Monday, 4th December 2023

In 30 days of honeymoon, Tinubu’s sweeping reforms leave Nigerians poorer, agitated

By Geoff Iyatse, Muyiwa Adeyemi, Seye Olumide and Rotimi Agboluaje
30 June 2023   |   4:10 am
President Bola Tinubu would be remembered for reversing the traditions. In stark deviance to what his predecessor, Muhammadu Buhari, was known for in his eight years of leadership, he did not only hit the ground running, but also turned the conventional inauguration speech into a policy statement.

In a sharp contrast to the laidback presidency of his predecessor, the Bola Ahmed Tinubu-led administration started like a house on fire with the abrupt end to the prodigal fuel subsidy era. About 30 days after, both fans and foes could feel the ‘new sheriff in town’. GEOFF IYATSE, MUYIWA ADEYEMI, SEYE OLUMIDE and ROTIMI AGBOLUAJE, however, report that the ‘renewed hope’ runs the risk of turning into a rekindled despair without commensurate efforts at rapid economic rebound and real succour to ease pains of change. 

President Bola Tinubu would be remembered for reversing the traditions. In stark deviance to what his predecessor, Muhammadu Buhari, was known for in his eight years of leadership, he did not only hit the ground running, but also turned the conventional inauguration speech into a policy statement.

He did smuggle the “subsidy is gone” refrain into his inauguration speech, suggesting that Nigerians might have elected a ‘non-conforming’ president. To others, it tells of a clumsy presidency ahead.

About a month later, he has shocked many, including the entire Nigerian masses that are at the receiving end of the tough, though inevitable economic decisions. Conspicuously missing, however, are the palliatives to cushion the spiral effects on beleaguered Nigerians.

‘Subsidy is gone’
Many other sensitive statements were smuggled into the prepared speech of Mr President, but that of the subsidy removal stuck out.

How the presidential declaration – interpreted as a statement of fact in some quarters and a policy directive by others – was managed, became even a bigger issue.

Whereas the President’s men said implementation was not immediate, the Nigeria National Petroleum Corporation Limited (NNPCL) unveiled a new pricing template the following day amid long queues at filling stations and nationwide scarcity. That put paid to any doubt as to whether subsidy payment would endure even for a month.

For once, there was a consensus among stakeholders, including organised labour, that subsidy removal was the way to go.

But critics held on to what they described as ‘wrong timing’ as a major misstep.

The N3.6 trillion earmarked for subsidy in the 2023 budget covered up till the end of this month but Tinubu, who was also faulted for unilaterally taking such an impactful decision, pulled the plug a month earlier.

In its reaction, the Nigeria Labour Congress (NLC), said it was outraged by the pronouncement without due consultations with critical stakeholders or without putting in place palliatives to cushion the harsh effects of the subsidy removal.

NLC President, Joe Ajaero, said the decision was insensitive as it threw the nation into a tailspin due to a combination of service shutdowns and product price hikes.

However, the international development partners, local pro-market economists and capitalists hailed the decision describing it as overdue. The argument among the anti-subsidy payment is that only a very small percentage of the spending goes to the poor masses, much of it ending up in the pocket of the rich people.

In its Nigeria Development Update (NDU) issued on Tuesday, the World Bank, which had long called for an end to all forms of subsidies, enjoyed by Nigerians to save the country from fiscal disaster. It insisted that the bottom 40 per cent of Nigerians received less than three per cent of the subsidy directly, “whereas those at the top 60 per cent received over 23 per cent”.

But the same World Bank insists 7.1 million people would be plunged into deeper poverty unless urgent palliative measures are implemented. Whereas the former administration had secured $800 million loan from the World Bank Group for palliatives for 10.1 million poorest of the poor, who would be affected by an increase in the pump price of fuel, the NDU said the intervention would restore 1.7 million people out of over seven million that would be affected to their original economic state.

