this government intends achieving by mismanaging these economic principles. The government must resolve this policy crisis or contradiction as Nigerians are passing through worsening economic times in this recession. Ultimately, the cynosure of this government should be on strategies to increase export size and attract foreign investors. For the former, the government should provide subsidies, incentives, enhanced power supply and choreograph structural reforms to stimulate domestic production as against import substitution. The government does not have to shanghai Nigerians into what choices to make on goods. Bans were not placed on Hollywood movies before Nollywood triumphed. Bans were not placed on foreign Hip-Hop songs before the music industry expanded. Rather the creativity and persistence of Nigerians guaranteed these.
In addition, the government should ensure the Central Bank’s independence and assure investors of a stable macro-economic environment. The government should focus on providing incentives for investors and boosting ease of doing business. Most importantly, the topical FOREX regime should be revised while the government uses diplomacy to ensure political stability in the country. But President Buhari’s government is fixated on an anachronistic maximalist international dependence revolution influenced Buharinomics while battling with the free market realities of the century.
Chambers Umezulike is a Program Officer at Connected Development and a Development Expert. He spends most of his time writing and choreographing researches on good and economic governance. He tweets via @Prof_Umezulike.
Hamzat Lawal tops finalist for World Leading Sustainability Award in Sweden Anti-corruption activist and Founder of Follow...
The follow the Money team was given 20min slot to speak about what we do in two events at the University of Ilorin. The first...