President Bola Ahmed Tinubu’s nationwide speech on July 31, 2023, recognised the inauspicious impact of his fiscal and monetary policies on Nigerians. The Tide appreciates his efforts in engaging with citizens’ concerns and comprehending their predicament. We encourage him to sustain a firm commitment to interactive engagement as an inherent feature of his government.
In his nationwide broadcast, the President addressed Nigerians’ concerns regarding the challenging economic situation directly resulting from his government’s recent policies. He empathised with the citizens and justified the necessity of the tough decisions made for the benefit of the country.
However, the speech concentrated on populist grandiosity but disregarded pragmatic measures to forestall subsidy removal and exchange rate flop. Interventions embodied N75billion for 75 enterprises, N125billion for MSMEs, the freeing of 200,000 metric tons of grains, N200 billion for cultivation, and N100billion for gas-powered buses. But Nigerians require more concrete measures to effectively palliate the impact.
For many Nigerians, the broadcast is uninspiring as it failed to tackle essential issues dissembling their standard of living and businesses. For instance, the President failed to cite primal solutions such as local refining of petroleum products, concrete plans for mass transit systems, lifting the employment embargo, or affording a well-defined timeline for raising remunerations and salaries, among others.
Undoubtedly, Tinubu’s policies have caused inflation, particularly impacting small-scale businesses and industries dependent on petrol. This has a disconfirming impact on commercial-grade motorcyclists and local barbers. Major enterprises reliant on the dollar face high exchange rates, ensuing in significantly increased prices for crucial goods, and placing a strain on the average Nigerian’s finances.
The President accused some people of embezzling subsidy funds, but surprisingly no action has been taken to recover the stolen money or penalise the corrupt. The Nigeria Customs Service, the Economic and Financial Crimes Commission, and the Nigeria Security and Civil Defence Corps were established to combat petroleum smuggling and protect the subsidy scheme, but their inactivity has contributed to its collapse. Accountability for officials and those accepting funds without fulfilling obligations is needed.
The palliative measures announced by Mr. President are unrealistic and cannot furnish temporary relief or a lasting solution to Nigeria’s rising living expenses. The authorities must re-evaluate the monetary and fiscal policies, which have caused the disorderly economic environment. A sustainable approach to reforms must be enforced by the Tinubu administration to harness the economic issues.
Despite the President’s promise that the Port Harcourt refinery would operate in December in a meeting with the NLC and TUC leadership to forfend the last protest against subsidy removal, we insist that the refinery solely cannot satisfy the fuel demands of Nigerians. Moreover, Tinubu failed to mention when the other refineries would be operative.
The operational date of the Port Harcourt refinery has been uncertain consequent upon multiple timelines presented in the past. Former Minister of State for Petroleum, Timipre Sylva, pledged that it would be running by December last year, but another date of September 2022 was afterwards given. It is mandatory for all the refineries to be operable by the end of the year.
Also in the broadcast, the President mentioned billions of naira budgeted for dissimilar palliatives, loans for students, and gratuitous buses, and how they had preserved over N1 trillion from subsidy removal within a month. We opine that Tinubu and his team should invest the proceeds in the refurbishment of all the refineries in the country to deal with the subsidy question.
Regrettably, little interest has been demonstrated by the Federal Government in revamping the nation’s refineries. The President’s proposed solutions to the country’s economic challenges are ill-conceived. His address lacks the necessary panacea for Nigeria’s current economic conditions. Hence, the problems, inflictions, and adversities will persevere until the refineries are operational.
Even with the removal of subsidy on petroleum products, we reiterate that with a dexterous, transparent and innovative management of resources, economic potentials, national comparative advantage, and expanded value chain in refining capacity, petrol should not sell for more than N150 per litre in the country.
We also observe the absence of provisions in the speech regarding riverine and coastal transportation, as well as haulage, which embody important components driving Nigeria’s trade, commerce, agriculture, and industrial sectors. In the light of these novel challenges presented by the speech, Nigerians should refrain from despair and uphold composure, supporting one another during this precarious period.
Efforts should focus on reducing governance costs and re-allocating savings towards infrastructure provision. If petroleum products cannot be subsidised, other sectors like health, transportation, and education should be considered. Tinubu’s administration must address the insufficient palliatives announced on May 29, 2023, as they cannot inhibit the sufferings of Nigerians.
Checking Nigeria’s Rising Debt Profile
These are challenging times for Nigeria as the country grapples with an uncertain political environment,
heightened insecurity, and a struggling economy. The nation is facing financial difficulties, as indicated by the escalating debt profile and the resulting burdensome repayment obligations. To avert an impending disaster, President Bola Ahmed Tinubu and his cabinet must emerge from their passive stance and implement measures to halt the country’s downward spiral.
