BUHARI'S ECONOMIC POLICIES: A clear pointer to lack of perspicacity in the areas of fiscal and monetary policies on the path of his handlers. (By Kay Aderibigbe)

Nigerians, with exaggerated hopes, listened and absorbed inadvertently, to all the lies and blames dished out by APC government on why the economy has failed and the consequent recession that dehydrated almost everyone and their businesses. The blame games was followed by Buhari's second stint at the helm of affairs with the attendant series of incongruent, disarticulated and haphazardly thought-out economic ideas, which could, on its own, crumble the already damaged economy left behind by his predecessors. Some of those ill-conceived ideas include the continuation of multiple exchange rate system, continuous borrowings, increment of VAT and the idea of budget financing through new and obnoxious taxes.

In the first place, it was Mr Buhari's idea of 'float-managing' the Naira (controlling the currency value through​ CBN intervention) that crashed the Naira against dollars. Had it been the Naira was completely floated by adopting a flexible exchange rate system, Naira would have gained value by now with the help of market forces, i.e. what we export and import.

On the issue of borrowings, one thing still remains a mystery ever since president Buhari decided to increase our debt from N4.96trillion in 2015 to N25.95trillion. We could not point to any tangible percentage ​of infrastructural development despite the fact that IMF and other creditor agencies actually allowed us to take these loans for the purpose of social and economic infrastructural investment. Another $3billion has just been approved by IMF in September for the sake of electricity; we shall wait and see what becomes of power supply.

The new VAT will be in operation by 2020 at the rate of 7.5%. This means that the policy makers did not see anything wrong in the 11.24% inflation rate. The implication of the new VAT is that the personal income tax which stood at 24% will suffer invisible or indirect increase because VAT and other forms of taxation are directly proportional to the velocity of money (the rate at which money is exchanged in an economy) and the purchasing power of money.

The other issue is that of financing the N1.859 trillion budget deficits of 2019 with tax and concessions. Since the government realized that the Fiscal Responsibility Act 2007 provided a shield where they can hide, as such, they decided to introduce new tax systems in order to cover up for their inability to boost common GDP with sound and business-friendly economic policies. Ordinarily, a good fiscal policy is meant to condition aggregate demand (consumptions, investments, government spendings and imports) with the main purpose of attaining price stability, full employment and economic growth. On the contrary, the Nigerian government uses contractionary fiscal policy instead of expansionary; they borrow money for looting instead of infrastructural investment; and also, legislated that future budgets could better be financed through the introduction of new taxes.

The minister of finance, Zainab Hamed, defended government's action by stating that oil revenue is dwindling at $57 per barrel even, when we supply 2.18million barrel per day. If that is the case, must the budget be financed by the masses hard earned money? What type of budget are we even talking about? A type of "budget that is characteristically deficit and synchronized with the pulse of the rich". If Nigeria intends to be a tax-collector state we should have a commensurate service for the people also. Not when N160billion is budgeted for the Universal Basic Education and other Educational Spendings, while the health system gets a paltry sum of N46billion. Even, the Inspector General of Police told the National Assembly that the N9.2billion approved in the 2019 budget for the police overhead cost cannot fuel police vehicles for six months.

There is no harm in taking from the rich oil companies in order to boost the economy. If the National Assembly could negotiate effectively on the Deep Offshore and Inland Basin Production Sharing Contract (Amendment) Bill 2018 that is awaiting a final touch, there is still a way forward. But not to be extorting those that: are underemployed or unemployed in large numbers, source their own water, ply bad roads daily, pay for electricity but get darkness, and above all, labour tirelessly for a currency that has little value.

The good move by Mr Buhari's government in the recent time is the partial closure of land borders for the purpose of filtering contents; and the idea of compelling commercial banks to grant loans to businesses. Though, the border issue wasn't critically defined because our production capacity is quite low. While the loan policy is suppose to capture certain critical sector(s) of the economy holistically. Altogether, he did well despite the overall shortcomings of his government. But invariably, the gains of all these ideas are going to be defeated in the long run because of the multiplier effects of the numerous unreasonable taxes he introduced.


It will be wise for Mr Buhari and his team of economic advisers to have a rethink and jettison the idea of milking the society for the purpose of budgets that does not have positive impact on the people. We must make good use of our population advantage and transform to a producer state. It is important to engage in industrialization as against our absolute dependency on fossil fuel. All those that have one thing or the other to do with Nigeria's fiscal and monetary policies should know that, "for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle". (Sir Winston Churchill, in his Town Hall address to his party men in Malmesbury on December 18 1904).