SAN FRANCISCO, January 28, (THEWILL) – The Economist has taken a swipe at former President Goodluck Jonathan calling him an ‘Ineffectual Buffoon’ who let politicians and their cronies fill their pockets with impunity thus allowing corruption flourish under his watch.
It also declared that President Muhammadu Buhari was repeating an economic error he made as dictator 30 years ago for refusing to devalue the naira to reflect the country’s loss of purchasing power.
In two articles, Rude Tactics and Hope the naira falls, the news medium declared that dwindling oil prices was causing a currency crisis in Nigeria and warned that banning imports is not the solution even as it praised the anti-corruption war by Buhari.
It acknowledged that “the government has cracked down on corruption, which had flourished under the previous president, Goodluck Jonathan, an ineffectual buffoon who let politicians and their cronies fill their pockets with impunity.”
“This time, the Economic and Financial Crimes Commission (EFCC) has arrested dozens of bigwigs, including a former national security chief accused of diverting $2.2 billion.”
However, it adds that “President Muhammadu Buhari is repeating an economic error he made as dictator 30 years ago. The problems he has inherited are almost identical. So are many of his responses.”
“Oil’s price has fallen by half, to $32 a barrel, in the months since the new government came to power, sending its revenues plummeting. Income for the third quarter of 2015 was almost 30% lower than for the same period the year before, and foreign reserves have dwindled by $9 billion in 18 months.
“Instead of letting the naira depreciate to reflect the country’s loss of purchasing power, Mr Buhari’s government is trying to keep it aloft. The central bank has restricted the supply of dollars and banned the import of a long list of goods, from shovels and rice to toothpicks. It hopes that this will maintain reserves and stimulate domestic production.
“Barking orders at markets did not work then, and it will not work now. Mr Buhari is right that devaluation will lead to inflation—as it has in other commodity exporters. But Nigeria’s policy of limiting imports and creating scarcity will be even more inflationary.
“A weaker currency would spur domestic production more than import bans can and, in the long run, hurt consumers less. The country needs foreign capital to finance its deficits but, under today’s policies, it will struggle to get any. Foreign investors assume that any Nigerian asset they buy in naira now will cost less later, after the currency has devalued. So they wait.
“If Mr Buhari can find the courage to let fuel cost what the market says it should, why not the currency, too? You can forgive the general for being unlucky; but not for failing to learn from past mistakes,” it concluded.
Story by David Oputah
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