Economy: Tinubu’s Top Eight Game Changers
By Zeenat Sambo
President Bola Ahmed Tinubu came to office with a pedigree of a first-rate accountant who also understands how the economy works and knows the best Nigerian brains from across the world to help him deliver on his vision.
Putting together a cabinet of Nigeria’s ‘First Eleven’ during his time as Lagos state governor, Tinubu laid the foundation for what the state is today as one of Africa’s best business destinations. With Lekki Free Trade Zone, Eko Atlantic, BRT and the remarkable turnaround in the state’s Internally Generated Revenue (IGR), Tinubu proved that putting together a robust, modern economy that will create jobs and useful revenue for government is his greatest asset in public service.
Expectations were therefore high when he won the February 25 presidential election and was sworn-in on May 29. Making a historic speech on that memorable day at the Eagle Square in Abuja, he didn’t disappoint many Nigerians who already knew that the subsidy regime in the downstream sector of the petroleum industry was an unsustainable scam.
1. Pronouncement on Fuel Subsidy
Indeed, the highlight of President Tinubu’s inaugural speech was his announcement that fuel subsidy which was removed by his predecessor, was gone forever.
Fuel subsidy removal has been an emotive topic of debate and discussion in Nigeria for many years due to the obvious fraud embedded in it and the fact that any moment it is removed or an attempt is made to remove it, pump price of fuel and other staple items go up.
Also Read: Subsidy: NNPCL Issues New Price to Marketers
Several Nigerian governments, including that of former Presidents Olusegun Obasanjo, Umaru Musa Yar’Adua, and Goodluck Jonathan made attempts to remove or reduce fuel subsidy. However, these efforts were often met with widespread public protests and resistance.
In January 2012, President Jonathan’s administration announced the removal of fuel subsidy which led to nationwide protests and strikes. Following the Occupy Nigeria protests, the government partially reinstated the subsidy.
It however became clearer to Nigerians in recent years that fuel subsidy was never in their interest. Rather, it is a systemic fraud whose perpetrators take advantage of the government’s failure to fix the refineries to fleece Nigerians of an average of six trillion naira every year. Six trillion naira in a country where lecturers and doctors are always on strike over poor funding! And under a President who promised student loans and no more strikes in the ivory towers, there is no way the humongous waste called fuel subsidy would be allowed to stay.
President Tinubu said – and most Nigerians agree with him – that subsidy benefitted the rich at the expense of the poor and assured that subsidy can no longer justify its ever-increasing costs in the wake of dwindling resources.
“We shall instead re-channel the funds into better investments in public infrastructure, education, health care and jobs that will materially improve the lives of millions,” he said.
Fuel subsidy removal means the government will no longer pay the difference between pump prices and the actual cost of importing fuel. Technically, it means deregulating the downstream sector completely to allow vibrant competition, in line with the provisions of the Petroleum Industry Act signed by President Muhammadu Buhari.
The way and manner President Tinubu was able to remain firm and decisive under pressure on this matter is the hallmark of competent leadership which the nation needs at this time.
Interestingly, Nigerians have also accepted fate and learnt to live with the new reality knowing full well that the high prices would still come down as soon as some local refineries begin to work and we reduce or stop important of refined products. The Dangote Refinery will start production in August while that of another business mogul, Abdulsamad Rabiu, is on the way. The Port Harcourt Refinery is also undergoing repairs and will be able to refine crude locally.
The first masterstroke of the Tinubu era is therefore the pronouncement on fuel subsidy. The emphasis that fuel subsidy is gone and gone for good is also profound and it is the best way to save the country’s economy from bleeding needlessly.
2. Shelved NLC Strike
The second masterstroke of the Tinubu era is the blatant refusal to yield to Labour to revert to the old pump price of PMS. In fact, the President took the initiative and pulled the rug off the feet of the Labour leaders by getting the Nigerian National Petroleum Company Ltd (NNPCL) to adjust the price template across the nation, which made the price jump from N195 per liter to about N500 depending on the city.
