REALITY is piercing the optimism of multilateral agencies and domestic stakeholders hoping that President Bola Tinubu’s adoption of some of their standard prescriptions would quickly revive the economy. The IMF revised its earlier growth forecast for Nigeria for 2023 downwards from 3.2 per cent to 2.9 per cent, while the World Bank voiced fresh concern over rising debt. Among business operators, apprehension is mounting as adversity threatens many more enterprises.
Amid the uncertainties, the administration remains unsteady. Beyond broad statements of intent, no coherent economic plan has emerged. In the meantime, the economy worsens. Western agencies, and the organised private sector that applauded Tinubu’s stoppage of petrol subsidy, and the unification of the naira exchange rates are squirming.
The influential Financial Times of London admitted last week that his touted economic plans are not moving according to plan. While still praising the subsidy removal and the “shifting towards a market-driven exchange rate from the previously overvalued currency,” FT said, “but four months into his (Tinubu’s) presidency, there are signs of things going awry.”
That is putting it mildly: the naira plunged further at the parallel market midweek to exchange at N1,025 to the US$1; by weekend, it was N1,040-N1,050 to $1. In the energy sector, independent marketers pulled back from importing petrol, citing excessive costs fuelled by the high exchange rates and higher crude oil prices in the international market. Effectively, this restored the Nigerian National Petroleum Company Limited’s monopoly on imports. Chaos and subsidy may bounce back.
Simultaneously, prices of diesel, kerosene, lubricants, and industrial and cooking gas spiked geometrically. Electricity tariff has gone up. Unemployment is rising, far above the reality-denying 4.1 per cent posted recently by the National Bureau of Statistics.
Inflation hit 25.8 per cent in September. OPS organs are warning of more job losses, and factory closures. The Nigerian Association of Small and Medium Enterprises said a combination of forex scarcity, energy prices, dumping of foreign products and others would kill SMEs. Inability to access forex, the Airline Operators of Nigeria lamented, guarantees more shutdowns.
Tinubu needs a master plan. Nigerians and businesses are distressed. A World Bank estimate of 7.1 million more Nigerians sliding into poverty after the subsidy removal is now feared to top 10 million persons.
As The PUNCH had constantly canvassed, FT, IMF and others now agree that Tinubu should stop announcing policies without plans for their implementation and handling their fallout. His ministers are separately proclaiming plans, but no discernible overall coordinated plan weaving them together has emerged. While the administration touts, and cherry-picks some free market policies, it ignores the critical ‘low-hanging fruits.’
It is continuing the self-defeating template of wasting public funds on the four comatose public refineries, and the Ajaokuta Steel Company instead of immediate, transparent, and corruption-free privatisation. The evidence is crystal clear; reforms taken in isolation without simultaneous coordinated plans targeted at pulling down the inherent binding constraints arresting the economy will only deliver hardship.
To make his free-market actions deliver desired impact, Tinubu must immediately re-launch the privatisation programme; through outright asset sales, concessions and unfettering critical sectors like railways, mining and ports and airports. He should enforce existing, and roll out more executive orders liberalising all economic sectors.
Institutions must be strengthened to deliver on their mandates. The Central Bank of Nigeria needs to radically retool its monetary policies to manage the naira, and tame interest and inflation rates. Without effective regulation of the money deposit banks and the bureaux de change, and tackling corruption, limited reforms will always backfire.
The NNPC requires total restructuring into a lean, efficient holding company and an investment subsidiary.
Tinubu should devise and implement a pragmatic master plan post-haste or have the economy collapse on his watch.
