Hope deferred! Scepticism trails President Tinubu’s first year in power

• Nigerians, gnashing their teeth, seek change

• Economic indices worst for president’s 1st year 

ONOME AMUGE IN LAGOS, NIGERIA

The imminent turn of the calendar to May 29th serves as a moment of reflection and commemoration in Nigeria, as citizens reflect upon the first year of President Bola Tinubu’s administration. Dubbed the administration of “renewed hope,” the last twelve months have been marred by one of the toughest economic challenges in the nation’s history, with an unprecedented currency depreciation and soaring inflation tearing through the population, pushing many Nigerians deeper into the darkness of poverty.

May 29 2023 marked the official inauguration of President Bola Tinubu as the 16th leader of Nigeria, a moment that was laden with promises of swift, decisive action. His inauguration speech resonated with his electoral manifesto to hit the ground running, and he wasted no time in implementing significant reforms, including the controversial removal of petrol subsidy and floating the national currency, naira, a move that was hoped would mitigate the turbulence in the foreign exchange market.

However, the hopes of many Nigerians were quickly dashed as the people were caught in a web of unintended consequences, struggling to navigate the economic devastation brought on by the implementation of the president’s well-intentioned yet ultimately ill-fated policies.

The economy and purchasing power of many Nigerians  were pushed to the brink, ushering in what many have since deemed the worst start to any administration in Nigeria’s post-independence history, a testament to the delicate nature of the economy and the fragility of a society dependent on petrol subsidies and a comparatively stronger currency/exchange rate.

In spite of the apparent statutory provisions within the Petroleum Industrial Act (PIA), which was supposed to ease the transition away from the petrol subsidy, the sudden scrapping of the long-standing financial measure by the Tinubu administration sent shockwaves through Nigeria’s economy, toppling the fragile equilibrium that had sustained it for so many years.

For many Nigerians, the initial optimism of renewed hope that accompanied President Tinubu’s rise to power quickly evaporated, revealing frustrations, as the nation’s economy unravelled before their very eyes.

Inflation, like a cruel tyrant, has seemingly overpowered the government’s intervention, as it held sway over every aspect of daily life, hitting 33.69 percent in April 2024, compared to 22.41 percent in May 2023 when President Tinubu assumed power. This has driven the cost of basic necessities to astronomical heights and the bleakness of the situation has become all too evident to the population, who find themselves struggling to make ends meet and provide for their families in the face of these harsh economic realities.

In the aftermath of the sudden and ill-fated subsidy removal and currency reform, the country has been plunged into a state of economic chaos, where the most basic services and commodities that people had once taken for granted, have now become elusive and out of reach. 

As the months have rolled by, the impact of the policy changes have become more evident, with the cost of electricity, medical care, and even the simplest medications skyrocketing, condemning the poor and vulnerable to a life of deprivation and despair.

In what seems like an endless chain of crises, President Tinubu’s once-lofty electoral promises now seemed like distant echoes, fading in the midst of a calamity  that is threatening to engulf the country. With the removal of the fuel subsidy, soaring taxes, and widespread hunger, it appears that the new administration had inherited a veritable Pandora’s box of economic maladies, leaving many Nigerians questioning whether the president had underperformed during his first year in office, or if the headwinds were simply too strong to steer the ship towards its intended destination.

The reality on the ground is nothing short of worrisome for tens of millions of Nigerians, yet those who are prepared to give the administration the benefit of the doubt firmly believe that Tinubu is not solely to blame for the economic and social woes that had afflicted the country.  Those in support of the government’s policies argue that the removal of the petrol subsidy and other tough decisions, while painful in the short-term, were necessary for the long-term recovery of Nigeria, much in the same way that surgery can be painful yet ultimately life-saving. To them, the situation that President Tinubu had inherited was akin to a wounded animal, mauled and left for dead by years of neglect, and it would take time, patience, and perhaps even sacrifice, for the nation to heal and thrive once again.

Vice President Kashim Shettima championed the administration’s boldness in implementing reforms, in a speech presented  at the 2024 Vanguard Economic Discourse held recently at the Civic Centre, Lagos, themed “Reforms in the Era of Global Economic Uncertainty: Whither Nigeria”.

Shettima, who was represented at the event by Tope Fasua, special adviser on economic affairs in the office of the vice president, noted that the government’s removal of petroleum subsidies and the revaluation of the naira were not mere cost-cutting measures but strategic steps towards fostering a more resilient and sustainable economy for Nigeria.

