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Interrogating The Budget Of Buharinomics / Buharinomics And The State Of Nigerian Economy (2) (3) (4)

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Buharinomics by Roozzaay(m): 10:30am On Feb 06, 2015
Seyi Odetola wrote (
Folks, please read this piece and make
WASHINGTON BLACK BOOK... (Not my writing but this piece tally with
my thinking and assertions)
I decided to quote other sources because
some readers have seen me as too
partisan, therefore, decided to browse
through archives and quote verbatim all that transpired during GMB. Though I can
authoritatively tell you that by the time GMB took over, I was a full blown adult in
the Polytechnic, Ibadan and a Student
leader, so, I could attest to all these!!! What was however missing in this piece is
more of political processes which is a
matter for another day... Summary of General Buhari's economic
performance - (sources : data from Central
Bank of Nigeria , Wikipedia, ...BUHARINOMICS , THE SAVIOUR OF THE COLLAPSED ECONOMY... Inflation in 1984 - 39%
Inflation in Aug 1985 on Buhari leaving
office - 3.2%
Naira to Dollar exchange rate largely
unchanged at N1 = $1.34 on Buhari leaving
office (no devaluation of naira) Buharinomics was General Buhari’s
economic program marshalled out to
salvage the nation in 1984. He summarised
the objective of his economic policy (as
articulated in the 1984 budget) as follows:
"To arrest the decline in the economy, to put the economy on a proper course of
recovery and solvency, and to chart a
future course for economic stability and
prosperity" (West Africa, May 14, 1984).
He had previously done similarly, in March
while receiving the visiting Sudanese President, Gaafar Nimeiri. Upon his
inquiring of what the new military
government had in mind for the nation it
then ruled, Buhari said to him: "The
priority [of his administration] is for economic recovery, providing
employment opportunities, improving
people's living conditions, consolidating
internal security and ensuring foreign
respect" (Africa Now, March 1984). In a
nutshell, Buharinomics set out to arrest the decline in the economy and refocus it
towards recovery. Buharinomics was to
wean the nation off consumerism and
profligacy, while channelling it towards
frugality and productivity. To accomplish
this, the government was to cut down on its expenditure, engage in more efficient
restricting and controlling of foreign
exchange outflow, undertake the revival
of the country's productive capacity
(concentration was on agriculture), and
broaden government's revenue base. ...BUHARI STABILISED BANKING SECTOR... The first test of Buharinomics wasp
implemented to revive the comatose
banking industry and arrest local currency
hoarding. In April 1984, the government
ordered a change in the color of the Naira.
This action was dubbed the “real coup” by unscrupulous business men and politicians
who had almost eliminated the need for
commercial banking in Nigeria by keeping
their moneys under their mattresses or by
trafficking them into neighboring West
African countries. This currency change, which forced all holders of the naira notes
into exchanging them for the new naira
notes at commercial banks, infused billions
that had remained unaccounted for into
the banking industry and eliminated
counterfeited currencies, which had inflicted inflationary and other nefarious
effects on the economy. This measure had
an immediate revitalising effect in the
banking industry and was an unqualified
success. Banks that were close to
collapsing became vibrant again, to the extent that some of them began to hire
hitherto unemployed Nigerians. ...BUHARI FOUGHT AGAINST MONEY
SPECULATORS AND FIXED NAIRA... To cut down on government expenses,
the federal work force was cut by 30%
and imports for 1984 pegged at 4 billion
pounds (mostly on basic foodstuffs, spare
parts, and raw materials for local
industries), against 14 billion pounds spent in 1983. To ensure that Nigeria remained
respectable on the international business
world, Buhari committed to honouring
Nigeria’s debt payment schedule
irrespective of the limited earning
potential of Nigeria. In August 1984, Buhari was on one of his meet-the-people nationwide tours, which he began as soon as the administration got on its feet.
