Going back to the days of “essential commodities”?

Nigerians who were of age in 1984 will vividly remember what they went through to get ‘essential commodities’ like rice, milk, sugar, bread, kerosene etc. My parents, for instance, told me of how they queued for days just to get milk, grains, and rice to buy at very exorbitant prices. For cooking, they simply had to resort to using sawdust since it was not possible to get kerosene anywhere to buy. I was told by a senior colleague that because they couldn’t get kerosene to buy in the city, they had to go to villages where sawmills are located just to get sawdust.

Just to rehash, even before overthrowing the rudderless Shagari regime on December 31, 1983, the economy was already in serious decline due to collapse of oil prices and the unbridled corruption of the political elite. Buhari’s immediate tasks were therefore to eradicate corruption and indiscipline and revamp the economy. With the price of oil down and with very little or no foreign exchange or external reserves to import even necessities, the regime sought lines of credit from multilateral agencies. Buhari was urged to first float the naira, liberalise the economy and allow the private sector to lead the economic revival before securing loans. Buhari stoutly refused. Instead, he rolled out some crude jack-boot policies that further worsened the problem. His way of controlling inflation and steep price rise was to send out soldiers with koboko into the markets to force traders to sell essential commodities at a fixed price regardless of costs. Of course, prices fell in the first few weeks of the coup due to fear of the soldiers and producers and traders took on huge losses. However, as scarcity began to bite, prices went northwards, exceeding their levels before the coup. Unable to access forex to import raw materials and spare parts to keep factories working, industries closed down and unemployment became rife. What was more, wages of public sector workers were delayed for several months.

The ultimate result of this archaic strategy was scarcity. Essential commodities that were once readily available were no longer available. Inflation spiked and Nigerians had to queue for days just to buy commodities like milk, rice, sugar, salt etc at very exorbitant prices. In a report in the Guardian Newspaper of 26^th May 1984, the then Nigerian Grains Board was said to be unable to buy grains “because market prices were higher than what it was allowed to pay”. Also, the same paper two days earlier reported that the Association of Master Bakers, Confectioners and Caterers were said to have made passionate appeals to the government and suggested ways to end the severe scarcity and rising price of bread. But they were ignored and the problem continued to bite even harder.

Meanwhile, as the regime was busy handing down ridiculous sentences of upwards of 100 years to so-called corrupt second republic politicians, it was, through the scarcity it was engendering, opening up a profitable line of corrupt businesses for army officers, their wives and others in privileged positions to become dealers in imported rice and other commodities.

To escape from its economic immobilism, the regime, beginning in December 1984, began counter-trading or trade by barter in order to obtain technology, spare parts and other raw materials. Although it was expedient, the modern trade-by-barter came at a huge cost to the nation. Nigeria more or less auctioned off its oil for less than its real value. Expectedly, the usual buyers of its oil demanded to enjoy similar counter-trade discounts and this led many of them refusing to lift oil from Nigeria when the regime did not oblige them. Thus, counter trade, rather than bringing relief, only served to heighten the desperate economic situation. In real terms, social and economic situations continued to deteriorate and wages still went unpaid. It was therefore a relieved nation that welcomed General Babangida when he put an end to the insufferable regime in August 1985.

Fortuitously, Buhari returned to power in 2015 and faced similar situations as he faced in 1984/85. Sadly however, his response has been the same or worse. Who was it that defined insanity as doing the same thing over and over again and expecting different results?

To begin with, it was downright dangerous for someone with no real knowledge of the economy and who has shown no evidence of improving his knowledge or skills since being edged out of power in 1985 to want to direct the economy. But urged on by an ignorant and sometimes hypocritical crowd and hangers on and a belief in his messianic status, he proceeded to usurp the powers of the Central Bank and the Monetary Policy Committee to determine the country’s monetary policy.

Like in 1984, he has now refused all sound entreaties to float the Naira, which will encourage investments, businesses and capital inflow even when it is obvious that we are in a cul de sac. Despite his filtered speeches on the campaign trail, he has been showing open contempt for private businesses and capital and has stuck to his expired philosophy of statism and belief that the government alone is capable of developing the country, even with rock bottom oil prices.

What is the result? Stagflation – a portmanteau of high inflation, declining economic growth rate and high unemployment. Prices of goods and services have skyrocketed beyond the reach of Nigerians, the economy is shedding jobs at an alarming rate, petrol and electricity have become scarce commodities, growth is down to 2.8% last year – the lowest since 1999, industrial output contracted by 2.2%, business confidence is down to 8.3% from 14.9% recorded at the third quarter of 2015. The Naira has plummeted by about 118% against the dollar in the past 12 months, while youth unemployment is at an all time high of 50%.

This statistical jargons aside, the country and the economy have practically been grounded by the combined shortages of foreign exchange, fuel and electricity. It has never been this bad really!

The government, on its part, appears to have outsourced its core function of regulation and provision of infrastructure to God, so it seems, while it has taken over those functions proper to the private sector – importation and distribution, buying and selling. Is it any wonder that Ibe Kachikwu and the entire NNPC bureaucracy have been reduced to petrol importers and distributors and petrol attendants at the filling station!

Meanwhile, while the administration claims to be fighting corruption, it is directly encouraging it by the arbitrage opportunities it provides. Now, government officials and those with influence scramble to get the dollars at the official rate and sell them at the black market for huge profits. Private sector people are not left out too. The only profitable business for travel agents now is the selling of fake flight tickets to bankers so they can buy BTA at the official price.

Like in all systems where the government takes over the functions of the private sector, scarcity is the result. Unfortunately, Nigerians who thought they had voted for change will soon wake up in queues for essential commodities.

Christopher Akor