Nigeria: EndlessHope versusEconomic Growth and Development

By Marcel Okeke

Exactly eighteen months into his four-year term, President Bola Ahmed Tinubu had his first live media chat on Monday, December 23, 2024, during which he majorly offered Nigerians “hope for a new dawn” The President insisted that his administration and its policies were on the right path, stressing that he had no regrets whatsoever regarding the “fuel subsidy is gone” pronouncement during his inauguration on May 29, 2023.

“I don’t have any regrets whatsoever removing fuel subsidy. It is necessary. We cannot spend our future generations’ investment. We were not investing. We were just deceiving ourselves. The reforms are necessary,” President Tinubu said.He rather asked Nigerians to believe in his government, saying that the administration is on the right path and marks “a glorious dawn” for Nigeria.

Speaking further in the media chat, held in Lagos, Tinubu said his government’s reforms, though coming with much unintended painful consequences, were not intended to inflict pain on Nigerians, but to lead the country to the glorious future that the people crave.

But it is either Mr. President is not aware of the full expanse and depth of the disruption or collateral damage that the fuel subsidy removal and its kindred policies had unleashed on Nigerians or that he was deliberately putting things euphemistically. Economic policies are for the wellbeing or improvement of quality of life and nothing else. Any economic policy that makes the living condition of the people worse-off is an aberration; and an anathema to human development and progress.

Did Mr. President consider his policy sequencing from day one? Could the fuel subsidy removal have waited for a month or months longer? Could the subsidy removal have been done in ‘tranches’? Could the cabal or ‘crooks’ behind the fuel subsidy ‘scam’ that was draining the Nigerian economy have been combed out and made to face the music?

Must the fuel subsidy removal be followed up with full Naira floatation? Were there options to the full floatation of the local currency? Could have Nigeria adopted any other foreign exchange (FX) market management system other than going full blast with currency floatation?

As fuel subsidy was removed, what measures did the government put in place to deal with its upshot: both good and bad?  Why did the government not embark on expedited local refineries’ repairs and re-streaming? Or fast-track incentivizing private sector construction and running of refineries? Why were private investors in refineries being frustrated (as exemplified by Dangote Refinery imbroglio)?

Why did the government opt to embark on massive licensing of importers of refined petroleum products (particularly premium motor spirit, PMS)? Was massive fuel (PMS) importation not gulping a huge proportion of our scarce FX? Why should Nigeria (with so much crude oil production) depend almost one hundred per cent on imported refined products?

With the full floatation of the Naira, and the resultant collapse of the local currency vis-à-vis the dollar and others, what measures did the monetary authorities put in place to contain the trend? Has the massive push-up of the Monetary Policy Rate (MPR), from about 18% in June 2023 to 27.75% as of today solved anything? As claimed by the Central Bank of Nigeria (CBN) that it is raising the MPR to fight inflation, has the hyperinflationary trend been tamed?

From 22.79% level of the headline inflation in June 2023, the figure hit 28.92% at end-December 2023. It rose to 29.90% in January 2024; hit 34.19% in June 2024, and stood at 34.60% at end-November 2024. And most likely to close the year at 35%.

In the face of this worrisome inflationary trend, has the CBN considered the collateral damage the very high interest regime it induced in the economy is causing operators in the real sector? Credit facilities have since gone beyond the reach of the average operator in the productive sector. Have most Small, Medium-sized Enterprises (SMEs) not gone out of business, because of high inflationary pressure and lack of access to finance?

Has the ‘hot money’ attracted via foreign portfolio investment (FPI) because of the high interest environment (giving high returns) done the economy any appreciable good? Has the rising FPI provided the CBN with the much needed FX to stabilize the market, and the economy?

On the fiscal side, is President Tinubu’s pronouncement on the Tax Reform Bills now before the National Assembly, not a bombshell? Does it not smack of arrogance or insensitivity for Mr. President to dismiss all the considerations and contestations about the Bills? In a rare occurrence, did the National Economic Council (headed by the Vive President) not call for the withdrawal of the Bills, for further negotiations and wider consultations by stakeholders?

Did the body of Nigeria Governors’ Forum (NGF) not also call for the subjection of the Bills to wider consultations? Did the Northern Governors’ Forum, and various geo-political and social interest groups not stand for more deliberations on the Bills, before being submitted for Legislative action?

Has Mr. President’s pronouncement during the maiden media chat now foreclosed all these suggestions and pleas regarding the tax bills? Same goes for the borrowing spree that Mr. President ‘justified’ and insists on more borrowing, going forward. In this regard, has the utilization of borrowed money leapfrogged Nigeria’s economic development at any point in time? Has there been any appreciable infrastructural facelift at any time resulting from the deployment of loans (especially foreign ones)?

If anything, Nigeria’s economic history shows that the more foreign loans the country takes, the more it plunges into external debt trap. Has this trend changed? The answer is NO!In point of fact, the hyperinflationary environment as well as the crashing Naira in the FX market have combined to push up the ‘volume’ and pains of such debts: in terms of servicing and repayment.

In recent times, has anybody noticed the tight conditions under which foreign loans (especially via dollar bonds) are being extended to Nigeria? Will an intertemporal and/or peer comparison not show the scary high interest (coupon) rate at which those foreign loans are being given to Nigeria? Yes, loans (foreign or local) per se, are not bad; but does Nigeria’s history justify the nation taking humongous (foreign) loans?

In all, did Mr. President’s presentations during the media chat give any realizable hope for the turnaround of the Nigerian economy any soon? The President said: “I seek your understanding. I understand the trouble you have been through: the economic problems. It is just 18 months that I’ve taken reign. We will maintain focus. Let’s believe in ourselves and our country. Tomorrow will bring a glorious dawn.”

But, the question is: how soon will this ‘glorious dawn’ be? Are there timelines for the stages of the ‘expected’ improvement in the wellbeing of Nigerians? Or, is an endless hope the same as real economic growth and development? Right now, Nigerians are at the nadir of hope!

• The author, Okeke, a practicing Economist, Business Strategist, Sustainability expert and ex-Chief Economist of Zenith Bank Plc, lives in Lekki, Lagos. He can be reached via: obioraokeke2000@yahoo.com (08033075697) SMS only