Everywhere he went, the people
embraced him, coming out en mass and
ushering him tumultuous cheers and
unreserved applause. In one of his
speeches to the people (this one in Owerri), he reiterated Nigeria’s
commitment to honouring its debts, the
dire economic situation notwithstanding . "The task of this administration is how to
persuade Nigerians to understand that for
a number of years to come, we would be
paying debts, the roads may be long and
thorny but we believe that on our
shoulders lies the responsibility to save our father land from devastation that has
resulted from
mismanagement" (Newswatch, February
LOANS... Buhari could not have been any more
correct in his statement above. Assuming
Nigeria took no further loans, its
breakdown of loan repayments was as
follows: 3.9 billion naira ($4.4 billion) in
1985, 3.7 billion naira ($4.19 billion) in 1986, 2.8 billion naira ($3.2 billion) in 1987, until a
decrease to 703 million in 1991 (Concord
Weekly, May 6, 1985). Nigeria’s precarious
financial situation made it impossible for it
to finance capital projects and meet up its
balance of payment obligations. With oil export pegged at 1.3 million barrels per
day by OPEC, borrowing from external
sources became necessary. To this effect,
Nigeria proposed borrowing 1.795m naira
to finance its capital project from the IMF.
The patriotism with which General Buhari handled Nigeria’s dealings with the IMF
was the highlight and beauty of
Buharinomics. ....BUHARI REFUSED TO DANCE TO IMF... In order to qualify for the loan, IMF gave
Nigeria certain conditions which must be
met. In 1984 when the naira exchanged
for $1.34, the IMF demanded a minimum
of 60% devaluation of it. Buhari refused,
agreeing only to a "crawling peg"—a mechanism whereby government would
realign the currency gradually, forestalling
or minimising economic and social
dislocation because of such drastic
devaluation of its currency. In addition to
the devaluation of the naira, IMF demanded that government took other
drastic actions: (a) The government must
remove its subsidy on petroleum. (b) It
must curtail its expenditure. (c)
Government must rationalise its tariff
structures. (d) It must put a freeze on its wages. (e) It must put a total end of non-
statutory transfers to State governments,
(f) Government must at least institute a
30% raise on interest rates—governmen t resisted this because the decline in its
revenue earnings and its debt obligations
made it almost impossible to raise interest
rates without triggering inflation (West
Africa, May 14, 1984). The Nigerian government and veteran
economists in Nigeria (like Aluko,
Onosade, Okigbo, etc) could not make
sense of being asked to devalue its
currency when Nigeria’s imports were in
dollar and its export (fixed quantity of oil) was also in dollar. The implication of
devaluation was that Nigeria would pay
more to import lesser quantity of goods
than it did prior to any devaluation. It
would also export the same amount of oil
it exported before any devaluation and derive lesser revenue than it received
before any devaluation The impacts of it
debt payment would have harsher effect
on the citizenry if the naira was devalued.
This did not make any economic sense to
Buhari; it struck him as an insult on the intelligence of the African. Finance
Minister Onaolapo Soleye and Alhaji
Abubakar Alhaji who led the Nigerian
delegation to the last negotiation in
Washington were chewed out by US
Federal Reserve Chairman, Paul Volcker, for presenting the Nigerian governments
rejection of most of these
recommendations . For rejecting the IMF conditions and the loan, the Buhari
administration got into the black book of
Washington. Already, it had earned the
dislike of 10 Downing Street for cutting
down Nigeria’s imports from the UK by
about 350%. In any case, without the IMF loan, government was still in a bind as to
how to finance capital projects and pay
for imports, especially spare parts for local
industries, food items, etc. At this
juncture, the genius and resourcefulness
of Buharinomics illuminated to the delight of the African. ...BUHARI, THe UPSTREAM AND
REASONABLE WAY OUT... First, the administration sent Oil Minister
Tam David West to OPEC to seek a raise in
the quantity of oil that Nigeria could
export. If OPEC agreed, Nigeria would
expect to generate extra revenue in the
long run from any increase of its oil quota and this would assist tremendously in
augmenting the shortfall in the nation’s
purse. Professor West came back empty