A month after the bold decision on subsidy removal was taken; the discussion between labour and government on palliatives and wage review is still stalled. There is also doubt if the government, at all levels, could afford any increase on the prevailing personnel cost even as NLC and its affiliates are requesting N200,000 as a new minimum wage.

Naira refloating
TWO weeks ago, the Central Bank of Nigeria (CBN) heeded the call by the President for foreign exchange rates convergence, pulling the plug on the prevailing subsidised Investors’ and Exporters’ (I&E) window.

Since that decision has been taken, the official exchange rate has climbed up by over 60 per cent eliminating the wide market arbitrage said to have been responsible for round-trip transactions, speculative tendencies and other ill-market practices.

The apex bank said the decision would address the age-long illiquidity and restore sanity in the market. The Guardian reported that from 2020 to 2022, Nigeria lost, at least, N8 trillion to rent seekers, who explore the multiple rates in the foreign exchange (FX) market to rip off the country. The amount is based on data sourced from CBN’s intervention in the highly discounted official market.

Director-General of Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, a strong advocate of rates harmonisation, said the bank would save trillions of naira yearly by ending the multiple exchange rate regime.

Petrol pump

The World Bank, International Monetary Fund (IMF) and the African Development Bank (AfDB) have hailed the decision of the Central Bank, saying it would unlock capital inflow to critical areas of the economy.

The immediate past World Bank President, David Malpass, commended Tinubu in a tweet for the “sweeping reforms” in the FX market and the abolition of the fuel subsidy regime, saying the actions would enhance currency stability, tackle corruption and rein in inflation (the very opposite of the current reality).

“Glad to see @officialABAT taking concrete steps to scrap Nigeria’s harmful government subsidies and multiple exchange rates. These are important steps toward currency stability, lower inflation, and reduced corruption in Africa’s most populous country,” he tweeted.

But there is a possible downside of the rates harmonisation if the value of naira continues to plunge. Depreciation, historically, is a metaphorical falling knife in the Nigerian economy as a development economist, Dr Chiwuike Uba, suggests that exchange rate devaluation contributes about 70 per cent to inflationary pressure in the economy.

Already, the inflation rate is consolidating on its 17-year high at 24.4 per cent. The PMS removal will raise the inflation rate to 30 per cent this month, according to the former Statistician-General of the Federation, Yemi Kale.

Perhaps, the 40 per cent increase in the customs clearing FX rate determination has demonstrated that, indeed, the exchange rate is a rising function of inflation. Economists are already worried that the cost of vehicle purchase would soar leaving ongoing mass transport vehicle procurement arrangements in limbo. That might also complicate the cost of the transport crisis.

CBN: ‘A rotten financial system’
The exchange rate convergence came about a week after the President suspended Godwin Emefiele as the governor of the apex bank and appointed one of his deputies, Folashodun Shonubi, to act pending the outcome of the investigation of his former boss.

Just last week, Tinubu said the embattled chief regulator presided over a rotten financial system. The President’s assertion is debatable. For once, the non-performing loan (NPL) of Nigerian banks has been brought down to below the five per cent regulatory threshold, from over 30 per cent about a decade ago, showing that the quality of assets of the banks has improved tremendously.

But policy analysts believed Emefiele obviously failed woefully in his price stability mandate with inflation currently over 24 per cent and the naira losing over 70 per cent of its value in the past eight years while the effective commercial interest rate now exceeds 30 per cent.

Emefiele also presided over the naira redesign programme, the CPPE said, to cost the economy an estimated N20 trillion in the first quarter of the year. The speed of economic growth, indeed, slowed to 2.3 per cent in the first quarter compared to 3.1 per cent the economy finished last year.

Whereas some analysts hailed the suspension of Emefiele, Dr Ayo Teriba, a leading economist, said there was no moral justification for retaining Shonubi even as a temporal replacement for Emefiele, if the President believed the CBN as an institution has not done its best in the past nine years.

