Tinubu’s Economic Tsunami: Whither Nigeria?

Beyond every iota of doubt, the pace, variety and number of ‘policies’ unleashed by the two-months-old President Bola Ahmed Tinubu administration on the Nigerian polity fittingly amount to an ‘Economic Tsunami’. The entire economy has been thoroughly disrupted; every economic agent is hard hit, and the way forward and how soon the thick fog will give way to light remain in the realm of conjecture. Two months after the controversial “fuel subsidy is gone” pronouncement by the President, the heavy dust it raised is yet to settle. The price of everything has gone through the roof, inflation is at runaway pace. Millions of the citizenry are getting impoverished by the day—as their disposable income have totally lost value.

The crash of the Naira triggered by the ‘forced’ unification of multiple exchange rates (or Naira floatation), has seen the national currency practically on a tailspin. While the local currency was officially going for N465/$1 in May, today, it goes for about N850/$1—with every tendency to hit N1000/$1 in no distant future. And from all indications, these ‘policies’, including the dismantling of several other initiatives of the Central Bank of Nigeria (e.g. non-oil export drive) were not necessarily premeditated. Rather, they are mere products of whimsical arbitrariness, playing to the gallery or display of hubris and ‘heroism.’

In truth, Nigerians have lived with petrol (Premium Motor Spirit, PMS) subsidy for decades—a practice that over time got corrupted to epitomise malfeasance and opacity in public finance dealings. A gang of unscrupulous Nigerians and their foreign cohorts took charge of the subsidy regime to practically drain every kobo in the nation’s public till. From few hundreds of millions usually committed to subsidy payment, the amount in a few odd years ballooned to several trillions of Naira. This impoverished the Government to the point of having huge and rising deficits in its annual budgets, and borrowing endlessly from virtually all parts of the globe for the provision of basic infrastructure. Indeed, at some point, the Federal Government under President Muhammadu Buhari had reportedly been borrowing even for recurrent expenditures including payment of salaries of civil/public servants.

Bad as this is, the peremptory approach to ending fuel subsidy, in all honesty, has left Nigeria and Nigerians worse off, economically. All manner of panic measures are being peddled: more PMS importers are being licensed to keep importing—thus, further depressing the Naira exchange rate vis-à-vis the dollar. No word is heard about re-streaming the country’s four moribund refineries that have been grounded for years. Many state governments are devising various ways of assuaging the pains of their civil servants who can no longer afford going to work on a daily basis because of high transportation costs and soaring cost of living generally. Not a few states have reduced their official work days from five to three or two; others are promising ‘cash awards’ and salary increase even in the face of daunting revenue challenges.

The Federal Government itself seems bereft of effective antidote to the miasma into which it unwittingly plunged the nation. It has rather deployed a number of disingenuous tactics and methods to supress industrial actions (protests and demonstrations) by organised labour and civil society bodies. It had also secured an ‘omnibus’ injunction from the industrial court to ‘perpetually’ stop any person or group(s) from protesting against its disruptive policies. This is why two months after the “fuel subsidy is gone” pronouncement, no palliative package has been effectively put together by the Federal Government. And yet the entire populace is reeling under crushing poverty, accentuated by spiking costs of transportation, foodstuffs and all else, triggered by fuel subsidy removal.

Meanwhile, both the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC), apparently moved by the deteriorating plight of the citizenry and the muddled ‘palliative’ proposals of the Government, have issued, in strong terms, fresh protest notices. Specifically, the NLC has given the Federal Government a seven-day ultimatum to “reverse all its economic policies.” The Labour body says “the Federal Government risked an indefinite nationwide strike if the policies are not reviewed before August 2, 2023.” Towards this end, the NLC has also directed all its affiliates and state councils to “immediately begin mobilization of workers and other Nigerians, including civil society allies, for a long-lasting strike and mass protests” should the government fail to meet its demands.

On its part, the TUC has issued a “warning” to the Federal Government, and set a two-week deadline for negotiation, threatening to initiate protests after August 19, 2023. TUC President, Festus Osifo says “the demand of Nigerians at this moment is for the Federal and state governments to implement policies that can lead to reduction in the cost of living rather than actions that would inflate it.” These threats (by NLC and TUC) and protests already ongoing in some cities across the country actually keep the Nigerian polity in a state of anomie. There is widespread hunger, anger and poverty—being worsened by shrinking disposable income—and Government’s apparent tardiness in providing some succour.

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Indeed, in the face of this dreary augury, the Tinubu administration seems to have adopted policy somersaults, prevarications and tergiversations as public opprobrium and criticism keep mounting. Its earlier proposal to deploy N500 billion to making ‘cash transfer’ of N8000 per poor household for six months had to be ‘dumped’ for a review. The rumoured proposal to increase the salaries of civil/public servants at the Federal level seems yet hanging. In the nitty-gritty of plans for palliatives, the National Economic Council (NEC) unanimously faulted the existing Federal social data, saying it lacked integrity and credibility. Consequently, the ‘cash transfer’ dole had to be moved to the states to administer—on the unfounded belief that the sub-nationals should have more credible social data—to reach the intended audiences/targets.

In truth however, shifting the administration of the Federal Government’s palliatives package (in part or full) amounts to taking an uncharted path that could lead to nowhere. Whatever ‘goodies’ that come the way of the state and local governments from the Centre usually end up as ‘political patronage’ to be dispensed along party lines. The fuel subsidy removal palliatives cannot be anything different at the sub-national levels. Truly, hardly is there any state or local government area in Nigeria today that has updated and credible social data to reach the poor households that really deserve some handouts. Unfortunately, what the Nigerian economy badly needs at this time is stimulus package rather than mere palliatives that are likely to end up in wrong hands and pockets. Palliatives (especially cash transfers) are unearned, unproductive ‘transfer payments’ that do not make for any economic progress.

All said, the flurry of ‘activities’ and policy somersaults of the President Tinubu administration can only show vividly that it neither undertook a proper assessment of the economy nor the implications of the hasty removal of fuel subsidy, and Naira exchange rates unification. For a long time, for sure, the administration will keep grappling with the unintended consequences of those ‘reform’ policies, among others. In fact, more recent policy pronouncements like declaration of “state of emergency on food security”, cancellation and/or postponement of take-off dates of some taxes and levies are being perceived as moves to merely douse socio-economic and political tensions in the land. The government seems to have put too many irons in the fire at the same time. That is, biting off more than it can actually chew!

• The author, Mr. Okeke, an economist, sustainability expert and consultant on business strategy lives in Lekki-Lagos. He can be reached at: [email protected]