The Nigerian economy has been stifled by the overwhelming influence of petrol Dollars, hindering prosperity. Upon assumption of office, President Bola Tinubu vowed to reform and diversify the economy to foster prosperity. In one year, there is yet to be respite for most Nigerians, THE PUNCH writes
A year ago, President Bola Tinubu assumed the coveted duty as the 16th president of Nigeria, succeeding former President Muhammadu Buhari.
Tinubu was declared the winner of the 2023 presidential election by the Independent National Electoral Commission Chairman, Prof. Mahmood Yakubu, on March 1, 2023.
Tinubu, the candidate of the All Progressives Congress, garnered 8.7 million votes to defeat Atiku Abubakar of the Peoples Democratic Party, who came second with 6.9 million votes, while Peter Obi of the Labour Party secured 6.1 million votes.
Tinubu assumed the national office after spearheading the transformation of Lagos State into an economic powerhouse.
Public commentators claim that Tinubu inherited a fragile economy that was teetering on the brink of collapse, characterised by rampant polarisation, severe revenue constraints, and burdened by a staggering public debt of N77tn as of June 2023.
As succinctly put by the Minister for Solid Minerals, Dele Alake, at the ongoing Ministerial Sectoral Update, Nigeria failed to utilise revenue from the oil sector in the many years when the economy depended solely on income from oil and petroleum.
He stated that the country also failed to use its humongous “petro-dollars” to develop other sectors of the economy, particularly the solid minerals industry, and the agricultural sector, adding that while other countries diversified their economies to generate greater revenue across sectors, Nigeria failed to do the same.
Alake said, “In my own considered estimation, Nigeria over the decades failed woefully to efficiently utilise the revenue that accrued to us from the oil sector. And how did we fail to utilise that? We failed to utilise the humongous amount of petrodollars that came into the coffers of this country. We did not utilise this money to sufficiently create a very solid structural economy in other sectors.”
In the wake of the economic challenges, Tinubu campaigning on the Renewed Hope Agenda assured Nigerians of sweeping economic reforms aimed at revitalising the nation’s financial landscape. However, as his first year in office draws to a close, many Nigerians appear to have found themselves grappling with deteriorating living standards and increased economic hardships.
Tinubu’s economic reforms were met with initial optimism, with promises to tackle corruption, streamline government spending, and attract foreign investment.
Yet, the reality on the ground seems to paint a starkly different picture. While some progress has been made in certain sectors, the overall impact on the living standards of ordinary Nigerians appears to have been predominantly negative, according to some economic analysts.
One of the key aspects of Tinubu’s economic agenda was the restructuring of key sectors such as oil and gas, agriculture, and infrastructure. However, the implementation of these reforms has been marred by inefficiencies, bureaucratic red tape, and a lack of transparency. As a result, some critical sectors continue to underperform, exacerbating unemployment and poverty levels across the country.
Critics doubted Tinubu’s sincerity when, during the June 12, 2023, commemoration, he proclaimed, “I feel your pains.”
In a widely circulated video, the president echoed the socioeconomic philosophy of socialism, advocating for the liberation of the poor: “Let the poor breathe, don’t suffocate them.”
Indeed, his policies seem to have left a widening gap between the very rich and the poorest poor, the middle class appear to have been extinguished and the wretched poor are left with no “breath to breathe.”
Furthermore, the new administration’s policies have led to a widening wealth gap, with the benefits of economic growth disproportionately favouring the wealthy elite. While the government touts increases in Gross Domestic Product and foreign investment, these gains have yet to translate into tangible improvements in the lives of the average Nigerian.
In one year, the headline inflation rate increased by 31.2 per cent from 22.41 to 33.69 as of April 2024, making basic goods and services increasingly unaffordable for ordinary citizens.
Tinubu’s first anniversary could be compared to the first year of past presidents, with Buhari at a 12.48 per cent inflation rate, Goodluck Jonathan at an 11.85 per cent inflation rate, Umaru Yar’Adua at a 7.66 per cent, and Olusegun Obasanjo at 0.95 per cent.
