Nigeria’s president, Bola Ahmed Tinubu, upon assuming office in May, pledged to boost the economy by at least 6% annually, lift barriers to investment, generate employment, and unify the exchange rate.
Tinubu took over an economy facing significant challenges, including high debt, shortages of foreign exchange, a weakened national currency, almost two decades of high inflation, insufficient power supply, and declining oil production due to theft and lack of investment. The ex-governor of Lagos State also announced that the expensive fuel subsidy will be removed in line with this year’s budget, starting in June.
Over six months into his administration, Tinubu has made a lot of waves with hardly any progress. Not many Nigerians expected much from his presidency, so the lack of substantial advancements does not come as a surprise.
Subsidy removal
The removal of subsidy, one of Tinubu’s audacious economic moves, drew praise from foreign investors and global financial institutions. However, the decision tripled fuel prices, amplifying the costs associated with transportation, food, and the cost of living. Critics argue that Tinubu’s execution of policies to mitigate the impact of subsidy removal has been suboptimal, leaving many who favoured the subsidy’s elimination disillusioned. Despite claims of Nigeria saving $1.2 billion post-subsidy removal, this has failed to assuage the concerns of those whose financial situations have further deteriorated. Additionally, Tinubu’s administration boasts the largest cabinet in the country since 1999, a detail that seemingly contradicts his calls for frugality during these economically challenging times.
Naira float
The move to float the Naira, intended to unify exchange rates, deviated from expectations, evolving into a managed float instead of the promised free float. Regrettably, this shift has not yielded the anticipated benefits, such as an increased availability of foreign exchange. On the contrary, it led to the devaluation of the Nigerian naira and escalated the costs associated with imported fuel. Furthermore, the foreign exchange system remains opaque and susceptible to manipulation by influential entities, reminiscent of the conditions prevailing before Tinubu assumed office.
Softening the blow
To alleviate the adverse effects of subsidy removal, Tinubu took measures such as suspending some new taxes. Furthermore, in July, he established an infrastructure fund aimed at supporting nationwide projects in transportation, education, and health. Recognizing the pivotal role of food security, Tinubu declared a state of emergency, implementing measures to ensure affordable and readily available food for all Nigerians. Additionally, his administration introduced a support fund overseen by the governors of Nigeria’s 36 states and the minister of the Federal Capital Territory. This fund is designed to procure essential items such as food and fertilizers for farmers, with the overarching goal of bolstering food production across the nation.
In the face of soaring expectations and an economy teetering on the brink, President Tinubu’s first year in office has proven to be a perplexing mix of unmet promises and exacerbated challenges. While his grand pledges upon assuming the presidency painted a rosy picture of reviving the economy, the stark reality paints a different canvas. As the nation navigates these economic challenges, the success of Tinubu’s presidency will ultimately be measured by its ability to balance necessary reforms with safeguarding the well-being of the Nigerian people.