The acting governor joined the monetary authority as deputy governor in charge of operations in 2018, and was part of its management team during the disbursement of the huge controversial funds Emefiele is partly being investigated for.

Where is the $800m-palliative plan?
WHILE Nigerians bear the brunt of subsidy removal – in PMS and FX – and brace for faster inflation in the coming months, Tinubu and his men have kept quiet about the $800 million palliative.

The creditor, World Bank, said the scheme would need to be expanded to cover 40 million individuals to reasonably reduce the negative impacts PMS subsidy removal would have on the citizens.

The pan-Yoruba socio-political organisation, Afenifere, yesterday, called on the President to urgently put a halt to steps by some government institutions to jack up prices of commodities and services ‘as such would further worsen the precarious situations of hapless Nigerians”.

National Publicity Secretary of the organisation, Jare Ajayi, maintained that various steps taken lately by the Tinubu-led administration might have the potential of lifting Nigeria up in the medium and long term.

“But there is the need to ensure that the people are not squeezed out of breath before that good time comes, as it’s only a person who is wholesomely alive that would enjoy the largesse of tomorrow!”

While calling on President Tinubu to checkmate steps capable of alienating his administration from the people, Afenifere urged him to be mindful of actions by government agencies that may be tantamount to sabotaging his good intentions.

The Manufacturer Association of Nigeria (MAN), through its President, Francis Meshioye, revealed that electricity tariff had gone up by 186 per cent in the last eight years.

And this is not only having negative impacts on economic activities, a lot of businesses are being forced to close down or relocate from Nigeria. Reports have it that the inflation rate has climbed up to 29.8 per cent this June following the removal of petroleum subsidy.

Faulting the reason of Discos for the planned increase in tariff on Naira exchange that went up from N441 to N750 per dollar, Ajayi wondered why service being rendered in Nigeria should be denominated in or predicated on US Dollar.

“Is the energy they are distributing imported from the United States of America?” He called on President Tinubu to stop the planned increase on electricity tariff and ensure that the increase is not effected secretly as had been done before, stop the planned N1,000 POC levy and prevail on relevant arms of government to utilise information about Nigerians already in their purview as the new CBN directive is repetitive of what already exists in addition to its potential of being used to infringe on the privacy of Nigerians.

A political strategist at work
ONE of the major challenges that quickly put President Tinubu’s political prowess to test was the election of the leadership of the National Assembly. The President and his party, All Progressives Congress (APC) were burdened on how to balance ethnic and religious sentiments that have become a big factor in Nigerian politics.

For the ruling party that narrowly escaped the political consequence of its decision to field Muslim-Muslim ticket at the February 25 Presidential election, APC decided to rally round a Christian from the South-south for the office of the Senate President and Deputy Senate Presidency to go North-West.

The party adopted Senators Godswill Obot Akpabio, representing Akwa Ibom and Jibrin Barau, representing Kano North. It also zoned the Speakership and Deputy Speakership to the Northwest and Southeast and chose Tajudeen Abass (Kaduna) and Ben Kalu (Imo) for the slots.

President Tinubu approved the party’s choices and led the campaign for their emergence.

But about seven members of the ruling party in the House of Representatives, led by Deputy Speaker Idris Wase, kicked against the party decision and described it as anti-democratic and avoidable interference in the independence of the legislature.

Sensing the danger of approaching the election with multiple candidates from the same party, President Tinubu deployed all tactics in his political arsenal to ensure that most of the aspirants stepped down for his anointed candidates and at the end of the day it was only Yari, who led a group that did not see anything wrong for the country to produce Muslims as head of executive and legislature arms of government that contested against Akpabio.

Wase was on the ballot with Abbas.

President Tinubu had his way and his men emerged victorious and now heading the National Assembly despite concerns by many Nigerians if the Lawmakers will be vibrant enough to perform their oversight functions and not become a rubber stamp as 9th National Assembly was dubbed.

