Is President Buhari in the Tina Vortex?
Jibrin Ibrahim, Deepening Democracy Column, Daily Trust, 20th June 2016
I found reading Feyi Fawehinmi's blog story "The Price Club: The New Nigerian Naira" rewarding. He defines himself as a free marketer on the naira/dollar currency debate but knowing President Buhari's position, he confessed that: "I always found it difficult to argue for a full float of the naira. That's what I wanted but it felt like asking for too much. So devaluation seemed like a halfway house that would ease things a bit. The main thing being that the fixed rate of N199 to $1 was completely ridiculous and untenable." Indeed, given Buhari's visceral opposition to currency devaluation, expressed publicly and severally, almost everyone was surprised with the Central Bank announcement of free floating the Naira from this Monday morning. Fawehinmi tells us that nobody ever floats their currency willingly — you are always forced into it. An example was 'Black Wednesday' which forced the UK to float the Pound in 1992. It was painful and embarrassing but you won't find anyone who wants to go back to pre-1992 here anymore. The pertinent question that should be asked is what changed the President's mind? Has the Tina bug caught Buhari?
The Tina story is fascinating. It is the story of what the Washington Consensus did to Africa. The narrative tells us that throughout the 1970's; African states began to live beyond their means. They borrowed massively and their production was not at pace with their consumption, and a payments crisis developed. The World Bank and the International Monetary Fund decided to impose discipline, meaning austerity on Africa. The form of these austerity measures known as Structural Adjustment Programmes (SAP) was to cut public employment and to massively reduce public expenditure on education and health. The imposition of austerity measures in Africa was something that was extremely traumatic for the continent and impacted on it in various ways. Within a period of three years, the middle classes in most African counties were pauperised. A massive brain drain occurred as professional groups in Africa started to move out of their countries and to search for better lives elsewhere. Within Africa itself, the impact of the devaluation of African currencies at the beginning of these austerity measures meant that there was massive inflation and that the livelihoods of Africans all over began to crumble in a very dramatic manner.
Given the suffering, Africans begged for SAP to end but were told that the policy package was not open to discussion; it simply must be implemented completely and immediately. That is the context that gave birth to Tina, "There is no alternative (TINA) to structural adjustment and austerity measures." The Nigerian policy shift reminded me about the Greek tragedy, that of today not ancient drama. In 2011, we all saw the hapless Greek Prime minister George Papandreou being told off by Angela Merkel: "Did we not give you a package to implement immediately?" Why did you announce that you would ask the Greek people whether they are ready to accept the package? Don't you know that there is no alternative to austerity measures? As the poor Greek Prime Minister tried to explain that it is difficult, if not impossible to implement draconian austerity measures for ten years while people are already in the streets protesting, the then French President Nicolas Sarkozy delivered the killer message, implement or vacate power. The Greek people got angry thinking they were in a democracy. They voted in a communist Prime Minister on a platform of exiting austerity under my applause and what happened, he got into power and told the Greek people he was sorry, its TINA or worse suffering. I cannot remember the number of times I have heard President Buhari condemn devaluation, only for us to wake up this morning with a regime of free floating of the Naira which everyone knows is worse than devaluation. How did TINA get Buhari?
It must have been the fault of the Niger Delta Avengers, not their threat to bomb Aso Rock but the way they precipitated a drastic decline in petroleum exports. The previous CBN dollar regime imposed a price of N197.50 and N199 respectively for selling and buying dollars. As the same dollars were trading in the parallel market for around N350, all other sources of dollars into Nigeria dried up and the Central Bank became the sole supplier to a privileged few. With dramatically growing deficit of the dollar, it became clear that we were heading in the direction of Venezuela where they maintained a similar regime until they literally ran out of dollars and today there is no food, drugs and basic supplies in the country. Tina restricts choices and makes independent policy making difficult.
According to Fawehinmi, "President Buhari's second coming to power was for him to learn economics and how markets work. One by one his shibboleths are tumbling down. Fuel subsidy has been forced out of his hands and now his beloved N199 to $1 has been taken away from him, too. The sad part is that this his education is quite expensive and Nigerians are the ones footing the bill." The question that is posed if these policy shifts were foreseen and inevitable - why did the Government wait until its hands were forced. If we had devalued 10 months ago, would we have been saved the nightmare of full scale floating? The President needs to reflect seriously about the competence of his economic team.
Mo Ibrahim's Five Million Dollars
The Mo Ibrahim Foundation has once again taken the decision that no former African head of State deserves their $5 million African Leadership award. In the past ten years, only four former presidents have qualified to collect the prize. Former President Goodluck Jonathan clearly met the first criterion for qualification, that of willingly relinquishing power as and when due. He must have had problems with the second criterion of exercising power with integrity and ensuring that corruption is tamed. Mo Ibrahim's criteria guard against giving "so much" money to people known to have already helped themselves from the till. I guess for many people who have exercised power in Africa, $5 million is simply not a great deal of money that could make them change their behaviour in anticipation of the award. Maybe what we need for our past leaders is the stick of naming and shaming rather than the carrot of "bribing" them with money they do not need. If only Mo Ibrahim can use his money to deal with Tina, it might be more useful.
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