Nigeria’s President Muhammadu Buhari hasn’t managed to find a solution to the country’s most pressing issue – Nigeria depends too much on its crude oil. Many Nigerians are fed up after the government cut fuel subsidies.
Lekan Sunmola is, like most Nigerians, a patient person. And he’s polite. He starts off by praising the many things President Muhammadu Buhari has accomplished during his first year.
The head of state was a man of integrity, Sunmola said. Unlike many other Nigerian politicians, Buhari took the fight against corruption seriously, he added. And when it comes to the fight against Boko Haram, he was on the right track to make good on his promises to defeat the terror group that has been raging most notably in Nigeria’s northeast for the past years.
It’s only after these words of praise that he starts mentioning the problems he’s been battling with for a while.
“I don’t know how to pay my rent anymore,” the 33-year-old told DW. He said his landlord was becoming more aggressive by the day. Sunmola’s worst nightmare: He might kick his family – he has a wife and two children – out of the apartment.
Fuel price hike after subsidy cut
One year ago, prospects looked bright for the taxi driver. He had just bought a 15-year-old used car which was in good shape with air-conditioning and comfortable leather seats for his customers.
But then the economic crisis hit. Nigeria’s unemployment rate was soaring, prices for staples doubled. And just a few days ago, there was the next piece of bad news for the taxi driver: The government announced it could no longer afford to pay the massive fuel subsidies. The price for one liter of gas jumped to about 70 eurocents overnight – that’s an increase of 80 percent.
“In the past, when a job was given to me for 5,000 Naira (22 euros; $25), I had to buy fuel for maybe 1,000 Naira. Now for the same job I have to buy fuel for at least 2,000 or 2,500 Naira,” Sunmola said. He can’t raise his fares because few people can afford to take a taxi these days.
According to Marc Lucassen, head of the Delegation of German Industry and Trade in Nigeria, the Nigerian government’s decision to cut the subsidies was a sensible one. Although he feels sympathetic towards the people, Lucassen said Buhari had to stop incentivizing oil imports, since Nigeria had tried to refine more oil within the country. To subsidize oil imports would send the wrong signal, he added.
“From the perspective of the average Nigerian it is understandable that such subsidy cuts are not taken as something positive. Nevertheless, from an economic perspective we believe it is the right step because the money for fuel subsidies can be used more intelligently in other fields of the economy,” he said.
Buhari failed to diversify Nigeria’s economy
Most experts say Buhari’s economic-political mistakes happened elsewhere. Seventy percent of Nigeria’s state revenues come from oil. The price slump – a barrel of crude oil costs about half as much as it did two years ago – couldn’t have hit the West African nation harder.
But instead of diversifying the country’s economy, Buhari kept pushing for an economic policy of closed doors.
The president refused to devalue the Nigerian currency, the Naira, which had come under pressure, saying this would “murder” the currency and jack up inflation. His administration also pushed for a restrictive foreign exchange policy that makes it almost impossible for companies doing business in Nigeria to officially obtain US dollars, euros or other foreign currencies.
“Short-term shocks – especially the oil price decline – have led the government to carry out a policy that is not exactly in the interest of foreign direct investment,” Lucassen said diplomatically.
That view is echoed by Arukaino Umukoro. The political correspondent of the Nigerian daily “Punch” said he had observed that the Buhari administration had increasingly become disoriented when it came to economic-political matters. During his election campaign, Buhari had focused on fighting corruption and improving domestic security which he now – rightfully – gets the praise for on his multiple trips abroad, Umukoro said. But Buhari hasn’t managed to find a solution for the country’s economic crisis, he added.
Buhari administration came ‘unprepared’
“I think the administration came into office unprepared, “Umukoro said. “A serious government should be able to map out a strategy.” It took Buhari more than six months to appoint ministers – that certainly drove many potential investors away, he added.
Some political observers fear Buhari’s steadfastness – the same characteristic that makes him so successful when it comes to fighting corruption – could be his downfall on the economic front. This quality could turn into stubbornness.
“I don’t know much he listens to his ministers. And I don’t know how much they tell him,” Umukoro said. “If you are the leader people might be scared of telling you the truth.”
German economic expert Lucassen takes a more optimistic view.
“The government has come to the understanding that the Forex restrictions are mainly hurting foreign direct investors which are the key group supporting the program of the government to diversify the economy,” he said.
As a matter of fact, Nigeria’s Central Bank governor Godwin Emefiele said just a few days ago he was considering greater flexibility in the foreign exchange market – and promised to deliver details in the coming weeks.
Leaving Nigeria to make ends meet
Meanwhile, taxi driver Sunmola said he’s made other plans. He wants to leave Nigeria.
“I have even discussed it with my friends and family if they can do one or two things for me so that I can relocate,” he said. He’s waited long enough to be rewarded for his hard work, he added. “If my country cannot appreciate my ability, maybe another country can.”