The NLC and its allies therefore threatened to embark on a nationwide, total strike. While previous administrations would have allowed them to ground the economy for weeks before bowing to their demands, the Tinubu government allowed none. The master gamesman celled President Tinubu had his way on all fronts, eating his cake and having it.
While he used the stick approach by taking their case before the National Industrial Court which declared the proposed strike illegal, he also dangled carrots before them by meeting with them and telling them that the issue of reversing the policy or embarking on strike should not be on the table, that rather, how to give palliatives to Nigerians, increase revenue going to states and adjust the minimum wage should be explored.
The Labour leaders bowed to superior argument and they agreed to forget about the needless strike on account of the depth of the facts, figures and vision presented by Tinubu’s team.
To show how serious he is to ensure those measures are in place, the President discussed the issue with the governors when he met them. He told the state chief executives that no matter the necessary policies that must be put in place to rescue the economy, the poor people must be allowed to breathe.
For the first time in a long period, it looks like Nigeria is in safe and steady hands.
3. Shelved Health Workers’ Strike
Government is a continuum. A new leadership inherits assets and liabilities of the previous one. So President Tinubu can’t lament the fact that he inherited unresolved problems between the federal government and health workers’ union.
Rather than lament or issue blames, President Tinubu got on the job, met with the union’s leadership and promised to look into their grievances and got them to suspend the strike. That is leadership. If this was last year or the year before, the health workers would have been allowed to shut the hospitals for weeks and subject Nigerians to avoidable deaths. After all that, a Minister would have met them and arrogantly told them to leave the country if they want, that we have have enough doctors and nurses.
But this President doesn’t delegate sensitive national assignments. He gets it done himself for optimum results.
This is a testament to Tinubu’s astuteness, shrewdness and ruthless efficiency.
4. Plan to Unify Exchange Rates
The plan to unify Nigeria’s exchange rate was one of the major things highlighted by President Tinubu in his inaugural address. The policy is expected to address inflation and strengthen naira against the dollar in the long run.
Already, Tinubu’s emergence as President-elect caused positive trading inflows in the country’s equity market. At that time, Nigerian bonds rose significantly, posting some of the best gains in emerging markets, according to Bloomberg.
The Naira also appreciated against the US dollar by 1.32percent following his win.
Also on the 30th of May, a day after his inauguration, Nigeria’s naira bonds accelerated after his plan to unify exchange rates and sustain the fuel subsidy removal policy was announced.
Tinubu assured that his administration would work to abolish Nigeria’s multiple exchange rates regime to further stabilise the Naira and make it competitive.
5. Crash of JetA1 and Gas Prices
Amidst subsidy removal announcement, the price of aviation fuel known as Jet A1 has been on a downward slide. Reports indicated that from over N800 per litre, aviation fuel crashed to N650 in Lagos and N680 in Abuja from 1st of June while slightly higher in Kano, Maiduguri and Port Harcourt. This is the same JetA1 which almost hit N1,000 per litre in 2022.
Unlike fuel price which soared due to subsidy removal, the decline in aviation fuel price was a pleasant surprise to operators. Most marketers told ECONOMIC CONFIDENTIAL that the crash in price could be due to the forces of demand and supply and some spontaneous reactions to developments in the downstream sector of the petroleum industry.
Obviously, the President’s pronouncement on fuel subsidy has been a huge blessing to the airline operators and if the momentum is sustained, it could lead to multiplier reduction in air fare and that means a blessing for air travellers.
Similarly, price of cooking gas has also dropped, with 12.5 kg of the commodity crashing from about N14,000 to N6,950 in Lagos and about N8,000 in other states as at 6th of June 2023. The commodity now sells at about N700 to N800 per kg as against over N1,000 in mid-May 2023.
The fall in prices of these commodities has reinforced a positive outlook on the economy and even though it is early days, Nigerians can genuinely hope for a better future under this new dispensation.
6. Signing of Electricity Bill
Another euphoric policy for many Nigerians was the signing of the Electricity Reform Bill, which authorises states, companies and individuals to generate, transmit and distribute electricity in Nigeria.
