Economic analysts have expressed concerns about the impact of multiple reforms implemented by President Bola Tinubu‘s administration, emphasising the need for effective measures to mitigate the effects on citizens and businesses.
On May 29, 2023, Tinubu was sworn in as the president — on
the same day, he announced the end of petrol subsidy.
A few days later, the Central Bank of Nigeria (CBN) announced the unification of
all segments of the foreign exchange (FX) market, collapsing them into the
investors and exporters (I&E) window.
Also, on April 3, the Nigerian Electricity Regulatory
Commission (NERC) approved an increase in electricity tariff for customers
under the Band A classification.
The commission said customers under the category, who
receive 20 hours of electricity supply daily, would begin to pay N225 per
kilowatt (kW) from April 3 — up from N66.
While these reforms aim to drive economic progress, they
have resulted in significant economic hardships for businesses and households.
‘INEVITABLE REFORMS’
| ’40/100 PERFORMANCE’
Muda Yusuf, the chief executive officer of the Centre for
the Promotion of Private Enterprise (CPPE), said the reforms introduced by the
current administration are inevitable for progress.
“The point of stress is that much of the first year was
devoted to corrective reforms which were in many instances also painful,” Yusuf
said.
“But the reforms were inevitable because you can’t build
something on nothing. Fixing the economic fundamentals was crucial for economic
sustainability.
“However, I believe the administration could do better with
regards to the speed of delivering mitigating measures to ease the pains of the
reforms.”
Yusuf further said the administration has made significant
progress in restoring some sanity to the oil-producing areas — even though it
is a work in progress.
“The truth is that reforms take time to be conceptualised
and executed. It could take even longer for the results to be felt. But my view is that the reforms were
necessary to pull back the economy from the brink,” he said.
“Much has been achieved with fiscal consolidation.
Government revenue had improved significantly following the reforms. There were
also tax reform initiatives.”
Charles Abuede, the research lead at Cowry Asset Management,
said despite these reforms there has been “little or no improvement in the
security architecture, rising food and commodity prices, amongst others”.
“The present
administration has enacted various reforms since assumption of office till
today and for the record, we have local and international businesses as well as
consumers feeling the brunt,” Abuede said.
“In one year, we have seen the exchange take a different
turn and the effects are what is obtainable today.”
Also, Ayokunle Olubunmi, head of financial institutions
ratings at Agusto & Co, said there were some high points and low points to
the reforms.
According to Olubunmi, the reforms could be seen as the
administration laying the foundation – even though it might be hard for
Nigerians.
“I know there are a
lot of downsides. The exchange rate has been volatile, market devaluation we
saw last year. If you check
insecurity, it doesn’t seem to be
getting better. Right now we can see that of food inflation. Farmers are
finding it difficult to go to the farms and inflation is also increasing,” he
said
“The power sector too, the situation seems to be worse. We
get to hear almost every time that our system collapses.
“Another issue has to
do with the following various policy reversals. Announcing something today and
changing it tomorrow. Examples are cybersecurity, the return of the UAE visas
and Emirates Airlines. It got to a point people had to start fact checking
messages from the president.
“I think it is too early to properly judge them. There are
some good parts of what they’ve done and then some down paths toward what
they’ve not done properly.”
Olubunmi and Abuede rated the performance of Tinubu’s
administration 40 out of 100.
‘FG SHOULD FOCUS ON
SECURITY, AGRICULTURE, SERVICES SECTOR’
Speaking further on sectoral growth, Olubunmi said he
believes the sector that seems to be getting a lot of attention is the
financial sector.
“Specifically, I think this is everyone’s critique of the
government. Everyone agrees that the CBN seems to be the shining star and where
the administration seems to be focused on,” he said.
“More so, I don’t think communication is good enough. What
they are doing is that they are not communicating well.”
Olubunmi also said agriculture and security lacked
attention, especially to slow down food inflation.
On his part, Abuede said all sectors of the economy have
been functioning just like we saw from the last administration.
However, he believes the services sector should be targeted
for more economic growth.
“A look into the latest GDP report for Q1 2024, we can see
the continued growth in the services sector which still has more room for
growth if enough investment can be channelled there,” Abuede said.
“So, there’s really no sector which saw the most benefits as
we can literally not get hands on FDI inflow into the sectors. Instead,
decline.”
‘CONSISTENCY MOVING
FORWARD TO GROW ECONOMY’
On what areas to focus on moving forward for economic growth
and achieving the $1 trillion economy goal, Abuede said the government’s focus
should be encompassing and holistic to ensure all-round sustainable growth.
“Areas needing major attention include security and defence,
agriculture, increase in crude oil production, trade and investment, mining and
power,” he said.
Abuede added that achieving a $1 trillion economy is
“ambitious”.
“I think we need to experience a high growth rate annually
to achieve it. Nigeria at the moment is growing at an average pace of two
percent,” he said.
“But to achieve sustainable growth, Nigeria needs to grow at
a minimum average of 7-10 percent annually for 10 years or to grow at 5-6
percent and exhibit strong momentum to achieve a near figure.
“Remember, Nigeria currently sits third on the largest
economies in Africa behind Egypt and South Africa.”
On his part, Yusuf said he believes the administration could
do better with regard to the speed of delivering mitigating measures to ease
the pains of the reforms.
“There is also a need to address the volatility in the
foreign exchange market. Frequent swings in the exchange rate are very
detrimental to business because of the uncertainty that comes with it,” he
said.
Yusuf added CBN should also address the frequent changes in
exchange rates for import duty computation.
“This rate should actually be fixed at N1000/$ or even less
to subdue current inflationary pressures,” he said.
Corroborating their points, Olubunmi said the power sector,
insecurity and communication should be focused on.
“If the government can get those three things right because
I believe those three things are like foundations that need to be fixed before
we can grow the economy.”
In addition, he said achieving a $1 trillion economy
projection is not feasible in the first tenure of Tinubu’s administration
unless something changes drastically.
Advertise on NigerianEye.com to reach thousands of our daily users
No comments
Post a Comment
Kindly drop a comment below.
(Comments are moderated. Clean comments will be approved immediately)
Advert Enquires - Reach out to us at NigerianEye@gmail.com