₦airaland Forum

Buhari and Obama were elected during a period of economic turmoil and distress. When Obama was elected in 2008 the US economy was in dire straits and reminiscent of contemporary Nigerian economy. With unemployment rate hovering around 10%, the US economy was losing 800,000 jobs monthly. Budget deficits were spiraling, pushing the country’s debt stock to unsustainable levels.

Like Buhari, Obama not only met an empty treasury but was also saddled with a whopping debt burden of about US$10 trillion – or 72% of GDP.

Both presidents also inherited expensive and drawn-out wars which they pledged to end. Ending the wars in Afghanistan and Iraq was a major mantra in Obama’s election campaigns in 2008. In Buhari’s
campaign a major platform was the promise to end the scourge of Boko Haram.

Just as Nigerians clamoured for change during the last elections, Americans desperately wanted change in 2008. When people clamour for change, they’re taking a big risk.

But, looking back, many Americans would say that the risk they took in 2008 was well-calculated. The US economy has rebounded. Unemployment has fallen from 10% in 2009 to the current level of about 5%. The US budget deficit is now less than half of what it was when Obama first took office.

Obama has also significantly reduced the presence of American troops in Afghanistan and Iraq. In a sense, he has virtually fulfilled all his election promises well ahead of the end of his presidential tenure. Given the striking similarities in both leaders’ circumstances, Buhari would do well to borrow Obama’s economic “magic wand”. If he does, he’ll be surprised to learn that Obama turned the US economy around not through austerity measures, but by spending more.

Obama justified the stimulus programme by referring to the severity of the economic challenges he inherited. Despite push-backs from Republicans in Congress, he managed to implement a stimulus programme worth almost US$1 trillion. His strategy was predicated on the premise that the way to
resuscitate the economy is not through belt-tightening, but via expansionary fiscal and monetary policies. Obama’s stimulus strategy focused on “shovel-ready” projects that created jobs almost instantaneously, as well as on programs that delivered immediate cash to Americans. The projects and programs include infrastructure, education, health, renewable energy, tax incentives, unemployment benefits and other social welfare provisions.

Shortly after Obama’s inauguration, Americans began to receive stimulus cheques in their mailboxes or get temporary tax relief. As an unapologetic proponent of “Middle Class Economics” – the notion that a virile middle class is a sine qua non for a robust economy – much of Obama’s stimulus money went to middle-class Americans.

Though Buhari has yet to formally unveil his economic blueprint, he should resist the temptation of embarking on belt-tightening as an end in itself. His administration appears to be drumming-up the need to reduce the cost of governance. While this is an unassailable proposition, he should be circumspect about what he intends to cut.

In the process of cutting costs care should be taken not to jettison investments and projects needed to enhance the country’s productive capacity. Buhari should consider increasing spending in sectors, projects and programmes that boost the economy,
generate employment and promote inclusive growth. These sectors include infrastructure, labour-intensive
manufacturing, agro-processing, health and education.

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