Emmanuel: Policy reversals reduce credibility of government

Richard Adeyinka Emmanuel is the lead research consultant at Richardson Consult, a Lagos-based economic and political research body. In this interview with DAVID OGAH and TEMILOLUWA ADEOYE, he said that a government with inconsistent policies would suffer credibility problem.
One year after, it appears government is still fine-tuning its policies, be it political and economics; what is the implication?
The implication is massive. Looking back from the tenure of Chief Olusegun Obasanjo to Goodluck Jonathan, you’ll notice that there was an arrowhead coordinating the economy, and speaking about the economy to the people. But this administration is different. There seem to be no direction since President Buhari took over the country a year ago. The country is going back and forth in terms of forex and other issues. The managing director of International Monetary Fund (IMF) came and discussed with the government on the possibility of devaluation of the Naira, but the President maintained his position on devaluation, saying he has not seen how it will impact the economy, and we said yes. I was shocked when I heard the announcement for increase in petroleum pump price.

The Minister of Petroleum, Dr. Ibe Kachichukwu, said anyone who wants to import fuel should do so, but should source the forex required from the parallel market, with the price pegged at N285 to a Dollar. You don’t control the rates at the parallel market, in fact, the parallel market is black, and the business is black, you don’t control it. You can’t import fuel at the parallel market rate. By Friday, after the announcement was made, it rose from N285 to N321 to a Dollar, which made it impossible for those who wanted to import fuel. If you decide to import at the rate of N285 to a Dollar, but when you get there, it becomes N325, that means if you buy at that rate, you will not sell at N145, that explains why few are selling at N145, which the papers reported. Someone called me that the pump price in Ekiti is N160; they have adjusted their meter.

That is the implication, we don’t know where we are going, government is running both the parallel and official markets, with rates fixed at N285 for the former, and N145 for the latter, which is impossible. This causes us to ask what then is the real value of the Naira? It is not only the fuel importers that will go to the market, importers of other goods too will also approach the black market for Dollars, and they won’t get it at N285, so it means things will become more expensive.

I don’t know if this government has a policy on education, economy or health. Nigerian masses have been impoverished for long and it is getting worse. That is the implication of policy somersault.

Last month, at the peak of the crisis, Kachichukwu promised that by May, fuel would be available. They say they are removing subsidy, Nigerians already believed that and were expectant, but in May, they increased the pump price. That tells you the kind of people advising him. In fact, if you want to know his position, wait till he travels out of the country. That is when he will say something. When Fashola was the Lagos State governor, in his second term, he organised a retreat for his commissioners to let them know the task at hand and how to tackle it. That is what I feel the president should do.

Those who are even speaking will say one thing, and then the president will travel and say something else. Kachichukwu has never been stable with his words and actions. When he said N285, when has government ever controlled the black market, it shows lack of coordination. We expect so much from this government.

The ban and the unbanning of domiciliary account operation is one area of policy inconsistency, how did it affect the economy?
This government acts on impulse. The President and his men will say something with one side of the mouth, then when they see reactions or impact, or discover that it won’t work, they will quickly reverse themselves. The ban on domiciliary account principally affected students, but there are others. The implication is huge, he is saying don’t send your children to school if you cannot afford it, those who want to send newly may not do so. Those who have already started their programme, what should they do? It is huge; they can forfeit their programme and come back home, while the capacity of Nigerian universities is not enough to admit everybody. Only those who have no choice will go to polytechnics and college of education, but everybody wants to go to the university, so when you put all this together, you ban, then unban, it distracts those who are already there. It creates uncertainty; parents are worried about where to source forex for school fees and if their children will be able to graduate. What this government is doing, it is very dangerous, unfortunately, and it is getting away with too much. I think if care is not taken, the goodwill this government got from the people will run out in no time.

What of rice importation?
Those who are doing business now in Nigeria, I call them people with ‘extra spirit’, something must be pushing them to still have confidence in this economy to the extent of investing and running a business. How they make headway, I don’t know. You want to encourage local producers to produce rice, you said imported rice should not come in, when those people would have gone into the production of rice, spent and borrowed money from several sources, to invest, now at the point of harvesting, the government has now opened up the ports for imported rice to come in, what does it mean? It means government is not stable, how can people invest when policies are introduced, then banned and unbanned. Some people act before they reason as opposed to reasoning before acting. The sources they borrowed money from would be chasing them to return the loan. The imported rice would have taken over when it is time for them to harvest and sell. What government is doing to Nigerians is bad. Look at electricity, Diesel is now sold at between N140 and N160 per litre, and these people would have borrowed money, then the government changes policy, the losses will be too much for businesses, how they survive, I don’t understand it.

The government also tinkered with interbank interest rate a number of times, how did this affect the banks?
It has the capacity to kill the banking sector, when the banks die, where do we go? Although with the double-digit interest it is already difficult for businesses to approach them, so the banks are just spending the money the way they like. They are not doing well at the moment, nobody is doing well, house holds are complaining, those who are working are not being paid, especially, state workers, retrenchment here and there, except something is done urgently. We need to have a clear-cut policy that people can understand. I laugh when I hear we want to attract foreign investors, they are not daft, we are in the age of globalisation; whatever happens in Nigeria is seen around the world. If I want to invest in Nigeria, I must be interested in her affairs. Who will bring money down to Nigeria to invest? The money will go, and that is what is causing employment. We need Small and Medium Enterprises (SMEs) to run all over the country so that people can work and stay where they live, make the money and spend it there, whoever is interested in investing in Nigeria will be discouraged by things happening in the country.