The EAC option

TWO WEEKS AGO, PRESI DENT Mohammadu Buhari, underscored his determination to make the economy a top priority in his second...

WEEKS AGO, PRESI DENT Mohammadu Buhari, underscored his determination to make the economy a top priority in his second term by constituting an Economic Advisory Council EAC) to report directly to him. The executive action is a departure from the past as the EAC replaced the then Economic Management Team which hitherto reported to vice president Yemi Osibajo.

The president unveiled an eight-member Economic Advisory Council who are mainly private sector technocrats and seasoned economists known for their views for a free market economy unencumbered by excessive regulations and controls..

The council of outside experts, which will meet directly with Buhari every quarter, is led by Adedoyin Salami, a central bank board member until 2017 and lecturer at the Lagos Business School, known as a cradle of orthodox economists. Other members include former central bank chief Chukwuma Soludo and Bismarck Rewane, an exBarclays Plc banker.

The advisory council would advise the president on economic policy matters and would report directly to his office.

Femi Adesina , the special adviser to the president on media and publicity, in a statement, said the Economic Advisory Council would be expected to also advise Buhari on fiscal analysis, economic growth and a range of internal and global economic issues working with the relevant cabinet members and heads of monetary and fiscal agencies.

The EAC will have monthly technical sessions as well as scheduled quarterly meetings with the President. The Chairman may, however, request for unscheduled meetings if the need arises.

Diverse reactions have greeted the announcement.

“These are known freemarket capitalists who have been critical of President Buhari’s economic policies,” said Cheta Nwanze, head of research for Lagos-based SBM Intelligence. “While I’m cautiously optimistic, it remains to be seen really where this will go.”

Africa’s richest man and President of Dangote Industries Limited, Aliko Dangote, lauded President Muhammadu Buhari over the formation of the Economic Advisory Council (EAC).

Dangote commended the President for constituting a council that will advise him on the nation’s economic growth and overall development. He said the move was a proactive one capable of elevating Nigeria’s economy to greater heights.

Dangote urged the federal government to take advantage of the rare opportunity to strengthen the economy and put the country on the path of growth, job creation and competitiveness.

The Manufacturers Association of Nigeria (MAN) and Lagos chamber of Commerce and Industry (LCCI) have immediately set agenda for the Economic Advisory Council (EAC). They want the council to comprehensively review current policies that drive government’s actions and urgently harmonise the outcomes to craft a new agenda that will guide the economy going forward.

According to the organised private sector, this is the time to accelerate reforms, ensure fiscal consolidation, enthrone a market driven foreign exchange policy and promote a trade policy regime that is in consonance with the potentials and competitiveness of the Nigerian economy.

In their comments on the establishment of the council, MAN and LCCI commended the federal government for setting up of council, noting that it was a welcome development that will help to give the desired direction to the nation’s economic management.

Muda Yusuf , LCCI’s director-general, said: “At a time like this, the economy needs such a team to pull the economy back from the brink. The management of the Nigerian Economy needs to be anchored on tested economic principles that will propel sustainable growth and development. The economy craves a critical mass of private sector investment to stem the current slide and declines in the economy.

For MAN, “The beauty of this team, apart from their pedigree, is its composition of private sector citizens who we believe will operate independently and effectively. The team we believe will not be shackled with the bureaucracy of government and hopefully the political interference and correctness of our clime. They are more likely to be receptive to a wide range of opinions and innovations, even if deferring from the norm”.

Segun Ajayi-Kadir, MAN’s director-general, added: “Already on ground are policy initiatives such as the Nigerian Industrial Revolution Plan (NIRP), Economic Recovery and Growth Plan (ERGP), the 2020-2022 Medium Term Fiscal Framework and Fiscal Strategy. It behoves the Council to recommend pragTWO matic programmes that will improve upon the achievements already made in some areas such as Ease of Doing Business in the country.

The Task

Business analysts say the first major task will be to convince Buhari to reopen the border with Benin Republic closed since mid August over alleged smuggling activities. Business leaders say the border closure has disrupted regional trade.

Next on the agenda will be deeper reforms needed to modernize the tax system, eliminate multiple exchange rates and overhaul the oil and power sectors, which the new panel members have urged this and past administrations to do for years.

President Buhari may not be easily convinced on the need to remove fuel and electricity subsidies which have gulped over N2.3 trillion in the last four years (2015-2019), according to a new report released by PwCPricewater Coopers. In the face of dwindling fiscal resources and mounting public expenditure, many orgainsations, including the IMF, have recommended the stoppage of fuel subsidies to the government to free more resources for development. However, the fear of a possible backlash by labour and student unions has prevented the government from embracing the idea.

Government intervention to keep the naira artificially strong and curb imports to foster local production is partly blamed for the slow recovery from a 2016 contraction. With annual economic growth of barely 2% over the last two years, Nigeria trails smaller neighbors that have some of the world’s fastestgrowing economies.

Policies to keep the naira stable could trigger clashes between the new council and central bank governor Godwin Emefiele, who in the past has disagreed with several members of the council over his use of unconventional monetary policies, according to Citigroup Inc. analyst David Cowan

Asimiyu Damilare of GTI Research said the CBN governor may not allow free market determination of the value of the naira.

“It iss already ripe to unify the exchange rate now. But if you understand the body language of the CBN governor, such development is not in the offing in the near term.”, he said. The CBN governor is known to be an avid believer in guided foreign exchange market.

Given the caliber of the members of the council and their antecedents, they can help the president to add a new fillip and hope to the wobbling economy. However, this is only if the president is willing and ready to take their advice and implement their recommendations.