The opposition Peoples Democratic Party (PDP) and Labour Party (LP) expressed their displeasure at the manner at which the ruling party imposed their candidates on the National Assembly, saying that democracy thrives when the principle of separation of power is respected and allowed to enhance rule of law. They said it would be difficult for Akpabio and Abbas to do anything against President Tinubu’s interest because of the role he played in their emergence.

Appointment of security chiefs
IF the politics of electing the leadership of the National Assembly attracted divergent reactions from Nigerians, President Tinubu’s decision to sack former service chiefs and appoint new ones was applauded by the people, who have been angling for a better security in the face of killings of thousands of harmless Nigerians by Boko Haram insurgents, bandits, kidnappers, unknown gunmen and separatists groups that are still halting business and commercial activities in the Southeast by sustaining Monday sit-at-home order.

The picture of President Tinubu’s plan for the security architecture of the country came with his initial appointment of the former EFCC boss, Mallam Nuhu Ribadu (Adamawa, North East) as Special Adviser on Security.

The appointment was seen as a round peg in a round hole because of his integrity and deep knowledge in security. Analysts believe that the wide commendations Ribadu’s appointment received encouraged the President to elevate him within two weeks to become the National Security Adviser (NSA).

Despite wide acceptability the appointment of the service chiefs is receiving, Nigerians are looking forward to seeing their performances and their ability to deal with internal crises in the country.

Many analysts are also of the opinion that President Tinubu was smart enough in dealing with nepotism and favouritism that characterised such previous appointments.

ALSO, the President’s first official trip outside the country saw him attending the Paris Summit for a ‘New Global Financial Pact’ where he met some world leaders and investors, who expressed interest in doing business with Nigeria.

His policy on removal of fuel subsidy, liberalisation of the electricity sector and his monetary policy to unify exchange rate are believed to have opened the country for Foreign Direct Investment (FDI), among other business opportunities in the country.

Engage the poor masses
A SOUTHWEST socio-political group, Yoruba Ronu Leadership Forum (YRLP), yesterday, cautioned the president to understand the fact that his various reforms and economic policies are already snuffing life out of Nigerian masses.

President of the forum, Akin Malaolu, also cautioned the President that he cannot rule with ‘pride and the attitude of I know it all’, without critically engaging Nigerians and or sample public opinions, especially that of experts, before foisting crucial economic policies on the nation.

According to Malaolu, “We have studied the emerging difficulties on many Nigerians in their day to day expectations to meet their needs due to the prevailing conditions of things in relation to subsidy removal from petrol pump price, education at the tertiary level and removal of subsidy from agricultural implements, including fertilisers.

“Not only have we been told by President Tinubu that he removed all forms of subsidy without the advice of those around him, and he made the revelation with an unpardonable glee. These decisions made, will remain as an albatross to those who will work closely with the President, and they should be ready to take more foul snubs.

“Our leadership position on the concerning withdrawals and the 100 per cent floating of the naira to get its value in the open market are as follows.

“Firstly, no country in the world has ever floated their currency by one hundred per cent. It is tantamount to what we can call extreme capitalism. What the government did to the general mass of our people is to tell them that the Tinubu-led government has no further responsibility to give and it is therefore on holiday season.

“We can all read the faces of our people, the decline in productivity and efficiency nationwide. Some governments have declared three working days a week, while others are struggling with lateness to work. To put it mildly, President Tinubu is taking the country out for sale and not for repairs.

“A leader that is sincerely in power to lead the nation out of the woods, will consider the land use patterns presently on ground, the reasons why railway transport cannot cargo our petroleum products and other heavy goods, and why there are more out of school children in their millions, and how to increase productivity and not diminish it.”

The forum added that the faulty start by the President is a symptom from his overrating. “He has put the cart before the horse. His disappointing outings would take its toll on the people. He must change course before we hit the rock,” the forum warned.