Sopuruchi Onwuka

 

After arriving to power under the country’s most controversial electoral processes that earned international indignation, President Bola Ahmed Tinubu has been relentless in churning out economic policies and programmes that have so far failed to impress highly disappointed Nigerian people.

Expectations that the president would calm frayed nerves and quickly win over the people with economic policies that attend to their immediate needs were dashed with Tinubu’s first two policy interventions: removal of social welfare programmes, rash withdrawal of fuel subsidy and devaluation of the Naira.

With these policies, every Nigerian was not left in doubt that the president was either very insensitive to the suffering in the land, or he decided to deliberately turn his back on the people. Either way, President Tinubu indicated too early in his administration that he is far distant from the economic reality on ground.

 

That the new president would disappoint the people was confirmed when in his inaugural speech declared that fuel subsidy is gone! That simple line became a death sentence to small and medium scale businesses that rely on petrol fired self power generation. By extension, it spelled hunger and deeper poverty for millions of Nigerians that were struggling below the survival line.

Fuel subsidy which is a grand norm in every thriving economy actually became an issue in the country following years of sleaze and abuse in the management of huge funds meant for keeping retail prices low. And industry technocrats close to the system regularly point at political involvement in the grand scam, explaining why every pre-election year recorded new highs in the volume of cash spent on bridging actual market prices and local retail rates.

The subsidy programme also survived many administrations which deferred to in the collective demand of the people as governments avoided triggering price shocks that elicit the degree of social backlash that President Tinubu has sparked off.

Before Tinubu came to power, there was stakeholders’ agreement that fuel subsidy removal would naturally fit into the ongoing reforms in the petroleum industry; and that all refineries operated by the Nigerian National Petroleum Company (NNPC) Limited would be revamped to displace high cost importation with local production that would also yield ripple economic benefits to the domestic economy.

Former President Muhammadu Buhari’s government had brokered an all stakeholder squad including labour and civil society groups to liaise with the operators of the refineries to guarantee best practices and quick revamp delivery.

A resulting moratorium might have explained the silence of the Nigerian labour movement in the ongoing protests.

Expectations were that the new president who has been the longest ally and an insider in the Buhari government would quicken the process to lay basis for his urgent deregulation agenda. But the rushed removal of subsidy has filled the hands of the NNPC Limited with urgent requirements to fit into the new market structure and also keep the market wet with transportation fuels. It inadvertently slowed down the process.

As of Today, there is no local refinery producing the highly demanded petrol: the only product government was subsidizing. And high cost importation remains the only source of supply. Thus, the problem remains. And the only change is that the Tinubu government transferred the cost of already impoverished Nigerians. He pulled the inflation trigger on the economy.

Hopes that Tinubu would rescind the decision and sanitize the subsidy flow lines upon settling down never materialized. Worse still, the president pulled down other social benefits including school feeding programme, varsity tuition subsidy, electricity tariff subsidy and many others.

While ever rising fuel prices continued the swish the people, Tinubu was also very impatient with artificial instruments installed by the Central Bank of Nigeria (CBN) to tame foreign exchange rates. The dismantling of the pillars that supported the Naira at the foreign exchange market merely pushed the local currency off the cliff for unrestrained fall.

The pressure on the value of goods and services has been enormous. From high energy cost, consequent transportation costs through jumps in grocery prices and astronomical rise in the prices of imported goods; the pull on inflation triggers have been sudden and strong. So, while skyrocketing prices opened the pocket of Nigerians from the top, devaluation of the naira drained value from the bottom, leaving Nigerians watch the wealth they acquired in the past decades vanish within months.

So in just a few months, President Tinubu’s early economic measures have triggered inflation, stifled earning opportunities and eroded values from existing wealth. And the value erosion on the Naira has left individuals and businesses counting permanent losses. So, the president’s hasty reforms brought shrinking effect on existing wealth and left citizens sinking deeper into abject poverty.

Besides, all promises of parallel application of the withdrawn subsidy funds are not visible as social services like education and public healthcare continue to get increasingly unaffordable in the face of brazen profligate lifestyle of political leaders.

The Oracle Today reports that a loaf of bread which cost about N300 before President Tinubu came to office a year ago now costs about N2000. Fuel Jumped from N197 per liter to national average of about N800. The value of the Naira against the US dollar plummeted from about N400 to near N2000. It actually transcended N2000 at a point.

The combination of Naira devaluation and high cost of fuel translated to high cost of manufactured goods, leading to galloping inflation and acute hunger among millions of Nigerians already classified by the World Poverty Clock as the poorest in the world.