The new electricity law assented to by the President repeals the Electric Power Sector Reform Act (EPSRA) which was signed by President Olusegun Obasanjo in 2005.
The new act consolidates all legislations dealing with the electricity supply industry to provide an omnibus and ideal institutional framework to guide the post-privatisation phase of the Nigerian Electricity Supply Industry and encourage private sector investments.
The passage means that anyone may construct, own, or operate an undertaking for generating electricity not exceeding one megawatt in aggregate at a site, or an undertaking for distribution of electricity with a capacity not exceeding 100 kilowatts in aggregate at a site, or such other capacity as the Commission may determine from time to time, without a licence.
As much as the Act empowers states, companies, and individuals to generate, transmit and distribute electricity, it also allows issuance of licenses to private investors who can operate mini-grids and power plants within the state.
This caused a phenomenal excitement on social media as Nigerians optimistically view the bill as a solution to the blackout that has plagued the nation for years.
7 Suspension of CBN Governor
Amidst the excitement generated by the new Electricity Bill, the news of Godwin Emefiele’s suspension from the Central Bank of Nigeria (CBN) sparked mass euphoria in mainstream and social media.
The president’s decision has been hailed by Nigerians as his best move since his inauguration.
The Office of the Secretary to the Government of the Federation revealed that the suspension was part of the ongoing investigation into his office and planned reforms in the financial sector.
Subsequently, the suspension followed by an arrest by the Department of State Services (DSS) over his alleged terrorism financing and other financial atrocities.
Some of the yet-to-be-proven allegations by the DSS against Emefiele include; terrorism financing, mismanagement of Nigeria’s social investment program (NISRAL) and the Anchor Borrowers Scheme, money laundering, round tripping, criminal conspiracy to divert government resources among others.
The CBN governor had made an audacious attempt to seek the highest office in the land without resigning his position. After the ruling party forms were bought for him, he also shocked many observers by going to court to enforce his rights to join partisan politics without resigning as the apex bank governor!
Emefiele, who was appointed the apex bank’s governor on June 4, 2014, was also at the centre of a storm in January 2023 when security operatives attempted to arrest him over allegations of terrorism financing and economic crimes.
Although Section 11 of the CBN Act, 2007 gives the President power to terminate the appointment of the apex bank governor with the backing of lawmakers but his suspension was a temporary move meant for him to establish his innocence or face prosecution.
Emefiele and Tinubu’s men had a near face-off in the buildup to the elections especially with the sadistic cash confiscation policy the latter introduced which subjected innocent Nigerians to untold hardship and avoidable deaths. Some of the governors had to sue the CBN up to Supreme Court while Tinubu himself criticised the policy in his campaign outings.
The belief in Tinubu’s circle was that the naira redesign policy and the indecent haste with which it was implemented was targeted at making the APC candidate lose the presidential election. Many therefore believe Emefiele would be on his way out of office immediately Tinubu was sworn-in. He however lasted in office for over a week before the hammer finally landed on him.
Away from the politics of Emefiele’s travails, as the Deputy Governor (Operations Directorate) Folashodun Shonubi, takes over as Acting Governor, Nigerians are hoping that he would reverse Emefiele’s poor polices that have worsened inflation, affected the exchange rate and rendered poor Nigerians poorer.
8. Signing of Students’ Loan Bill
Another game-changing decision of the President was the signing of the Students’ loan bill, which provides for interest-free loans to indigent Nigerian students.
The bill, which was sponsored by then Speaker of the House of Representatives, Femi Gbajabiamila, was titled ‘A Bill for an Act to provide for easy access to higher education for Nigerians through an interest-free loan from the Nigerian Education Bank established in this Act to provide education for Nigerians and other purposes connected thereto.’
This is another case of promise kept by the President. He had promised during the electioneering campaign that Nigerian students whose parents can’t afford their school fees would get loans from his administration.
President Tinubu has within just two weeks in office proven to be a no-nonsense leader who is ready to brave the odds and do the needful to reset not just the economy but the entire country in all ramifications. It is important for the President to appoint square pegs in square holes into his cabinet so they can help him to sustain this momentum.
The President has started well and has to finish well.
