By Lisa Vives, Global Information Network
NEW YORK | 4 March 2024 (IDN) — Recently-elected Nigerian President Bola Tinubu gave hope to a country in need of a miracle.
“The prospect of a better future merges with our improved capacity to create that future,” he promised a nation barely holding it together with ethnic and religious divisions, high unemployment and a heavy reliance on dwindling oil revenues.
The economy would expand by at least 6% a year, the 71-year-old former governor of Lagos pledged. Barriers to investment would be lifted, jobs created while rampant insecurity would be ended.
The first-term president faced monumental challenges, including a struggling economy with record debt, shortages of foreign exchange and fuel, a weak naira currency, nearly two-decades-high inflation, skeletal power supplies and falling oil production due to crude theft and underinvestment, inherited from past presidents.
“I have a message for our investors,” Tinubu said confidently. “Our government shall review all their complaints about multiple taxation and various anti-investment inhibitions.”
But to hold back a flood from a leaking dam, Tinubu’s promises seemed hard to fulfil —if not impossible.
Still, on his first day in office, President Tinubu went ahead and lifted the subsidy that used government funds to buy refined oil and keep gas prices low. Then, like a slow-moving tsunami, bad news rolled in and began to pick up speed.
Inflation is now running at nearly 30 per cent, food prices at 35.4 percent. The cost of imported goods has risen as the naira plummets.
Spiralling prices
“Removing subsidies was intended to improve government revenue,” said a local consultant with Financial Derivatives. “Revenues have increased, but they have not been efficiently spent. What happened to the money?”
In a country where half the population is younger than 18, spiralling prices are causing the greatest economic hardship in living memory.
Many are now questioning the wisdom of ending the subsidies without a shock-absorbing plan. Gasoline prices have more than doubled and inflation has shot up as a result, now the highest in nearly three decades, according to Nigeria’s National Bureau of Statistics.
A pledge to roll out gas-powered buses for mass transit last year also failed to materialize.
“We’re hungry,” said Joe Ajaero, president of the Nigerian Labor Congress after the union called a two-day strike against the mounting hardship and insecurity.
“Things are getting out of hand,” a shop owner complained to the Voice of America. “Prices keep soaring, the aid the government promised has not been provided”.
Even two square meals are unaffordable
“No one can afford three square meals, even two square meals in our dear country, a reporter was told. “That’s why we came out for a peaceful protest.”
Presidential candidate of the African Action Congress, Omoyele Sowore, added: “Tinubu’s thoughtless fuel subsidy removal triggered fuel scarcity and price gouging all over the country… Plus, the President failed to announce a new national minimum wage as promised from US$9.50 monthly to US$158 monthly.”
“Anyone can remove subsidies or ban something,” said Adedayo Ademuwagun, a consultant at Songhai Advisory. “But it takes real skill to plan for the big picture. How do you minimize the adversity for ordinary people?”
Meanwhile, state prosecutors have added 14 new criminal charges against Godwin Emefiele, former governor of the Central Bank of Nigeria in the most high-profile corruption case under President Tinubu to date.
Last month, Emefiele was charged with fraud, including obtaining $6.2 million in bank funds under false pretenses, all part of 20 charges levelled by prosecutors. He denies the charges.
Nigeria’s petrol subsidy saga is a lesson about the fragility of reforms in an economy pushed to the brink, said Michael Famoroti, an economist and head of intelligence at data firm Sears.
He added: “The decision to implement a market-driven pricing system for petrol before restoring confidence in the exchange rate market was an unnecessary policy risk.” [IDN-InDepthNews]
Photo source: Global Information Network
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