An alarm raised last year by the Centre for the Promotion of Private Enterprise re-echoed the magnitude of Nigeria’s debt crisis. The warning that Nigeria’s national debt, encompassing both the liabilities of the Asset Management Corporation of Nigeria (AMCON) and borrowings from the Central Bank of Nigeria (CBN), could soon reach the N50trillion mark caused serious concern. The present situation is already unsustainable, with the government spending 90per cent of its revenue on servicing debts.
But in the latest release, the Debt Management Office (DMO) puts Nigeria’s total public debt at N87.38trillion at the end of the second quarter of 2023. The figure represents an increase of 75.29percent or N37.53trillion, compared to N49.85trillion recorded at the end of March, 2023. The DMO, in a recent report, said the debt includes the N22.71trillion Ways and Means Advances of the Central Bank of Nigeria to the Federal Government. The statement also noted that other additions to the debt stock were new borrowings by the Federal Government and the sub-nationals from local and external sources.
The DMO had earlier projected that Nigeria’s public debt burden might hit N77trillion following the National Assembly’s approval of the request by former President Muhammadu Buhari to restructure the CBN’s Ways and Means Advances. The Ways and Means Advances is a loan facility through which the CBN finances the shortfalls in the government’s budget. The DMO’s Director-General, Patience Oniha, during a public presentation of the 2023 budget organised by the former Minister of Finance, Budget and National Planning, Dr Zainab Ahmed, noted that the debt would be N70trillion without N5trillion new borrowing and N2trillion promissory notes.
However, the latest data revealed that the current debt stock of N87.38trillion exceeded the DMO’s projection by N10.38trillion. Further breakdown showed Nigeria has a total domestic debt of N54.13trillion and a total external debt of N33.25trillion. While the domestic debt makes up 61.95 percent of total debt, the external portfolio makes up 38.05 percent. The Tide also observed that there was a significant increase in both domestic and external debts within three months. The domestic debt rose by 79.18percent from N30.21trillion, while the external debt rose by 69.28percent from N19.64trillion in Q1 2023.
In its 2022 Debt Sustainability Analysis Report, the DMO warned that the Federal Government’s projected revenue of N10trillion for 2023 could not support fresh borrowings. According to the Office, the projected government’s debt service-to-revenue ratio of 73.5percent for 2023 is high, and a threat to debt sustainability. It noted that the government’s current revenue profile could not bolster higher levels of borrowing.
Nigeria’s story is tragic. Its debt crisis began in 2005/06 with a debt buy-back with the Paris Club and the London Club of international creditors, leading to $18billion in debt forgiveness. However, enabled by a rubber stamp National Assembly, Buhari led the country into another debt trap, with public debt expanding the most under his regime, compared to previous administrations since 1999. The foreign debt component also grew over three times more than the combined figure recorded by the previous three administrations.
The present government should discontinue the last administration’s profligate borrowings and spending. There should be financial prudence since the country produces nothing tangible for the international market other than crude oil. Therefore, spending 90 percent of revenue on debt servicing is certainly not sustainable; it leaves next to nothing for capital projects, besides paying workers’ salaries.
It will be beneficial for the authorities to prioritise revenue generation by implementing initiatives and reforms to increase tax collection. This includes Strategic Revenue Growth Initiatives to raise the tax-revenue-to-GDP ratio, currently at 7 percent, to match other countries. Additionally, the three tiers of government should establish public-private partnership schemes to encourage financial support for capital projects previously funded through borrowing.
The crude oil business has long been shrouded in opacity, hindering transparency and accountability. Every dollar generated from the sale of crude oil should be properly accounted for, and we should take measures to block fiscal leakages. The recovery of the $62billion oil revenue owed by major oil companies, as sanctioned by the Supreme Court since October 2018, should not be further delayed. This substantial amount, if recovered, has the potential to uplift the economy.
Addressing the extensive theft of crude oil and expanding the tax net are imperative. The government should privatise most of the infrastructure it borrows to establish, such as airport terminals, railways, and seaports. The NASS, a compliant parliament, should restore its reputation by ceasing to approve all requests blindly for external borrowing without scrutinising the sources of repayment and considering the potential consequences for future generations of Nigerians.
Reducing bureaucracy, lowering governance costs, easing the fiscal burden, and increasing revenue are also vital to conserve funds. It is important to monitor the revenue-to-debt-service ratio closely to avoid excessive debt. Otherwise, Nigeria could end up in a situation of unsustainable debt burden, needing to ask for debt forgiveness from other countries, which might reflect poorly on the current administration. There should be a renewed urgency in ending gratuitous borrowing. This is our stand!
