One year in Office: Chaotic policy implementation puts Nigerians in economic woes

For many Nigerians, the last one year has been a renewed suffering as President Bola Ahmed Tinubu’s eight-point agenda fails to tackle rising headline and food inflation, unemployment, and a declining Gross Domestic Product.

From Tinubu’s speech anchored on an eight-point agenda, the country has been flooded with smokescreens of promises without results, as unemployment, inflation, GDP, and other monetary and fiscal indexes remain on the negative side.

The President’s infamous Fuel Subsidy is Gone statement on May 29 set the policy tune for the petrol subsidy removal implementation.

The fuel subsidy removal policy was implemented immediately, leading to an instant surge in the pump price of fuel from N260 to over N500 per litre.

According to the National Bureau of Statistics Petrol Watch, the average fuel price rose to N702 per litre in April 2024, compared to N254.06 in April 2023.

According to FMDQ data, Fuel Subsidy removal and foreign exchange market harmonization increased the Naira to 1339.33 per dollar.

The twice policy has counterpointed Nigeria’s headline and food inflation to record highs of 33.69 percent and 40.53 percent, respectively, in April 2024.

Rising energy costs have further worsened the economic woes for Nigerians and manufacturers.

On April 3, the Nigerian Electricity Regulatory Commission announced a 240 per cent electricity tariff increase for band A customers with at least 20 hours of power supply.

Though N18 was slashed from the tariff, Nigerians have continued to bear the impact of rising costs of goods and services.

NBS, in its monthly Food Price Watch for April 2024, said rice, beans, garri, yam, and tomatoes rose by over 130 per cent.

The development weakened Nigeria’s purchasing power.

Due to inflation, N10, N20, N50 Naira notes have been rendered useless. Apart from sweet (Tom-tom or bubble gum), which is sold for ‘two pieces N50’, inflation has doubled the depreciation of Nigeria’s currency.

CBN Monetary Interventions

Since the emergence of Olayemi Cardoso as CBN governor, he has raised Nigeria’s interest rates three times.

The country’s interest rate or Monetary Policy Rate increased to 26.25 per cent in May from 18.75 per cent before Cardoso’s emergence in September last year.

Like a broken record, the MPC repeated its interest rate hike to tame inflation.

However, the country’s inflation continues to rise untamed. Worse, from May 2023, when Nigeria’s headline inflation stood at 22.41 per cent, the country’s inflation surged to 33.69 per cent, representing a whopping 11.28 per cent inflation hike in the last year of Tinubu’s administration without a remedy.

Cardoso had said that the MPC would do everything to bring down inflation, yet rising food prices have been worsened by heightened insecurity in the middle belt, southeast, Northeast, North West, and other parts of the country.

Recall that on August 29, the Minister of Finance, Wale Edun, unveiled President Bola Ahmed Tinubu’s eight-point agenda when he presented the ‘Economic Road Map’ at the maiden Federal Executive Council meeting.

“The overriding conclusion is that we’re not where we should be, and we also examined the president’s eight-point agenda, that is, the eight priority areas for moving the Nigerian economy forward and for delivering to Nigerians, and those are food security; ending poverty, economic growth and job creation, access to capital, particularly consumer credit, inclusivity in all its dimensions, particularly as regards youths and women, improving security, improving the playing field on which people and particularly companies operate, rule of law and course, fighting corruption”, he said.

However, one year later, Nigeria’s inflation remains high, as did unemployment and underemployment, which stood at 5 per cent and 12.3 per cent in the third quarter of 2023, according to NBS.

Tinubu said in his New Year message, “The time may be rough and tough. However, our spirit must remain unbowed because tough times never last. Meanwhile, Nigeria’s economic woes have lasted for a year.

“My administration recognizes that no meaningful economic transformation can happen without a steady electricity supply. In 2024, we are moving further in our quest to restart local refining of petroleum products with Port Harcourt Refinery and the Dangote Refinery, which shall fully come on stream.

“To ensure constant food supply, security and affordability, we will step up our plan to cultivate 500,000 hectares of farmlands across the country to grow maize, rice, wheat, millet and other staple crops. We launched dry season farming with 120,000 hectares of land in Jigawa State last November under our National Wheat Development Programme.

CBN multiple interventions in the last one year

The Central Bank of Nigeria’s multiplicity of policy interventions has done little to the Country’s Monetary policy.

From the Naira development policy in June to the recent fresh draft policy for BDC operators, the apex bank has seen a mixed drill of so much effort and little results.

On a good note, the CBN said it had cleared all valid forex backlog, which stood at $7 billion.

Meanwhile CBN’s continued hike of interest rate did not impact rising inflation which jumped to 33.69 per cent in April.

The Naira crisis has persisted despite its continued interventions at the forex parallel market.

