Having been declared winner of the February 25 presidential election, Nigerians are anxiously waiting for the president-elect’s much-touted private sector experience and ingenuity to tackle some of the economic challenges currently pushing Nigeria into another episode of recession, Festus Akanbi writes
The battle for the just concluded 2023 presidential election ended with the emergence of the All Progressives Congress (APC) presidential candidate, Bola Ahmed Tinubu as the winner on Wednesday morning.
While other aggrieved candidates have vowed to go to court, stakeholders in the Nigerian economy said while Tinubu and his party are bracing up for the impending legal battles, Nigerians will keep their eyes on the President-elect to hit the ground running.
The argument is that having traversed the length and breadth of the country, where messages of hope and assurance of quick fixing of the prevailing economic challenges were given by Tinubu, one can’t blame the citizens for being in a hurry for solutions to the myriads of economic difficulties which have driven a larger proportion of them into poverty.
Therefore, they raised some issues bordering on low-hanging fruits in the economic space and challenges that they feel need to be urgently addressed once Tinubu becomes the next President.
On what he would do within his first 100 days if elected, Tinubu said, during his campaigns, that he would hit the ground running by selecting a team of technocrats to help him run the country as he did when he was governor. He said he would prioritise national security, economy, agriculture, power, oil and gas, transportation, and education if elected in the 2023 general election.
Tinubu also outlined policy options for healthcare, the digital economy, women empowerment, judicial reform, federalism/decentralisation of power, and foreign policy.
Fuel Subsidy Removal
On what to do with the issue of fuel subsidy, Tinubu said: “I believe we must remove petrol subsidy immediately. It has outlived its shelf life as a public good. We will neither subsidise neighbouring countries’ fuel consumption nor allow a select few to reap windfall profits and hoard products.”
And in line with the popular narrative, the President-elect had said, “And the subsidy money will not be ‘saved’ because that means elimination from the economy. Instead, we will redirect the funds into public infrastructure, transportation, affordable housing, education, and health, strengthening the social safety net for the poorest poor, thus averting increased security challenges.”
Analysts said his ability to walk the talk would be one of the first measures to know if he has what it takes to implement policies he advanced during his campaigns or not.
Calls for the end of the subsidy regime have been coming from home and abroad. The World Bank and the International Monetary Fund had repeatedly advised Nigeria to do away with the subsidy programme, which put pressure on revenue and heightened tension in the nation’s foreign exchange market.
The IMF, for instance, stressed the need for bold fiscal reforms to create needed policy space, put public debt on sound footing, and reduce vulnerabilities.
It urged the authorities to deliver their commitment to remove fuel subsidies by mid-2023 and increase well-targeted social spending.”
Despite rising oil prices, the IMF said the government’s fiscal deficit is estimated to have widened further in 2022, mainly due to high fuel subsidy costs.
And according to the current Minister of Finance, Zainab Ahmed, the government needs to exit the fuel subsidy regime because it is a significant contributor to revenue loss.
“You can look at it in two ways; the payments made are revenues that would have come to the government but don’t because they are being spent on fuel subsidies,” she stated, adding that Nigeria borrows to buy the products. Analysts said it would be politically challenging to scrap the popular price cap that residents and small small businesses use to run cars and power generators in the energy-deficient country.
Revenue Generation
Perhaps, one of the central planks upon which the campaign of Tinubu rested was his impressive revenue credential which he earned when he was governor of Lagos State between 1999 and 2007. He has continued to boast of growing Lagos’ internally generated revenue from “a paltry N600 million monthly, which has now grown to N51 billion.”
Analysts said having secured victory at the poll; the onus is on him to unveil his plans to redeem Nigeria from its current revenue challenges.
Tinubu is expected to give marching orders to revenue agencies like the Federal Inland Revenue Service (FIRS), Nigerian Customs Service, and Nigerian Ports Authority, among others.
Revenue generation is a major constraint of the federal government, negatively impacting the country’s debt situation. Analysts believe the systemic resource mobilisation has been compounded by recent economic recessions, adding that the most viable solution to the country’s challenge remained to grow revenues and plug all leakages, as cutting expenditure was not a viable option.
Today, Nigeria’s non-oil sector accounts for about 93.67 per cent of the GDP, while the oil sector accounts for 6.63 per cent. Still, according to National Bureau of Statistics data, the oil sector accounts for over 95 percent of export earnings.
Rising Debt Profile
Although Bola Tinubu once said he would not borrow dollars from China and other lenders to build infrastructure that will stimulate growth and improve the average Nigerian’s standard of living, analysts say his body language suggests he is not entirely opposed to borrowing to fund the economy.
They maintained that Tinubu, who was quoted as saying that a deficit budget is not inherently wrong since, according to him, all modern economies run it, explained, “A budget deficit is not necessarily bad. Look at the Japanese example with high government borrowing and low inflation. The real issue is whether deficit spending is productive or not unproductive. Deficit spending is a compound negative, especially if backed by excessive foreign currency borrowing. This is not classroom economics, but it is the lesson of the real economic history of nations,” he said.
However, his message is coming at a time when the country is steep in debt, as President Muhammadu Buhari’s administration cannot balance its revenue and expenditure. The government relies on borrowing to finance its budget to bridge the gap.
As explained by the Director-General of the Debt Management Office (DMO), Patience Oniha, Nigeria’s debt was already N77 trillion as of September 2022. The National Assembly refused to approve the planned securitisation of the CBN’s ways and means, which would have added to the public debt,” she stated.
Crude Oil Theft
One of the dangers to the nation’s revenue generation is crude oil theft. The president-elect is not unmindful of the danger this poses to the nation’s economy. During his campaigns, Tinubu promised to ensure maximum technology deployment to curtail oil theft in the polity.
Speaking during a Townhall meeting with Organised Labour at the Chida Hotel Conference Centre in Abuja, he explained that the measure would monitor, protect pipelines and block theft of oil resources in the country.
Tinubu also condemned those receiving stolen crude, saying there won’t be a supplier if there is no receiver. He also stated that his administration would have a zero-tolerance for corruption by strengthening anti-corruption agencies. He urged Organised Labour to support him in the 2023 presidential election based on his track record in public service.
Crude oil theft has gone on in Nigeria for years. Unfortunately, not much has been done to stem its tide. This apathy is difficult to understand for a country that depends almost entirely on this economic good for its sustenance.
Nigeria currently faces an existential threat. Crude oil is the mainstay of the economy. Experts say that Nigeria loses about 600,000 barrels of crude oil daily to oil thieves. The Nigerian National Petroleum Company Limited (NNPC) admits losses of 470,000 barrels daily. While this discrepancy exists, what is certain is that much of our crude oil is stolen daily.
The federal government recently engaged the services of Tantita Security Services, led by former militant leader Government Ekpemepulo aka Tompolo, to protect oil pipelines. Although Tinubu has yet to speak on whether or not he would retain the services of Tantita Security Services, the war against economic saboteurs must be fought from all angles.
Naira Redesign/Cash Withdrawal Limit
At the height of the country’s current cash crisis, Tinubu claimed that the withdrawal policy was implemented to thwart his presidential ambition.
Some of his close associates said the policy would be reversed once Tinubu won the presidency. Tinubu also promised to deal with the challenge of multiple foreign exchanges (FX) rates if elected President.
As Tinubu engages challengers to his victory in court in days to come, one also expects him to brace up for the challenges ahead and his promise to turn the nation’s economy around.
