In spite of the hurry-scurry that its immediate policy prescriptions have generated across the economy over the past two weeks, it has been difficult to glimpse a pattern to or establish the destination of the Tinubu government’s policies. Partly, you could blame this on the sedate pace at which the new government has gone ahead to fill key political and public vacancies. A more rapid recruitment of personnel to fill the different vacancies would have, at the very least, allowed the construction of a profile, however tentative, for the administration and its likely trajectory over the next four years.
In the main, though, the devil remains in the details of the circumstances surrounding the administration’s ascent to power. The Buhari government was not remarkably bright. It took forever to agree on the composition of its cabinet, to take just one example. It regularly conflated the hardships, which its policies inflicted on the people, with the success of such policies. But, throughout, it had a solid core. In just about all it set its hands to, it leaned on a statist interpretation of problems and solutions.
Inevitably, the hope was that the new Federal Government, with clear examples of the failures of dirigisme in its sails, will tilt to the right ― favouring, over the next four years, at least, market-based solutions to the sundry economic problems that the Nigerian economy has faced over the years. Partly, again, this expectation provides the context in which claims by supporters of Mr Tinubu that he is pro-business and that his influence on the outcomes in Lagos State have largely favoured the private sector there have resonance within our specific experience.
In office, though, the picture that is emerging is more of a muddle. Mr Tinubu’s inaugural address did not help much. The sound bites were there, as was expected ― removal of fuel subsidy, collapsing the multiple external prices for the naira, and a drop in interest rates. But rather than speak to resolve, this smorgasbord of “things to do” underlined the extent to which our governments continue to do battle with elementary economics. For the truth is that moving both the price for petrol and foreign exchange closer to the rate at which the forces of demand and supply in the respective sectors will clear the markets will doubtless drive up prices across the economy’s activity sectors. In that case, a monetary authority worth its policy credentials (i.e., neither Turkey under Recep Tayyip Erdoğan, or Nigeria under Muhammad Buhari) will have to tighten monetary conditions, including through hiking its benchmark interest rate.
And it was not only the basics of economics that came off poorly in that address. I worry that neither the directions of interest rates nor the naira’s exchange rate lie within the president’s subject area. While we may have issues with how the apex bank has managed this levers of monetary policy up until now, surely it cannot be the Tinubu government’s intention to further blur the lines between fiscal and monetary policy management. The Buhari administration did more than enough damage there.
Then again, who is to inform the new government that we are not a low interest rate economy. The costs are just too high ― from people and businesses building and maintaining their infrastructure, through lets imposed by the poor working of the criminal justice system. One could interpret the administration’s Iow interest rate pronouncement as evidencing its commitment, eventually, to lower these and sundry costs. But from the NNPC’S plan to resume issuing import licensing, through the CBN’s new requirement for tax clearance in order to access one of its FX windows, the administration’s gut response remains statist.
I have been told that this is but one unintended consequence of personnel holdovers from the Buhari years still in charge. True or not, one fact that we cannot run away from is that the Buhari administration drove the Nigerian vehicle rapidly towards a cliff-edge, with no steering wheels or brakes. Mr Tinubu cannot afford the luxury of picking his teeth while the vehicle continues to careen towards what can only be an ugly appointment.
Uddin Ifeanyi, journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
