Tinubu’s Speech: Facts and fallacies

President Bola Tinubu yesterday told Nigerians, many of whom are living by a thread, that he is aware of their struggles and that the economic reforms his administration has embarked on in the past year are meant to prevent the “peril of unimaginable consequences.”

The President admitted the reforms come with some pains, such as “rising living costs”. However, he noted that “we are beginning to see the light at the end of the tunnel”, a position many Nigerians have faulted, insisting that the standard of living continues to deteriorate.

Just last month, the price of PMS was raised by about N1,000, while consumers in some states pay as much as N1,200. With fuel becoming a major driver of price movement, the cost of transportation and essential commodities has continued to increase, a point some said Tinubu’s optimism failed to consider.

As typical of political leaders, the President mentioned some figures, which he assumed pointed to the government’s progress. For instance, he told Nigerians that the administration has cleared the N30 trillion ways and means facility it inherited.

At the twilight of President Buhari Tinubu’s administration, the National Assembly hurriedly passed a request for the securitisation of the outstanding N22.7 trillion ways and means facility. The President had lamented that the cost of servicing the debt, which attracted an interest equivalent to the prevailing monetary policy rate plus 300 basis points, would be unbearable; hence, it needed to be converted to bonds.

On May 4, 2023, the Debt Management Office disclosed in a notice published on its website that the amount was successfully securitised and a 40-year bond in its equivalent issued to the Central Bank of Nigeria (CBN) at an interest rate of nine per cent. The Federal Government, thus, was handed a three-year moratorium while the repayment of the sum spread across 37 years.

With the disclosure, the principal and interest payment is spread until 2063. The DMO revealed that the ways and means advances would henceforth be included in the public debt. In the second quarter of last year, when the total debt stock was quoted at over N87.3 trillion, the DMO explained that the debt ballooned because the N22.71 trillion ways and means facility was included in the debt stock.

The securitisation does not reduce the debt owed by the Federal Government but only moves it from the book of the apex bank to DMO for management, an action experts said would increase the transparency of the ways and means management.

And whereas the cost of servicing the debt would stand at 30.25 per cent, the government currently pays nine per cent, according to the terms of the securitisation, which the DMO said has nothing to do with fresh borrowing.

Reports said the government took a fresh N4.05 trillion in CBN overdraft in addition to the restructured sum between January and September 2023. The restructuring request was made to the National Assembly alongside the 2023 budget proposal.

Other reports said the pending figure had ballooned to N30 trillion at the end of the administration of Buhari. At another forum, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun commenced an investigation to ascertain the actual indebtedness to the CBN through the ways and means window.

About four months ago, during an interview with Channels, Edun claimed the Federal Government had settled N7.3 trillion out of the amount owed the CBN.
The Guardian checks the Government Integrated Financial and Management Information System (GIFMIS) shows that provision for the CBN overdraft stopped in the second half of last year, which coincides with the period Tinubu took over the affairs of the states fully.

Yesterday, the President also claimed that it has attracted over $30 billion in foreign investment in the last year. Where there are lots of commitments from different foreign interests, the officially documented foreign investment figure may be far less than what the President claimed.

For the whole of 2023 (recall the President assumed office almost mid-year), Nigeria attracted $3.9 billion in foreign investment, a far cry from its height ($23.99 billion) in 2019 and $1.4 less $5.3 billion recorded in 2022. In the first quarter of this year, it surged reasonably (to $3.4 billion). However the growth was not enough to raise the figure to match the figure with the President’s claim. The country would need to have exceeded the cumulative growth of foreign investment seen from last year till the first quarter of this year to in the second and third quarters to achieve the $30 billion Tinubu claimed the government has pooled in the past year.

According to the President, the administration has cleared a $7 billion outstanding foreign exchange backlog. Indeed, the CBN has cleared much of the backlog. But the correlation with the President’s claim stops at that. That the apex back cleared $7 billion contradicts the CBN’s position, which states that $2.4 billion out of the outstanding sum is invalid.

The CBN governor, Yemi Cardoso, disclosed that the outcome of an audit carried out by Deloitte shows that $2.4 billion is invalid. In March, the Acting Director of Corporate Communications of the CBN, Hakama Sidi-Ali, said the bank had paid the last tranche of the valid outstanding, which was $1.5 billion, bringing the total settled FX backlog to $4.6 billion, which is $2.4 billion less than the President’s claim.

The CBN data does not show the exact value of the external reserve on May 29, 2023, when the President took the reins of office. However, on May 30, a day after the handover ceremony, the total external reserve was $35.094 billion. The liquid component was $34.41 billion, while the non-liquid sum was slightly above $780 million. On May 26, the last reported date before the President assumed leadership, the composite external reserve was $35.15 billion. Both figures are over six per cent above Tinubu’s acclaimed $33 billion inherited foreign reserve.