Navigating Nigeria’s economic dilemma and burden of leadership, by Kayode Adebiyi

To govern and lead the government of Nigeria is a thankless job. This has nothing to do with who the leader is or what party he belongs to. The best leader, as far as Nigerians are concerned, is the man who is not yet in office as president.

No matter how loved a man is by citizens, the moment you get into the office of the president of Nigeria, it’s only a matter of time before you become the most hated. The reasons are not far-fetched. It’s always going to be one of two reasons:

1. Maintain Status Quo.

You want to supposedly make Nigerians happy, so your policy decisions are informed by the cries of the people about economic hardship. You go out of your way to maintain the status quo on the value of the Naira so as not to allow inflation, and you maintain a stable fuel price because that’s the main catalyst driving inflation in the country due to its multiplier effect on goods and services.

In doing so, you hurt the economy because you will have to borrow heavily, both internally and externally, to defend the Naira. The foreign reserve will take major hits, and ultimately, the economy will suffer, and the same people you are doing it for will still hate you because it cannot guarantee economic prosperity for the nation.

2. Economic Reform

As a leader, you believe something drastic has to be done to redress the economic situation. You don’t want the nation to continue borrowing both internally and externally to defend the Naira, nor do you want to deplete our reserves to defend the value of the Naira. Hence, your policy position is to allow the Naira to attain its value against the dollar, a process called floating the Naira. Of course, this comes with its own risk because the value of the Naira will depreciate.

Meanwhile, our major source of revenue, oil, is determined by the international price in dollars. This means the price of fuel will go up, which will have a ripple effect on other goods and services, driving inflation up and causing more hardship in the short term. Economic indicators may show upward movement in the right direction on paper, but it will take time before the effects are felt by the average citizen.

You borrow less to defend the Naira, the foreign reserve will recover, which are good indicators, but the bottom line is that the cost of living will become high because we are an import-dependent economy, and the disparity in the Naira/dollar value will lead to high costs for goods and services.

In other words, looking at the above two scenarios, no matter who is at the helm of affairs, and no matter how loved you are, your good relationship with the people cannot last because, heads or tails, whatever decision you make concerning your economic policy will hurt the average citizen.

What people don’t understand is that no leader wants to be hated. Every leader wants citizens to love them. Therefore, no leader goes out of his way to purposely hurt his people economically. Never! But a leader must be able to take tough decisions that sometimes hurt the citizens in the short run in order to grow the economy in the long run.

The first scenario I painted above was used by President Buhari. He was conservative in his approach to the economy. He did not believe in the devaluation of the Naira. Throughout his two terms in government, he continuously defended the Naira. But oftentimes, Nigerians have short memories.

I read somewhere that some people are saying if they had known, they would have stuck with Jonathan, as if things were rosy under Jonathan. Jonathan was already borrowing to pay salaries. His Coordinating Minister, Okonjo-Iweala, was already sounding the alarm about an impending economic crisis, and effectively within the first six months of the Buhari administration, we entered the recession she predicted. Two years later, the pandemic hit, and the global economy took a major blow. So, it was not all rosy for Buhari, hence he resorted to heavy borrowing both internally and externally.

I remember how some people always posted about how much debt we were in under PMB. In his quest not to float the Naira, Buhari’s government continuously defended it by borrowing from the CBN (asking the CBN to print more money, up to over 25 trillion Naira).

The Senate recently probed why the former Senate approved such reckless decisions. It’s hilarious seeing Senator Ndume shouting in plenary that he was not present in the chambers when the former Senate approved such reckless internal borrowing from the CBN. All this was done to keep the Naira at a manageable rate and prevent inflation. Yet, we still fared badly economically, and all these efforts by Buhari were met with stiff opposition, and he was thoroughly criticized as a failed leader.

We couldn’t even pay over $7 billion, which was our obligation to foreign business interests operating in Nigeria. This was part of the reason Emirates Airlines stopped operating the Nigerian route, among other issues, because they were unable to repatriate their money under the Buhari administration due to a lack of forex inflows.

When Tinubu came into office, he took a different approach. He’s a much bolder and more of a risk-taker than PMB. He believed the forex regime should be liberalized, allowing the Naira to find its level. He believed we should not use our hard-earned money, or even borrow, to defend the Naira.

As good as this was, it was short-lived because floating the Naira meant the benefit of the subsidy removal was eroded within six months. The NNPC, as the last resort for fuel imports, cannot adequately fund the importation due to the devaluation of the Naira against the dollar. The NNPC is currently in a hole of about $6 billion.

BAT’s economic policy has its gains: borrowing has been drastically reduced both internally and externally. We are no longer printing Naira with reckless abandon, as under Buhari. The backlog of $7 billion owed to foreign businesses has been cleared by the CBN. On paper, the economic indicators show positive movement, but there is a negative downward movement in the pockets of Nigerians.

The price of fuel, as a result of the floating Naira, is now subject to the international market price, leading to a ripple effect on other goods and services. The only solution is to ramp up domestic fuel production by ensuring Dangote’s refinery meets its obligations to produce and that government refineries also ramp up production.

Even at that, it still doesn’t guarantee that fuel will go back to about 500 Naira per liter. A 600 Naira mark would be a more realistic price for fuel, assuming all factors are brought under control and local production is sustained at optimum levels.

In conclusion, it doesn’t matter who you support or don’t support; there is no magic wand to fix Nigeria. No man elected to the position of president can perform any magic. I see a lot of Tinubu supporters feeling lethargic and wondering what’s going on. Don’t be sad; there’s nothing new under the sun.

Let those who want to gloat continue to gloat. The man they supported during the election doesn’t even have half of the political will to take tough decisions as Tinubu has done. As I said, the love for any new leader in Nigeria cannot last up to a year unless he’s not ready to work and take tough decisions.

That’s why I painted the two varying options open to any leader who finds himself in the presidency: you either swim or sink with your decisions and hope for the best. So far, so good, it has been tough. My pocket has been severely hit, but my faith in P-BAT remains; he’s still in his first year plus in office. If he can secure local production, we will get out of this sooner than expected.

What I don’t want him to do is to succumb to defending the Naira by borrowing again or start using our reserves to defend the Naira. That would be suicidal. It’s already hard and tough; we must weather the storm and see it through to the end. I believe we shall laugh last.

–Adebiyi, a Public Affairs Analyst wrote from London