Time To Resolve FG, Labour Impasse
President Bola Tinubu’s withdrawal of fuel subsidy during his inaugural speech on May 29 was a steely re-
solve well-made. But it has set the alarm bells reverberating. The decision sits nicely with the World Bank, International Monetary Fund (IMF), and technocrats who had participated in protracted advocacy for it; but not so for the downtrodden, who understand particularly the unpleasant effects that progress with it.
A day after the announcement, all hell was let loose at petrol stations. The Nigerian National Petroleum Company Limited (NNPCL) rolled out a fresh price template for the commodity, which supplanted the N185 per litre, for between N448 and N557 across the 36 states of the country and the Federal Capital Territory (FCT). But the retail marketers traded above the price dimension, for up to N800 per litre in some localities.
The organised labour’s expeditious and truculent reaction, with its threat of a nationwide strike, was not unforeseen. Its grouse was the non-consultation with varied stakeholders before the decision was reached and the paucity of measures put in place to insulate the deleterious effects of the price spike on workers. That the 2023 Appropriation Act (budget) captured fuel subsidy until the end of June made its precipitous and unilateral elimination further abhorrent to labour.
Earlier agreements snapped in the bud the planned 7th of June nationwide strike. These encompass the establishing of a joint committee to reconsider proposals on wage escalations; inclusion of low-income earners in the $800 million cash transfer programme; rehabilitation of the country’s ailing refineries; repair of highways, the $70 billion proposed fund for financing of the SMEs, among others.
The Trade Union Congress (TUC) had in its separate consultations with the government’s team, presented a N200,000 minimum wage demand to replace the prevailing N30,000. The Nigeria Labour Congress (NLC) endorsed it. However, finding a common ground on this proposition and the consequential adjustments on general wages to be conducted at both Federal and state levels will be convoluted.
Following a prolonged lag in winding up dialogues with the Federal Government regarding the implementation of subsidy incentives, labour resolved to call out workers in protest. They reached this step to communicate their dissatisfaction with the government’s unseriousness to engage in meaningful negotiations with the labour side. Tinubu’s moratorium in assembling a team is attributed to his filibustering in forming his government.
The government’s failure to agree on labour’s demands led to a recent two-day warning strike by workers. Following this, workers issued a 14-day ultimatum which expired last Friday. Labour leaders are now eager to confront the Federal Government, which may happen after their meeting tomorrow to determine the next course of action. The hasty removal of fuel subsidy, without adequate measures to alleviate its impact on Nigerians, reinforces concerns about President Tinubu’s readiness for effective governance.
The NLC acted within its rights as an organisation dedicated to workers’ welfare. Since the subsidy was withdrawn, life has not been easy for the average Nigerian. It has stoked inflation, at over 25 per cent. The inflationary spiral is already being felt in the over 200 per cent hike in transport fares. Frenetic discussions between labour and government representatives have not been producing any tangible advancement.
Organised labour is entitled to enlist in amicable mass actions. The anguish and hardship are real. The recent street protests that upset Benin City and the looting of warehouses and businesses in Yola, Adamawa State, are timely cautions. These call for immediate responses. The unfolding development is a clarion request for the Federal and State authorities to expedite effort on the promised palliatives.
Therefore, the Federal Government must end the gridlock with labour as the lamentable situation intensifies the misery Nigerians have been going through since the spontaneous fuel subsidy elimination. Tinubu must realise that thoughtlessly abolishing the subsidy which contributed to the hike in petrol price by over 300 per cent within a couple of weeks, while promising to administer palliatives thereafter, is comparable to operating on a patient and applying anaesthesia later.
To pursue the struggle to a logical conclusion, both the NLC and the TUC have to join hands, work together, and overthrow all dangerous policies of the government. The cacophonous tunes by the two labour centres in the present imbroglio are regrettable and do not portend well for labour activities in the country. For the trade union movement to be effective in any nation, there has to be solidarity of purpose. The struggle to salvage Nigeria is no longer a matter the organised labour alone should pursue, because the government’s grim strategies touch every citizen.
The two labour centres must move out to disparate groups in society so that their protests and strikes will be laudable and better productive. Market women and men, artisans and civil society groups must be approached because the struggle now belongs to everybody. Labour must re-strategise. They should build a dynamic alliance and function collectively to negotiate and obtain a stronger deal to enhance workers’ and the citizens’ welfare.
Tinubu must be aware of the dangers in ignoring obvious red flags in a distraught, hungry citizens of a nation and her disoriented youths. We are gratified that he is amenable to listen and react positively to the sentiments of the people. Labour should be malleable as well. We implore the Federal Government to explore an amicable solution to the standoff which will be acceptable to both parties. There is no substitute for a harmonious resolution of the dispute. The economy cannot afford a messy labour cul-de-sac.