According to Bloomberg, the Naira moved from the best-performing currency from early to mid-April 2024, with a 26 per cent appreciation in weeks, to the worst-performing currency in late April.

Power Sector intangible growth

Though the Ministry of Power, Adebayo, said electricity generation increased to 5,000 megawatts from 3,500mw in the first quarter of 2024, the country’s power generation has remained inadequate for an estimated 200 million Nigerians.

The development comes amid the recent April 3 hike in electricity tariff.

This added to the infrastructural deficit, vandalization, N3 trillion legacy debt owed to gas and generation companies and liquidity shortfalls.

Though Adelabu expects 6000mw of electricity generation by 2024, the said MW needs to be revised for a country estimated at 200 million.

Oil and Gas Sector

With the passage of the Petroleum Industry Act, experts had forecast a successful oil and gas sector in Nigeria.

The only sector with three Ministers, including the President as substantive Minister, Minister of State (Oil), Heineken Lokpobiri and Minister of State (Gas), Ekperikpe Ekpo, yet oil theft has continued to strive in the Niger Delta plummeting the country’s oil revenue.

According to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), crude oil production in Nigeria increased slightly by 4.14 per cent in April 2024, reaching 1.28 million barrels per day (excluding condensate oil).

When added to condensate oil, production was 1.447 million barrels per day compared to 1.438mbpd recorded in March 2024.

The Government said that in the last year, Tinubu’s administration attracted $16 billion in investment commitments.

Meanwhile, the investment commitment is yet to materialize as of the time of filing this report.

One positive of the administration is that the revenue shared by the Federation Account Allocation Committee with federal, state, and local governments increased astronomically.

In May, FAAC revenue to the three tiers of government was N786.161 billion; however, in April 2024, it increased to N1.149.816 trillion.

Meanwhile, the bulk of the money allocated to the various levels of government has yet to be felt in terms of infrastructural development and the well-being of Nigerians.

In December last year, the 16th Emir of Kano Emirate, Lamido Sanusi urged Tinubu to carry out an audit on Nigerian National Petroleum Company Limited, NNPCL, to end the forex crisis.

Agriculture and Transportation

The Nation’s food prices and transport fair had continued to soar. This is contrary to the Government’s agenda to end food insecurity.

NBS recently reported that Nigeria’s food inflation increased to 40.53 per cent in April from 24.82 per cent in April last year.

The interventions of the Federal Government have not translated into a reduction in the cost of foodstuffs.

Experts said rising insecurity had worsened Nigeria’s food inflation as staple foods such as rice, beans, garri, yams, and others continued to rise.

Meanwhile, during a ministerial briefing on Monday, Abubakar Kyari, Minister of Agriculture and Food Security, said Tinubu’s policies in the sector have yielded nearly 60,000 jobs in one year.

Meanwhile, Nigeria’s unemployment rate rose to 5 per cent in Q3 2023. This is as food inflation surged to 40.53 per cent in April.

With worsened price hikes in Nigeria’s land, sea, and air transportation in the past year, Tinubu’s administration has not been able to address food security,

Experts’ reactions, way forward

Speaking to the DAILY POST on Monday, Mr Idakolo Gbolade, CEO of SD & D Capital Management, said the Government’s monetary and fiscal policies have been reactionary instead of systematic.

He stressed that Tinubu’s Government had failed to listen to expert advice, and its approach was not yielding results.

He noted that the CBN’s hike in interest rates has failed to bring down inflation.

Gbolade rated Tinubu’s administration’s handling of the Nation’s economy in the last one year as below average.

“The fiscal and monetary policies of the Bola Tinubu administration have been reactionary instead of systematic to the extent that the government failed to listen to experts’ opinions even when its approach is not yielding the required results.

“The monetary policies implemented by the CBN have not stemmed inflation despite continuous increase of the MPR.

“The monetary authorities have failed to listen to experts’ views that raising interest rates alone will not bring down inflationary pressures.

“The cost of doing business has tremendously increased, and many companies are packing up or sacking staff because of losses.

“On the fiscal side, after the twin policies of fuel subsidy removal and exchange rates harmonization, the government began to realize increased revenue streams, which has not transformed the economy.

“The government listed many measures, like providing CNG conversion kits and buses to ease transportation problems, and promised to ensure the refineries would be working in the first quarter of 2024 and an agricultural revolution; these promises have yet to be fulfilled.

“The economy has witnessed serious pressure from these policies, increasing untold hardships for the people. The government also showed its insensitivity to the plight of the people by allowing an electricity tariff increase and the now abandoned Cybersecurity levy.

“The Dstv was allowed to increase its rate, and others, like the telecommunications sector, are also awaiting government approval to increase tariffs.