The former Lagos governor, in his inaugural speech, promised to “remodel, reform and diversify the Nigerian economy to bring about growth and development through job creation, food security and an end to extreme poverty.”
The agenda focuses on eight socio-economic priorities including food security, poverty alleviation, economic growth and job creation, access to capital, particularly consumer credit, inclusivity in all its dimensions, particularly as regards youths and women, improving security, improving the ease of doing business, improving adherence to the rule of law, and fighting corruption.
Very notable, among these policies, was the removal of fuel subsidies while Tinubu was giving his inaugural address. Others include the unification of the foreign exchange market, the introduction of new taxes and increments in tariffs, like electricity.
He ended the graft-ridden fuel subsidy regime, triggering high fuel and transportation costs, leading to food inflation and increased hardships across the country.
To combat food inflation, substantial funds were allocated to the agricultural sector, including N200bn provision to enhance productivity and ensure food security.
Efforts have been made to shift from seasonal to year-round farming through investments in irrigation and water resources.
The government provided N75bn to support small and medium-sized enterprises, fostering job creation and economic diversification.
It initiated a N100bn consumer credit fund to stimulate the manufacturing sector, encouraging production and economic growth.
The student loan scheme aimed at expanding access to tertiary and vocational education commenced operations last Friday after many hiccups.
The Tinubu administration also launched a 100,000 renewable housing programme across seven states to address housing shortages and boost the construction sector.
To address high transportation costs and promote energy efficiency, the government mandated the purchase of compressed natural gas buses.
In addressing security concerns, the Federal Government allocated N3.25tn in the 2024 budget to national security while supporting the establishment of state police.
The Central Bank of Nigeria also introduced a slew of reforms to address the forex crisis, including unifying the exchange rate markets, to create a single, transparent exchange rate that reflects market dynamics more accurately and reduces arbitrage opportunities.
The CBN regularly intervenes in the forex market by selling forex to banks and Bureau De Change operators through various auction mechanisms.
In a bid to boost the supply of foreign exchange in the market, the CBN implemented the diaspora remittances policy, encouraged non-oil exports by providing exporters with rebates and facilitating their access to forex at competitive rates, and restricted access to forex for the importation of certain items that can be produced locally. The recent interventions haven’t stemmed the depreciation of the naira, which has returned to being labelled as the worst-performing currency, despite being tagged at N1,500 per dollar.
Despite garnering recognition from international agencies and leaders, Tinubu’s policy reforms have indeed bolstered the gross national product while simultaneously inflicting economic hardships on the workforce responsible for its production.
The impact can be seen in inflationary figures, manufacturing costs and the exit of multinationals among others.
On April 3, 2024, the Nigerian Electricity Regulatory Commission announced new rates for electricity tariff which saw a jump from N66/N77 per kilowatt-hour to a significant N225.
While the recent electricity tariff increase only directly impacts Band-A customers, most economic actors in the said band are transferring the cost to the end users.
Transporting goods from farms to markets and from wholesalers to retailers has become more expensive. These increased transportation costs have been passed to consumers, leading to higher food prices, a major driver of food inflation in the country.
In one year, the food inflation rate increased by 15.17 per cent from 24.82 recorded in May 2023 to 40.01 per cent as of March 2024.
The aftermath effect of the petrol subsidy’s removal increased the transportation cost. Before the removal, the average cost of a single journey on a motorcycle was N464.55.
When compared after one year, the price increased by 1.6 per cent to N472.16. Also, the cost of a bus journey within a city increased by 46.2 per cent from N649.59 to N969.32.
The cost of a bus journey within two states increased by 78.7 per cent from N4002.16 to N7152.97. For air transportation, the cost of a single-route journey increased by 18.7 per cent from N74,948.78 to N88,964.86. Meanwhile, for a single journey on water, the cost went from N1,045.15 to N1,384.32, an increase of 32.5 per cent.
