President Bola Tinubu’s administration assumed office on the 29th of May 2023 having been declared winner of the Nigerian 2023 presidential elections in very controversial circumstances given all the irregularities during the election that ushered him in and also the subsequent electoral tribunal judgement that affirmed his victory.
His campaign slogan for the election was ´Renewed hope’ which was a subtle admission that his predecessor who he helped get to power had failed to deliver on his ‘Change’ campaign promise during the 2015 presidential election and his subsequent ‘Next Level’ campaign promise in the 2019 presidential elections.
In fairness to President Bola Tinubu’s administration, they did inherit an economy that his predecessor had badly managed for eight years in which the country’s economy had virtually stagnated while also being plunged into recession twice in the same time period. All the economic indices were bad but his administration had their work cut out for them if they were serious about revamping the economy.
On resumption of office, the Bola Tinubu administration inherited debts of approximately N89 trillion ($193 billion), debt service ratio above 100% of revenues, inflation rate of 22%, unemployment rate of 33% and a heightened state of insecurity across the country as a result of the kid’s gloves with which the Buhari administration addressed the increased rate of banditry, kidnapping and Islamic terrorism during his administration.
Given the sordid state of the economy and the security situation in the country when the Bola Tinubu administration commenced, there were expectations that he would urgently take steps to address the economic and security challenges that the country was grappling with.
In fairness to him, he did take some steps to address the economic challenges facing the country by such actions as the removal of fuel subsidies and the floating of the Naira but the policies were not properly thought out, ill-timed and poorly implemented and as a result of this the economy was sent into a tailspin with inflation reaching an all-time high.
Although the government has acknowledged that the inflation rate in the country is high and unacceptable, the acknowledged rate was put at 34% according to the data from the National Bureau of Statistics (NBS) which is unrealistic as independent observers have calculated the inflation rate in the country to be well more than 100% given the way prices of basic commodities have tripled in the last one year within the country.
The initial two policies of the administration were designed to make more revenues available to the government, and the government revenue in Naira terms tripled as a result of the policies. The crash in the value of the Naira allowed the government to earn more Naira value for their crude oil exports which are priced in dollars while the government retained more oil earnings since they were no longer paying subsidies. The additional revenue and cost savings did not have any positive impact on the economy as most of the money was channelled towards funding profligacy in the administration.
The President set the tone for his administration when he sent a supplementary budget bill to the Senate shortly after he assumed office. In the bill, he requested an additional N30 billion for the judiciary (at a time when the election petition against his controversial election was still before the judiciary), and N70 billion was requested for the National Assembly which was used to buy exotic SUVs and other frivolities. In contrast, N5 billion was requested for a luxurious presidential yacht despite the economic crunch that Nigerians where being subjected to.
Nigerians were told to persevere and give the president more time for his policies to work but in reality, absolutely nothing was done about growing the economy or creating jobs, the government was just fixated on increasing government revenue which they were using to fund their excesses.
To raise more funds through their debt instruments, the Central Bank of Nigeria (CBN) also cumulatively raised interest rates by over 800 basis points to 26.75% thereby crowding the productive sector out of the money market in the government’s desperation to raise more funds. The subsequent effect of this is that more manufacturing companies are closing down resulting in more job losses at a time the government should be doing everything possible to stimulate productivity within the economy and create jobs.
Despite the 200% increase in Naira revenue available to the government as a result of the crash in the value of the Naira and retained revenues resulting from the subsidy removal, the administration was extremely reluctant to increase the minimum wage of workers and it took over a year of negotiations and arm twisting of government before they could finally arrive at a minimum wage of N70,000 per month which is not even enough to cover the basic needs of any individual.
While those in government were living a profligate lifestyle at the expense of the people, the already high poverty rate in the country kept increasing, the unemployment rate skyrocketed, and manufacturing companies were closing down while some multinationals were moving out of the country. Many Nigerians could no longer afford the basics of life such as feeding and transportation yet the government told them to keep persevering whilst those in government continued to indulge themselves at the expense of the people.
After one year of economic hardship under the current administration which contrary to their campaign slogan of “Renewed hope”, Nigerians are now experiencing ‘renewed hopelessness’, they are left with no options but to take to the streets to protest their grievances in the hope that the government will be forced to listen to their demands.
While the protesters have been able to get the attention of the government and gotten them scampering all over the place to prevent and intimidate them from protesting, there is no guarantee that the government understands the gravity of the situation as they responded to calls the protest with an order for rice that had been previously hoarded in government warehouses to be sold to the public at a discounted price while failing to address the more grievous issues.
While temporarily selling foodstuffs at a discounted price is a step in the right direction, it’s just a drop in the ocean compared to the problems facing the economy. Rather than their continuous resort to cosmetic measures to provide short-term relief to a very limited section of society, the government ought to take a more holistic approach to address the macroeconomic challenges facing the country while making drastic cuts in the cost of governance and channelling more resources to the productive sector of the economy to stimulate economic growth and create more jobs.
The government needs to take drastic measures to reverse the country from the ‘road to Venezuela’ that they are currently pushing the country towards to avoid future unrest. It is only when these drastic measures are taken, that the protesting youths will be convinced that the government is ready to #EndBadGovernance.
Oshobi, a development economist, management consultant, and author writes from Lagos, Nigeria.