The vice president’s statement partly read: “Still ruminating over the uncertainty that defines our world today, creating considerable volatility, especially in developing nations like ours, we need to include other centrifugal factors such as insecurity, global economic downturns, external instabilities leading to slumps in commodity prices, natural disasters, global geopolitics, and a number of other occurrences that are outside of our control.

“Internally, Nigeria has a number of concerns to wrestle down, from insecurity, to economic diversification, to energy stability, food insecurity, industrialisation, productivity, high inflation, and a host of others. As I will explain below, the government of President Bola Ahmed Tinubu is valiantly tackling many of these issues in a decisive manner. We are certain that in a short while, every Nigerian will see clearly emerging, a new, fully energised nation, ready to face the world and to take an elevated space in the pantheon of nations.”

Shettima also listed potential investments secured by the administration, amounting to over $20 billion. Among the highlights of this achievement were a $14 billion investment from India and $15 million from the Netherlands, with a recent $500 million lithium development deal in Nasarawa State serving as a notable example of the administration’s efforts to draw high-profile investments to the country.

Muda Yusuf, the chief executive officer, Centre for the Promotion of Private Enterprises (CPPE), weighed in on President Tinubu’s performance during his first year in office, commending the administration’s efforts to address some of the longstanding economic imbalances that had hindered the country’s development.

Yusuf highlighted the administration’s focus on correcting “fundamental distortions” in the macroeconomic environment, specifically pointing to the highly controversial fuel subsidy issue and the challenges posed by oil theft in the Niger Delta region. He lauded these as significant accomplishments, suggesting that the Tinubu government was taking bold steps towards a more stable and prosperous economy for Nigeria.

Yusuf explained: “One of the major tasks was to rescue the economy from the brink because it was already at the brink as of the time the administration took over. Although the consequences of the macroeconomic weaknesses did not manifest under the previous administration, if we had continued on that trajectory, the consequences could have been more devastating than the cost of current reforms. So, the steps that have been taken to correct the distortions in the foreign exchange market and the petroleum downstream sector are major foundational steps.

“This is because you cannot build something on nothing. You need to correct those distortions before you can begin to do some other more visible things. Unfortunately, the reforms have come with a lot of pain that have triggered inflationary pressures, which have affected businesses in many ways. But I believe that these are difficult choices that need to be made. If you don’t have a strong foundation, you cannot have a stable superstructure. So, I think we should acknowledge those steps and efforts that have been made to correct or to manage the outcomes of those corrective reforms.”

Speaking on the fiscal front, Yusuf remarked that the revenue increases enjoyed by the federal government and subnationals are a development that could potentially help to alleviate the financial straits that the nation had been facing.

Yusuf also noted the significant implications of the Tinubu administration’s decentralisation of the power sector, a move that he suggested would spur private sector investment and ultimately lead to a substantial influx of domestic and foreign capital into the sector.

While acknowledging the progress made by the administration, the prominent analyst in the Nigerian business community, highlighted the pressing challenges that remained, notably the need to tame inflation and reduce its detrimental impact on the populace’s financial well-being. He stressed the urgency of implementing additional measures to ease the burden of living expenses for Nigerians, as well as the imperative of reviewing the government’s approach to tackling insecurity, which had become a severe and ongoing concern for the nation.

Johnson Chukwu,  the chief executive officer and the founder of Cowry Asset Management limited, addressed the hypothetical scenario of a continuation of the fuel subsidy regime, proposing that while it might have temporarily dampened inflation, it would have come at the cost of a more volatile exchange rate.

Chukwu posited that without the upward adjustment in fuel prices, the volume of fuel smuggled to neighbouring countries would have continued, significantly increasing the demand for foreign exchange in Nigeria and potentially exacerbating the country’s already delicate currency situation.

He noted further  that within the first four months of 2024, the Nigerian government had distributed an unprecedented 4.6 trillion naira to the three tiers of government, the highest allocation recorded in the nation’s history for such a short time span.

The asset management expert, in his assertion on the country’s economy if the Tinubu administration had not implemented the removal of fuel subsidy, stated: “If we are to answer a guess on what it would have been if that had been, we would have seen small stable price levels.  We would have seen a weaker reserve and we would have seen a more constrained fiscal space for the federal and state levels.”