ALHAJI Bola Ahmed Tinubu violently shook and severely unsettled the national economy in the first few hours after he assumed office 18 months ago. That of its own could not have been a problem. What manifested down the line was the real issue – Tinubu had no discernable plan to methodically work on an economy that, it must be acknowledged, had been dealt a severe blow by a serial bungler, one Maj.-Gen Muhammadu Buhari, the affliction who passed through here masquerading as a president. If this country were to be a human being what Buhari inflicted on it between 2015-2023 would have had more severe and deadlier outcome than the COVID-19 pandemic that swept through the globe in 2020/2021, leaving millions dead in its wake, destroying economies, and permanently impairing the health of many people worldwide, especially those with pre-existing health challenges. And Nigeria when Tinubu took the helm had pre-existing political and economic conditions. But instead of stemming the hemorrhaging, he made it worse.
Tinubu clearly mistook naivety bordering on ignorance for courage when he declared on May 29 last year that subsidy was gone. The spirit that he said led him to act in such a manner was the evil spirit. That same spirit drove him to act in such a manner in the foreign exchange market. The combined effects of those impulsive actions are responsible for our severely depressed and damaged economy and the littering of the landscape with human skeletons. Everything that followed had added to compound the dire straits this country has been consigned to in less than two years. The greater tragedy is that the regime is still digging, assuring only itself that it was on the journey of great economic reforms. Though it has no benchmarks and timelines for its promised dividends of democracy, it keeps assuring of light at the end of the tunnel.
It’s now obvious that this regime believes that the vigorous and mindless application of a narrow monetary policy instrument alone will cure the many ills afflicting Nigeria’s economy. Through the Central Bank of Nigeria (CBN), it has misguidedly pursued taming the rampaging inflation which, by the way, it caused by its own impulsive decisions early in the life of the administration through the so-called petrol subsidy removal, and the attempt at market-determined value of the naira. Both policies have spectacularly failed in spite of the concerted efforts by the regime to put a spin to them.
Let’s explain why we argue that the twin policies have already failed. When Tinubu announced the scrapping of the so-called petrol subsidy in May 2023, Nigeria had no petroleum resources minister and no cabinet. And 18 months down the line, the country still does not have an oil minister. Information adviser to the president, Bayo Onanuga, said this much recently in a national television interview. Crude oil generates about 80% of our national revenue, and until recently the country imports 100% of the petroleum products for domestic consumption, and has had no dedicated minister for almost two years. It only has a junior minister or what we call minister of state. Furthermore, there has been no physical manifestation of the gains from the removal of subsidy. If anything, we have suffered from the illusion of money, that is, a situation where the federal and state governments get more money from the Federation Account which has had no tangible impacts in the lives of the people. The national minimum wage has been increased from N30000 to N70000, but in real terms the value of the minimum wage is less than what it was about 40 years ago. Indeed, the Nigerian Labour Congress (NLC) and other workers’ unions are gearing for a further upward review of the minimum wage barely two months after it was passed into law. More than 70% of the country’s 36 states and the federal capital territory have not even started implementing the new wage.
Every increment in salaries and wages impacts inflationary trends. In Nigeria it has been a constant case of the monetary and fiscal policies in misalignment. It’s obvious that salaries and wages are the least of the problems at the root of galloping inflation. The government is implicated with its voracious appetite to borrow in our name, and steal or spend on consumption. At a time the CBN pretends to be fighting inflation by mopping up money in circulation, bank credits to the government are experiencing a phenomenal rise. Data from the Central Bank showed that credit to the government rose by 89.9% year-on-year to hit N42.01 trillion in September, up from N22.13 trillion in the corresponding month last year. The clear implication is that the Tinubu regime relies almost exclusively on offshore loan facilities and domestic borrowings to run.
According to the report, “When government credit levels rise, it indicates that it is increasingly borrowing from the financial sector, particularly from domestic banks and other lenders. This rise in borrowing generally reflects an increase in government debt, as funds are sought for financing various operations, social programmes, and budget deficit coverage”. The surge in banks’ credit to the government is in conflict with the stated drive of this administration. In August 2023, President Tinubu had vowed that his government will break the reliance on borrowing for public spending. One year on the evidence points to the contrary. Domestic and foreign borrowings have surpassed every projection, and there’s no end in sight. When a government sucks up credit from banks other potential investors are crowded out and production is negatively impacted. So where’s the basis and expectations for economic revival?