This is coupled with a depleted workforce, as the unemployment rate increased to five per cent, the highest since the new administration assumed control of the economy, according to unemployment data from the NBS.
Despite the depleted workforce, facing diminished wages and welfare due to the decreased value of their money, the Federal Government battled to boost the national output by 2.54 per cent and 3.46 per cent in Tinubu’s initial two full quarters in power.
Commenting, the Chief Executive Officer of Cowry Treasurers Limited, Charles Sanni, stated that the unveiling of inconsistent policies within a year indicated that the government was merely experimenting without a defined strategy for policy implementation and consideration of their social impacts.
During a telephone interview on Tuesday, Sanni remarked that while the steps taken were commendable, there is a necessity to recalibrate to ensure that the pains and adjustments adequately address the social impacts in society.
He said, “The first anniversary of the new government is an experimental one in the sense that, a lot of economic issues need to be dealt with in line with reforms and the restructuring of the economy were taken.
“So to that extent, I would say that they have taken steps towards the right direction. However, the approach to it and the depth at which such consequences and effects needed to be wielded against the timing is critical and crucial to the success of those policies. This includes other reforms that we still expect them to take. But again, it is a question of what you want to trade off. There are social benefits but discomfort associated with such policies. At the end of the day, you are governing the people so you cannot implement economic policies in isolation to social impact. It, therefore, means that you need to strike a balance in terms of the trade-off between what the government intends to do and get.
“The government needs to recalibrate to the extent that these are the pains and the adjustments made that would compensate for those social impacts in society. The economic policies are necessary, of course, they are but the approach to which you implement them or initiate them is the issue.”
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, urged the government to ease the inflationary pains pushed down on citizens by the various reforms.
He added that the fluctuations in the foreign exchange market have negatively impacted businesses due to the accompanying uncertainty.
Muda in an interview said, “The point to stress is that much of the first year was devoted to corrective reforms which were in many instances also painful.
“But the reforms were inevitable because you can’t build something on nothing. Fixing the economic fundamentals was crucial for economic sustainability.
“However, I believe the administration could do better about the speed of delivering mitigating measures to ease the pains of the reforms.
“There is also a need to address the volatility in the foreign exchange market. Frequent swings in the exchange rate are very detrimental to business because of the uncertainty that comes with it.
“The CBN should also address the frequent changes in the exchange rate for import duty computation. This rate should be fixed at N1000/dollar or even less to subdue current inflationary pressures.”
Also, a professor of Economics at Babcock University, Segun Ajibola, urged the current administration to rethink its palliative distribution process and called for investment in education, health, transport and other critical sectors to alleviate the suffering of Nigerians.
“As a government, there must be solutions that can be done to lessen the immediate pains facing the generality of Nigerians. Not long after the administration came, we were talking about palliatives to support the people but we also know the challenges with palliatives.
“There should be a better way to make use of the funds available and ensure to improve education, and health care, providing some other facilities as little as they may be rather than sharing money that people would just spend and forget the next morning. But if something enduring can be provided with such things it would lessen the pains of the reforms,” he stated.
In the corridors of power, promises echo loudly, but their resonance in the lives of everyday Nigerians often fades into silence. Tinubu’s inaugural year was heralded with lofty ambitions to reshape Nigeria’s economic landscape, promising prosperity for all. Yet, as the calendar turns, the shadows of economic hardship loom larger, casting doubt on the efficacy of the reforms.
While the halls of governance buzz with rhetoric of progress, the streets tell a different tale – one of stagnation, inequality, and despair. As we reflect on Tinubu’s economic tenure, it becomes clear that the road to prosperity is fraught with obstacles, and for many Nigerians, it remains an elusive dream.
As Tinubu’s administration moves forward, it is imperative that it reassesses its priorities and adopts a more inclusive and equitable approach to economic governance.
THE PUNCH
