Politics
Economy: Bittersweet for Nigerians as President Tinubu unfolds 8 point agenda
By AYOOLA OLAOLUWA
Day by day, the calendar counting President Bola Ahmed Tinubu’s four year term from May 29th, 2023 when he assumed office had been furiously ticking away.
On September 6, the President will be marking the first 100 days that he took over the reign of power from his predecessor, former President Muhammadu Buhari and it is time for assessment.
President Tinubu had swept to power on the back of promises to the nation on his ‘Renewed Hope’ mantra of restoring Nigeria back to the path of economic prosperity.
While many of his critics, who expect nothing short of magic have scored the president low, others, especially economic and financial experts, have applauded the bold policies taken so far.
According to some respondents, owing to the growing hardship in the land brought by some of the president’s ‘harsh’ policies, especially the removal of fuel subsidy and the unification of the multiple foreign exchange rates regime introduced by the Central Bank of Nigeria (CBN), he (Tinubu) has failed.
But the Presidency, speaking through the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, argued that the time is too short to assess the president,who inherited a ‘bad’ economy from Buhari.
Meanwhile, Business Hallmark’s appraisal of the nation’s economy in the president’s first 100 days in office showed that it’s been a bag of mixed blessings.
Removal of fuel subsidy and unification of multiple FX rates
The president’s decision to put an end to the controversial fuel subsidy regime, as well as the unification of the multiple foreign exchange rates employed by previous regimes, had been lauded by many experts as a bold move.
The removal of the wasteful subsidies on both petrol and forex ended the bleeding of the nation’s treasury, allowing government to have access to more funds for developmental projects.
Also, the removal of petrol subsidy and unification of the multiple exchange rates has largely reduced the nation’s dependence on foreign debts and overdrafts from the CBN for public finance.
According to available data, the government spent about N400billion monthly on the now rested fuel subsidy regime. This translates to about N1.2 trillion in savings from June to August 2023.
However, the two decisions, despite being lauded by many financial institutions and experts, have triggered chains of events in the country. For instance, the removal of subsidy on fuel pushed the cost of a litre of petrol to an average of N600 in the country, resulting in a steep rise in the cost of transportation.
The high cost of transporting goods and passengers further pushed up inflation rate in the country, with July Inflation Index climbing to 24.8 percent from 22.79 percent in June and 22.41 percent in May 2023.
July’s inflation figure is the highest in more than 10 years. The last time Nigeria’s inflation reached the 24 percent mark was in September 2005, when the rate was 24.3 percent.
Likewise, the unification of FX rates have pushed up the prices of goods and commodities as the country largely depend on foreign made goods for survival.
As a result of the depreciation of the naira, Nigerians now pay more for imported goods. Also, local manufacturers and producers that depend on FX for their machines and raw materials from abroad have been increasing the prices of their products owing to the high cost of obtaining forex.
Also on the positive side Nigeria’s crude oil production has increased exponentially due to the onslaught against oil thieves on one hand and the rapprochement with stakeholders in the restive Niger-Delta region on the other hand.
Speaking at the weekend in Abuja, the Group Managing Director (GMD) of the Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, disclosed that Nigeria’s crude oil production had risen to 1.67million barrels compared to 1.48 million million barrels per day in June and 1.29 million barrels per day in July.
“May I also use this opportunity to say that I was just checking the data for Wednesday (August 30). The actual data for crude oil and condensate production is at 1.67 million barrels per day.
“This is substantial, if you look at the situation where we were almost going below a million barrels some months ago. This is quite substantial. And the connection of this to subsidy was that you cannot give what you do not have”, Kyari noted.
Financial experts, who spoke on the rise in crude production predicted that the development, apart from helping to shore up the value of the naira in the near future, will also provide the much needed funds to build critical infrastructure and service debts.
In a related development, Nigerian stocks posted record gains on Thursday with the All-Share Index (ASI), which measures the overall performance of equities, rising 0.51 per cent to close at 66,490.34, its highest level ever.
The index growth, which is 15-year high, surpassed the highest value of 66,371.20 recorded on the exchange on March 5, 2008.
