Nigeria’s economy: Is Federal Government risk averse?

Before crashing oil prices destabilized Nigeria’s re­based economy, the economy was already distressed due to mismanagement, policy vacillations and intrusive parti­san politics. Hence, the economy President Muhammadu inherited, while perceptibly promising, was far from ro­bust, despite the blustering by the Jonathan government, about Nigeria having Africa’s largest economy. Paradoxi­cally, the change agenda touted by the incoming Buhari government were predicated on a gross underestimation of the laggardly scope of the economy and governance rut. So, the crash of global oil prices merely trip-wired and propelled the economy toward recession. Still, a blighted national economy is nothing new. Major economies have at different times faced grave economic challenges. The key to addressing such challenges is to determine the fault lines and necessary corrective measures including fiscal shock therapy and risks.
Ten months into the Buhari presidency, Nigeria re­mains challenged economically. Aside from Buhari’s espoused economic policies not manifesting fully, policy dissonance also intruded. As the economy wobbled to­ward a deleterious downturn, trenchant criticisms raged, compelling the government to resort to some inexplicable ad-hoc measures. Such disconnected measures proved confusing. Unhelpful policy reversals followed, making broad calls for a national economic conference inevitable. The welcome response was a two-day National Eco­nomic Council (NEC) retreat of the government held on 21-22 March 2014, on how to revamp Nigeria’s sinking economy. While the retreat’s seventy-one decisions are salutary, the revamping efforts risks defaulting to a false start, as policymakers seem ambivalent about addressing core challenges. This fact drives the notion of government being risk averse in tackling Nigeria’s tanking economy.
Some aspects of the outcome of the NEC retreat are bothersome as they are bereft of some classical stimulus tools recognized worldwide. Economic stimulus entails explicit fiscal measures and massive infusion of cash aimed at boosting economic growth. These include sig­nificant tax cuts -especially corporation and capital gains taxes — coupled with interest rate cuts and direct cash stimulus that benefit low income earners and the unem­ployed. Surprisingly, the catalog of corrective measures adopted by the NEC lacked clear unemployment benefits, even as empirical studies have proven that “direct govern­ment spending – through unemployment benefits, food stamps, work sharing or infrastructure spending- top the list” in higher returns on stimulus spending.
Government’s role remains that of regulator and partner in operating the Nigerian economy. The joint partner is Ni­geria’s organized private sector (OPS), which has the wealth creation niche. It’s mind-boggling; therefore, that serious ef­forts to kick start Nigeria’s stalled economy was undertaken by the government to the exclusion of the OPS, organized labour and think-tanks. After all, the N350 billion meant to jumpstart the economy will be dedicated to offsetting arrears owed to contractors. Whereas President Buhari had under­lined agriculture, power, manufacturing and housing, as four key areas, requiring urgent attention in order to revive the economy, the stimulus fund allotment plan does not tally with these priority areas and the disbursement plan remains ambiguous.