handed—the US and Britain had put
pressure on their puppets in OPEC (like
Saudi Arabia) to refuse Nigeria’s request. To counter OPEC’s bluff, the Buhari
administration entered into a $2 billion
barter trade agreement with four
countries. Nigeria daily bartered 200,000
barrels of oil as follows: (a) completely
knocked down parts for automobiles from Brazil. (b) Construction equipment
from Italy (c) Engineering equipment
from France, and (d) Capital goods from
Austria. This barter trade took care of the
administration’ s need to have borrowed money but it intensified the ill will the US
and Britain had for Nigeria. By bartering
this oil, Nigeria was: (a) solving those
needs which the proposed IMF loan was
geared toward. Doing so without
borrowing or feeling the pains of spending the meagre amount generated
from its OPEC approved 1.3 billion a day oil
export is the stuff an economic wizard is
made of. (b) Britain had been cut off as
Nigeria’s major supplier of the goods
which the countries in the barter agreement sent to Nigeria. (c) The US
usurious money lenders were denied the
chance to suck Nigeria dry through the
IMF loan. (d) American and British oil
companies were irate that the oil being
bartered would flood the oil market, cutting in on their profits. (d) The oil being
bartered was oil that used to be illegally
bunker ed before Buhari put illegal oil
bunkering artist out of business. For once,
an African country had put positive
economic mechanism in place to salvage its ailing economy without swallowing
RUBBING HUMILIATION...B UHARI STANDS HIS GROUND... As far as America and Britain were
concerned, there was a price to be paid by
this Buhari, who thought he was smart
enough not to accept subservience to their
authority. To begin with, a London
newspaper (The Financial Times) published Nigeria’s barter trade agreement with
Brazil (which, in truth, was done in
secrecy because Buhari treated some
aspects of his economic policy as State
secret). The British thought it was going to incite
OPEC against Nigeria since OPEC as a body
did not support oil bartering. Oil Minister
Tam David West, in a press conference,
said, “If a nation believes it is part of its
strategy for national survival to do this [barter trade], why not?” To assure OPEC
that Nigeria was not indulging in barter
trade in order to pull out of OPEC, he
added ”Our strategy is to stay in OPEC and
make its presence felt, and work together
on programs that will be for the economic interest of all” (Concord Weekly, May 6,
1985). There is more to this barter trade
than time will permit one to detail in this
piece. For now, it is worth noting that it
was the major reason for which Britain
and America wanted the Buhari administration overthrown. The counter trade showcased Buhari as a
visionary. He made America and Britain
feel silly and they swore to get him out of
EMPIRE...WHEN IBB OVERTHROWN!!!.. . When Babangida took over, on his maiden
speech to the nation he promised to
revisit the counter trade agreements.
Within two weeks in office, September
17, 1985, he setup a panel to review it and
recommend to his administration how to revive the economy without the use of
counter trade. Babangida rolled back
counter trade at the behest of his
imperialist masters and at the detriment
of the Nigerian nation and people. By the time the Buhari administration was
overthrown in August of 1985,
Buharinomics was beginning to yield
dividends. For example, the inflationary
rate had fallen from 23.2% in 1983 to 5.5%
in 1985. Nigeria did not regret rejecting the IMF loan because it was meeting its
obligation of prompt debt payment and
the bartered goods were, to some extent,
holding up within the austerity measure
which had been in place since the Shagari
days. Food was becoming reasonably available for two reasons: (a) The
emphasis paid to agriculture had resulted
in abundant food harvests, especially yam
tubers. (b) The border closure made it
impossible for unscrupulous business men
to continue smuggling food items into neighboring countries where they sold for
twice their value in Nigeria. ...HAD BUHARI CONTINUED... Had Buharinomics continued for at least
five years, Nigeria would have joined the
Asian tigers in economic growth and self
reliance. We know that to be true because
Babangida came into office and did
everything the IMF asked and the Nigerian economy took a dive into the
gutter and has not recovered yet. FOLKS, make a conclusion...!! !!!!

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