When Tinubu spoke last year of curbing government’s appetite for credit from domestic banks it was at the inauguration of the presidential committee on public policy and tax reforms. Coincidentally, the report of that committee chaired by Taiwo Oyedele, one of the tax czars of Tinubu, which has taken the form of a bill now with the National Assembly, is facing a vigorous pushback from a section of the country. Stakeholders in the north met about two weeks ago and demanded that the tax bills be withdrawn because they will impact their people and governments negatively. Days after the North took a stand against the bills, the National Economic Council (which comprises state governors and others with the Vice President presiding recommended the withdrawal of the bills by the president. But the president promptly dismissed the advice fearing that If the demand of the North and the request of the economic council were heeded to, then the reforms in the revenue sector will stall, and the borrowing from the domestic financial market will continue apace with its deleterious effects on private sector investments, production and economic revival.
Contrast the current uncertainty as regards the reforms in the tax laws with the urgency of the task as stated by Tinubu more than one year ago. “The Committee, in the first instance, is expected to deliver a schedule of quick reforms that can be implemented within thirty days. Critical reform measures should be recommended within six months, and full implementation will take place within one calendar year“. Obviously, all the targets have been missed, so where’s the hope for the government to avoid crowding others out of the domestic credit market? The emerging picture is not made any better by the fact that the north, apparently speaking through the controversial and outspoken Senator Ali Ndume, has committed to scuttling the tax bills in parliament. Another issue we should not gloss over is the indication that the bills appeared to show a fracture in the presidency.
There’s yet another reason why the revival of the economy is not in sight apart from the proliflagacy of this regime and the admonition by the Bretton Woods institutions that we should be prepared to wait for some 15 years for a possible turn around in Nigeria’s economy, as long as we stick with the ongoing punishing prescriptions. The piggyvest saving report for 2024 which was released recently is revealing, insightful, and depressing. It said 65% of Nigerians have a monthly income of about N100,000 ($65) or less; 86% earn below N250,000 ($151) monthly: multiple income sources dropped by 10% against the corresponding period last year; and, only 3% of over 220 million Nigerians spend above N500,000 ($303) every month. The findings should be concerning to every discerning citizen. And the pathetic picture about the state of our country and its people did not end as in above.
The report goes on to say that food remains the largest expense head in spite of findings of decreased spending from 2023. Today transport ranks as the second largest expense head, overtaking utilities and bills due to the removal of petrol subsidy. In addition, the report finds that the percentage of Nigerians saving money fell from 64% last year to 57%, while 10% of those who save do so only occasionally. In like manner, emigration as a savings goal dropped precipitously from third to eighth place, due largely to the 70% devaluation of the Naira. Also, the number of Nigerians with emergency savings decreased by 5%; over two-thirds of us lack savings for unplanned expenses without incurring debt; only 15% of Nigerians increased their savings over the past year; and, 19% who had emergency savings in 2023 no longer have any. It’s important to bear this sobering data in mind as this regime engages the overdrive to assure you about their Renewed Hope. It’s not your own hope, it’s theirs and they are very few. The few who live off their government.
Any economic recovery driven by pointing fingers at slight movement in the gross domestic product (GDP) alone is an illusion. It is worse when the GDP is growing at a slower pace than the population rate. Economies are revived and grown by human beings. And gainful employment is key to increased purchasing power. Nothing currently indicates that any of the two is happening or about to happen. In addition, there must be trust between the leaders and the led as well as implicit confidence of the people on their leaders. These ingredients are not there. They are just not there. Even without the benefits of a structured study, many Nigerians do not believe their country is heading in the right direction both politically and economically. And without a buy-in, there’s only so much the present rulers can achieve. And Tinubu by his actions in appointments into critical offices has demonstrated that he does not care about carrying every part of Nigeria along. That will magnify his failure. Sadly, the regime’s attempt to deflect its nepotism in appointments left it in a bad place. It publicly admitted that two geo-political zones (south south and south east) of the six zones of the country do not matter in appointments into critical and sensitive security positions.