“Although one year is a bit short in accessing this government, last year’s scorecard is below average, looking at an administration that came on the renewed hope mantra.

“I wish to advise the Bola Tinubu administration that it is not too late to begin aggressive implementation of people-oriented policies to make up for the past year’s mistake and renew the people’s hope in this government.

“A government that wants to run a trillion dollar economy must strengthen the local economy to the extent that it can compete favourably with its counterparts running in trillions of dollars”, he told DAILY POST.

Similarly, Muda Yusuf, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, said the reforms by Tinubu’s administration were necessary to pull the country out of the woods.

“Performance review of one year of the current administration requires proper contextualization. This is critical because significant legacy issues pose serious challenges, especially from a macroeconomic point of view.

“The fiscal space was very tight with the CBN assuming the role of a major financier of government operations. The CBN ways and means of financing rose to unprecedented levels in the country’s history.

“There was also a legacy of an incredibly dysfunctional foreign exchange market riddled with roundtripping and malpractices. This created major distortions in the economy.

“There was a fuel subsidy regime which created opportunities for corruption and bleeding of the country. It was unsustainable.

“The state of affairs was a major disincentive to investors in the downstream oil sector.

“The oil sector became a hotbed of corruption of huge proportions.

“The huge backlog of mature foreign exchange obligations was over 7 billion dollars.

“This created a major liquidity crisis in the economy and undermined investors’ confidence.

“Furthermore, there was vandalization of oil production facilities with incredible impunity. Even though it is a work in progress, the administration has significantly restored sanity to the oil-producing areas.

“The truth is that reforms take time to be conceptualized and executed. It could take an even longer time for the results to be felt. But the reforms were necessary to pull back the economy from the brink.

“Much has been achieved with fiscal consolidation. Government revenue had improved significantly following the reforms. There were also tax reform initiatives.

“The point to stress is that much of the first year was devoted to corrective reforms, which were painful in many instances. But the reforms were inevitable because you can’t build something on nothing.

“Fixing the economic fundamentals was crucial for economic sustainability.

“However, I believe the administration could do better about the speed of delivering mitigating measures to ease the pains of the reforms.

“There is also a need to address the volatility in the foreign exchange market. Frequent swings in the exchange rate are very detrimental to business because of the uncertainty that comes with it.

“The CBN should also address the Frequent changes in the exchange rate for import duty computation. This rate should be fixed at N1000/dollar or even less to subdue current inflationary pressures,” he told DAILY POST/

On his part, Prof Segun Ajibola, a renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers said that despite the economic hardship, the government has the wherewithal to reposition the country.

“A lot has been said about the desirability of the removal of subsidy on public goods such as fuel and electricity.

“The harmonization of the hitherto official and parallel market rates also arose from the desire to eliminate the prevailing distortions and abuses in the foreign exchange market. Such far-reaching reforms did not bring some pain to the populace in its wake.

“But it is expected to be one of the circumstances in which things must get worse before they can get better.

“The in-thing, therefore, is the compelling quantum of sacrifice that Nigerians must bear to ensure a better and better future for the generality of the people.

“Policy reforms usually come with the off-cited unintended consequences. Government officials must, therefore, be emplaced to manage such unintended consequences as they typically constitute the Achilles heel of radical policy initiatives.

“For fuel subsidy removal, efforts should be doubled up to complete the turnaround maintenance of local refineries to minimize importation of refined products. Also, more private investments in oil and gas should be encouraged.

“Oil theft through bunkering and pipeline vandalization should be tackled while environmental challenges, especially in the Niger Delta, need to be addressed.

“If done, the market forces would press down prices of refined products seamlessly, increase oil revenue, conserve foreign exchange and generate positive multiplier effects towards the growth and development of the economy as a whole.

“For the foreign exchange market, the focus should be what to do to simmer down supply rigidities and reduce the pressure occasioned by the ever-rising demand for dollar for essentials through promotion of local substitutes and gradual de-dollarisation of the lifestyles of Nigerians.

“A lot has been said about electricity tariffs. The creation of bands is unnecessary. As presently configured, banding is impossible to implement and monitor effectively. Nigerians will be positively disposed towards paying for regular and stable electricity.

“Therefore, efforts should be geared towards power generation, transmission, and distribution. Prepaid meters and allied facilities should be made available to consumers.

“All the above directly impact the level of economic welfare of the citizenry. When effectively managed, the generality of Nigerians would be the ultimate beneficiaries.

“This administration has the wherewithal to make the much desired positive changes in the lives of Nigerians.

“The foot soldiers should be up and doing by working with the leadership to make life more abundant for all and sundry.

“One can, therefore, see more fulfilling years ahead for Nigerians if the issues identified above are diligently tackled”, he told the DAILY POST.