As ordinary Nigerians continue to grapple with the effects of President Bola Tinubu’s harsh economic decisions, business executives are smiling to the bank because the policies favour them, says The Economist.
The British weekly newspaper argued in its recent publication on September 7 that Mr Tinubu’s removal of fuel subsidy and the unification of exchange rates, which it described as a bold move, is popular with the elite businessmen who now cash in as the poor lament the rising cost of commodities.
“Ordinary folk may be grumbling about Mr Tinubu’s reforms, but investors are delighted,” the newspaper said. “The main index of stocks on the Nigerian exchange has risen by almost 30 per cent since his inauguration.”
Despite Mr Tinubu’s resolve to hit the ground running, the London-based newspaper accused his government of “indecision, poor preparation, and in-fighting” as insurgents continue to attack communities in the northern states.
“A lawyer at an investment bank whispers that if Mr Tinubu walked into her offices, everyone there would bow at his feet. Yet, the president’s initial clear-headed resolve appears to be giving way to indecision, poor preparation, and in-fighting among his team. And it has not begun to deal seriously with Nigeria’s daunting security challenges, which include a jihadist insurgency in the North,” it said.
The Economist said the timing of Mr Tinubu’s “controversial” unification of exchange rates was not auspicious enough, as it came “abruptly.”
“Changes in the foreign exchange regime have also proved controversial. The previous administration tried to keep the naira artificially strong through currency controls, which resulted in shortages of dollars and a vibrant black market. Mr Tinubu’s government scrapped this system and allowed the currency to float.
“Overnight, the naira slumped by 34 per cent against the dollar, and it has continued to slide by a total of 63 per cent. The move came so abruptly that it caused chaos in half-completed transactions. The timing also stoked anger since the devaluation was just before the start of the new school term in America and Britain when there is a surge in demand for hard currency to pay the fees of the more than 100,000 Nigerians who study abroad,” it stated.
It also predicted the rise of Nigeria’s inflation rate to 28 per cent this year, as it wonders if the president would be able “to hold his nerve or be forced to reverse course, particularly in the face of rising fuel prices “. However, it warned that “turning back would certainly deepen Nigeria’s economic malaise.”
The publication also accused the president of repaying political favours to associates and supporters in appointing his cabinet to oversee economic reforms.
“Mr Tinubu appears to have been less reform-minded when it came to belatedly filling his cabinet seats. Although he has a reputation for having built strong teams during his tenure as governor of Lagos state from 1999 to 2007, his new administration is remarkably thin on technocrats. Instead, he seems to be repaying political favours and shoring up support. No fewer than nine former state governors now have cabinet posts,” the newspaper said.
The media outfit also quoted political commentator Feyi Fawehinmi as saying, “This lack of technical expertise is a shame because Mr Tinubu’s policies are facing unexpected headwinds.
“In August, when the Central Bank published its first audited accounts since 2015, these revealed a huge hole in the country’s foreign reserves.
“More than 40 per cent of the $34bn in foreign reserves the bank held at the end of 2022 were encumbered, either as collateral for loans from foreign banks or by being tied up in forward contracts. Nigeria officially claims to have enough foreign currency to cover almost eight months of imports, but after subtracting these obligations, that falls to little more than four months, leaving it vulnerable to external shocks. “[The central bank] still does not have any firepower to anchor the market… and calm things down.”
However, the president has, in the past few weeks, visited different countries, the latest being India, to attract investors into the country to get the ailing economy back on its feet.
