'Buhari doomed to fail, GEJ powerless'

Portrayed as incorrigibly rigid in his economic policy, the same stance he took thirty years ago as a military Head of State of Nigeria, President Muhammadu Buhari’s civilian outing may not be a success if he insists on not devaluing the Naira, The Economist has predicted.
The international magazine which also took a swipe at Buhari’s predecessor, Goodluck Jonathan, which it described as an ‘ineffectual buffoon’, indicated that although Buhari is doing well in curbing the menace of corruption that was the order of the day under the latter, ‘‘his policies on the currency seem likely to stymie that.’’
‘‘Today, as in the 1980s, the president is making a bad situation worse,” by refusing ‘‘the market set the value of the currency.’’
It deduced that difficulty in repaying the interest on loans made to oil and gas producers (along with another 4% to underperforming power companies) may create a banking crisis.
The magazine’s verdict was not all knocks. Apart from the fight against corruption, other issues for which Buhari got kudos were his crack down on Boko Haram insurgency, introduction of a Single Treasury Account (TSA) and stimulation of the economy with a mildly expansionary budget.
Other measures that impressed the magazine about Buhari’s eight months administration are its protection of dwindling hard-currency reserves by blocking imports and efforts to suppress inflation by refusing to devalue the naira.
Insisting that only the budget expansion seems likely to work, the magazine explains that the ‘‘plan to spend more on badly needed infrastructure, is a step in the right direction.’’
Its major take on Buhari is that: “More than 30 years ago, a young general swept to power in the fifth of Nigeria’s military coups since independence in 1960. The country he inherited was a mess: bled dry by pilfering politicians within and hammered by falling oil prices without. Last year that general, Mu-hammadu Buhari, became president again this time in a democratic vote. The problems he has inherited are almost identical. So are many of his responses.’’
According to it, ‘‘Although government revenues are under pressure from the falling oil price, Mr Buhari hopes to offset that by plugging “leakages” (a polite term for theft) and taxing people and businesses more. That seems reasonable. At 7%, Nigeria’s tax-to-GDP ratio is pitifully low. Every percentage point increase could yield $5 billion of extra cash for the coffers, reckons Kayode Akindele of TIA Capital, an investment firm. Mr Buhari also plans to save some $5 billion-$7 billion a year by ending fuel subsidiesa crucial reform, if he sticks with it. Even so he will be left with a deficit of $15 billion (3% of GDP) that will have to be filled by domes¬tic and foreign borrowing.’’
Apart from this, it faults the freezing of the naira by the Central Bank of Nigeria (CBN) for almost a year and various import bans that have stifled local businesses and dissuaded international investors from wholesale invest-ment in the country, just as some of them ‘‘have pulled money out of the country.’’
It continued that: ‘‘Nigeria is fortunate in having low levels of public debt (less than 20% of GDP), but it is not helped by high interest rates, which mean that 35% of government revenue goes straight out of the door again to service its borrowings. It would not take much to push it into a debt crisis.
Meanwhile, on Jonathan, who handed over to Buhari, The Economist was less sympathetic, carpeting his administration for being impotent in tackling corrupt politicians and their cronies, who it said filled ‘‘their pockets with im-punity.’’.