According to capital market experts, the strong performance is attributable to several factors, especially investor sentiment influenced by macroeconomic developments, such as the introduction of policies and formation and swearing-in of the economic cabinet by the president.
“The market has huge confidence in the new administration. That is why it is positively responding to it. I think the economy is in better hands. What we need is patience for the policies to start yielding results”, said Tolu Akogun, a stock broker based in Lagos.
In the same vein, trading on the NGX ended the week, Friday September 1, on a positive note, rising by 3 percent (N1.08trillion) as investors bought banking, consumer goods, and oil and gas stocks.
The market, which opened the new month in green (+1.47 percent) recorded positive return of 31.76 percent year-to-date (YtD).
Also, the NGX All-Share Index (ASI) and equities market capitalisation increased from preceding week’s lows of 65,558.91 points and N35.881 trillion respectively to 67,527.19 points and N36.958trillion.
However, the positive economic indices has not translated to a better life for millions of Nigerians, with many complaining of more hardship since the new administration came to power over three months ago.
According to a survey on the economy conducted by BH, 7 out of 10 Nigerians interviewed lamented that they are poorer today under the present administration.
“The price of everything has gone up. We can hardly feed again these days. Some food items like bread, egg, fish, meat, yam and beverages have been removed from our diet.
“For instance, the amount we will use for a bread meal at a go will feed the whole family for a whole day. We now eat what we can afford like beans, potato and garri.
“If I am to pass a verdict, I will give this government below average. I hope and pray that things will not continue this way”, said Adekunle Ahmed, a trader at the Jankare Market in Lagos.
Meanwhile, some economic experts, who spoke on the harsh economic climate in the country advised Nigerians to exercise patient, saying there is light at the end of the tunnel if the new administration did not derail.
A lecturer of economics at the Osun State University, Dr. Bosun Onayiga, advised Nigerians to be patient with the new government, arguing that the nation is in a bigger mess than most people realised.
“What do they (Nigerians) expect from a president that vowed to end fuel subsidy during his campaigns? In fact, all the three major candidates, Tinubu, Atiku and Obi told us they will scrap fuel subsidy and do away with multiple FX rates.
“Apart from Atiku who I doubt would have gone the whole lap due to political pressure, especially from his people in the North, Nigerians pre-February 25 presidential election were trapped between the devil and the red sea.
“Things under Peter Obi, I believe, would have been worse initially. If you recollect, he (Obi) vowed to remove subsidy in his first day in office. And I would have preferred him as what the country needed now is a painful but essential surgical treatment, which I doubt Tinubu himself can push to the end. To some of us, what we are experiencing is not totally unexpected.
“To eat an omelette, you must break eggs. There are no other ways round it. My only fear is that the president is a core politician and may not be able withstand the deluge of resistance that will surely accompany these belt tightening policies.
“You can see that in the administration’s decision to stop further increment in the prices of fuel despite rising crude prices and falling naira. What this means is that one way or the other, subsidy has been reintroduced”, Onayiga stated.
However, the Chartered Institute of Taxation of Nigeria (CITN), advised the president to slow down on the implementation of drastic economic policies to avoid dislocating the nation’s economy.
“We commend the government for starting on a good note by removing the fuel subsidy that has not helped anybody in the country. The removal of that wastage is a major step that this government has taken.
“We also commend the president for setting up a committee to reform the tax system in the country. But we will like to advise the government to be a little slow and not drastic in some of its decisions. For instance, the impact of the removal of subsidy leading to the current price of petrol is enormous on the citizens.
“In order not to make the shock too drastic, we may need to slow down in the introduction of other policies. I give an example, the planned increase in electricity tariff, if we add that to what is on ground right now, it will cause some dislocation to the system that may be difficult to handle.
“Tinubu started well and needs the support of everybody and we have applauded the initiatives of the government. But at this point, can we manage what we have introduced and slowly introduce other policies so that we won’t dislocate the system?”, CITN’s President, Samuel Agbeluyi, admonished.