Again, interest rates for borrowed funds have continued to rise since President Tinubu came to power. The Central Bank of Nigeria raised its latest benchmark lending rate by 50 basis points to 26.75 percent, marking the fourth consecutive hike this year. The decision follows increases of 150 basis points in May, 200 basis points in March, and 400 basis points in February, the largest in 17 years.

Inflation hit 34.2 percent in June, driven by fuel subsidy removal and a 70 percent in Naira depreciation, official figures showed.

According to data from the National Bureau of Statistics, Tinubu inherited inflation rate of 22.79 percent in June 2023, and interest rate of 18.75 percent in July, 2023.

Data at the National Social Safety-Net Coordinating Office (NASSCO) show that about 20 million households of over 80 million individuals in the country have officially registered in the National Social Registry of poor and economically insecure families.

The National Social Registry (NSR) is an aggregated database of all State social registers, and serves as an information system containing data on poor and economically insecure households collected by respective states.

According to NASSCO, the social registries can serve as a credible gateway to select beneficiaries for immediate support especially as government makes efforts to provide fuel subsidy palliatives to households.

Before the highly contested and robustly discredited February presidential elections that brought in President Tinubu, Nigeria was sitting shamelessly at the base of global prosperity ladder, taking the dishonor of the world poverty capital with the highest number of the abject poor on the planet.

A 2022 Multidimensional Poverty Index Survey jointly released by the National Bureau of Statistics (NBS), along with the National Social Safety-Nets Coordinating Office (NASSCO), the United Nations Development Programme (UNDP), the United Nations Children’s Fund (UNICEF), and the Oxford Poverty and Human Development Initiative (OPHI), had indicated that over 130 million Nigerians were living in multidimensional poverty, a figure representing 63 per cent of the entire population.

According to the survey, over 50 per cent of children across the country are affected by poverty.

The report added that the poverty index is mostly domiciled in rural areas, especially in the north with women and children being the most affected.

Office of the Statistician-General of the Federation holds that the multidimensional poverty index survey reveals that the 133 million people multi-dimensionally poor experience over one-quarter of all possible deprivations.

The report added that significant 86 million people or 65 percent of the poor live in the North, while nearly 47 million or 35 percent of the poor live in the South. Poverty levels across States vary significantly, with the incidence of multidimensional poverty ranging from a low of 27 percent in Ondo to a high of 91 percent in Sokoto.

The United Nations through its Humanitarian Coordinator for Nigeria stated on the UN website that over 4.3 million Nigerians in the North East region, including; Borno, Adamawa and Yobe states are facing severe hunger and malnutrition.

It explained that princely $1.3 billion in humanitarian funding needed to save some 700,000 children under five from the risk of life-threatening severe acute malnutrition.

“Soaring food prices, fuel and fertilizers have exacerbated the crisis, and the response remains severely underfunded,” he further noted.

The UN declared last year that 4.3 million Nigerians ‘particularly in the North East region of the country’ face severe hunger and various forms of malnutrition.

“The removal of the petrol subsidy is anticipated to cause one-time impact on prices, primarily affecting petrol purchases for transportation, power generation, and certain services,” the World Bank stated.

The Oracle Today quotes the Managing Director of Seplat Energy PLc, Mr Roger Brown, as saying that petrol accounts for over 25,000 megawatts (MW) of self electricity generation by homes and small businesses in the country.

The assertion which has been corroborated by the organized private sector deflates the official argument that petrol subsidy benefitted only the ultra-wealthy that parade fleets of high performance cars. And with petrol prices jumping from N195 to N800 per liter, impact on homes and small businesses can be crushing.

With homes and businesses struggling with cost crises, the resulting spate of public outcry is now translating to palpable anger and mass protests against bad governance, just within one year of Tinubu’s government.

The protest has been planned and coordinated across months, serving the government a time window to arrest the situation; but the president and his men have again proved vey disingenuous! From approving huge salary increases, buying protesters off the streets and stoking ethnic hate massages to break the ranks of the protesters, the government has only displayed loss of strategy.

Experts call on the president to return to the drawing board, recruit tested technocrats and redesign a structured recovery model that quickly addresses inflation, promotes rapid recovery of local capacity for low cost refining, and addresses hunger.

Pumping free cash into the market would only worsen inflation, they argue.

Taming inflation is the only direction for the Nigerian economy under the present economic predicament. Distributing cash via salary increases and cash transfers only displays the confusion of spending more to save less.

The most reliable and sustainable measure out of the prevailing Tinubu mess, economists point out, would be to restore value on the Naira and not to pump out more.