As UNGA Meets …
At least 150 world leaders are attending the 78th United Nations General Assembly in New York,
United States. The event commenced on September 18 to conclude today and was scheduled to be attended by heads of state and government from at least 145 countries. Some high-profile issues include climate change, poverty and food insecurity, war and humanitarian needs, and growing inequality.
This year’s event, themed “Rebuilding Trust and Reigniting Global Solidarity: Accelerating Action on the 2030 Agenda and its Sustainable Development Goals towards Peace, Prosperity, Progress, and Sustainability for All,” is featuring African leaders addressing global and continental issues, as well as discussing the situations in their respective countries.
The Chairperson of the African Union (AU) and President of the Union of Comoros, Azali Assoumani, is expected to deliver a speech at the event. As one of the African leaders, his address, along with those of other heads of state, would reflect the continent’s regression and expectations from the world.
African leaders must remind Western nations that despite emitting fewer greenhouse gases, the continent is disproportionately affected by climate change. They should highlight the recent floods in Libya caused by Storm Daniel, which tragically claimed the lives of over 11,000 people.
Also, African heads should urge the international community to fulfil its previous pledge of $100 billion in annual climate finance, as well as to accelerate the phase-out of fossil fuels and establish a loss and damage facility. We believe that these demands were emphasised at the Climate Ambition Summit on 20 September, held alongside the general assembly.
The need for a more level playing field on the global stage should be accentuated, particularly in multilateral institutions, including the United Nations itself. Africa has been campaigning for a permanent seat on the United Nations Security Council, and the calls should be louder now. African leaders have to emphasise this in their speeches. The global financing system is another key issue. Africa says it is being treated unfairly, leading many countries to fall into “debt traps”.
The war between Russia and Ukraine will certainly come to light again. African heads of state must highlight its impact on the continent’s food security. They should call for a peaceful resolution to the conflict and demand that Russia rejoin the Black Sea Food Agreement, which Turkey brokered with UN support in July 2022. The pact helped export more than 32 million tons of Ukrainian agricultural products through the Black Sea, of which nearly 19 million tons were destined for developing countries in Africa.
Nigeria’s President and Chairman of the Economic Community of West African States (ECOWAS), Bola Tinubu, joined other world leaders in his inaugural outing at the event. Before engaging in the general debate, the President joined other leaders to participate in the High-Level Political Forum on Sustainable Development (UN 2023 Summit on SDGs).
President Tinubu’s address encompassed several issues, such as sustainable development, climate change, global cooperation, and the imperative to address inequalities and global humanitarian crises. He addressed the issue of coups in the region and efforts to promote democracy. Recall that there have been five coups in the region so far: Burkina Faso (January 2022), Guinea (September 2021), Chad (April 2021), Mali (August 2020), and Sudan (October 2021).
In the case of Niger, ECOWAS initially threatened military action to restore deposed President Mohamed Bazoum to power, but later preferred dialogue as a way to resolve the situation. Tensions are further rising among the three West African Sahel countries governed by Mali, Niger and Burkina Faso. The military governments signed a security treaty pledging mutual aid in the event of any rebellion or external aggression.
African leaders must address their nation’s governance challenges, as corruption and impunity are the main reasons for increasing coups. This culture weakens nations’ foundations, erodes public trust, and threatens essential services. As a result, ordinary people bear socio-economic hardships, with leaders gaining wealth while infrastructure and services erode, leading to political instability and military intervention. Solutions must be found to these issues.
A democratic government and peaceful power transfers are essential for a nation’s functioning. West Africa has experienced a series of coups, revealing the fragility of democratic institutions and mistrust of political processes. Countries fighting for democracy are now grappling with the reality that coups are more common than fair elections, highlighting elected officials’ failure to uphold democratic principles.
Fraud is prevalent in the electoral system of many African countries, particularly Nigeria. Unfortunately, our electoral integrity is threatened by factors like voter aparthy, election rigging, and lack of trust in electoral officials. This leads to a decline in citizen trust in democratic institutions following poor governance and electoral corruption. The independence of electoral institutions is also in doubt, as many believe that whoever pays the piper dictates the tune. Integrity in elections is crucial for building citizens’ trust in democracy.
The Nigerian state, like its counterparts in Africa, grossly underperforms due to lack of state capacity to deal with the contemporary complexities of governance. Governance and political leadership in the country have been driven by self-interest and other primordial considerations, which take priority over that of the public. The state has failed in three major areas: security of lives and property, promotion of the rule of law, and provision of visionary leadership.
Given that this year’s UNGA theme focuses on the 17 Sustainable Development Goals set by the global body in 2015 for a 15-year period, Nigeria must redouble its efforts to attain the SDGs by 2030. All development indices point southwards for the nation. Poverty, and hunger allevition education, health, peace, justice, strong institutions, climate action, gender equality, clean water, and sanitation have remained unattainable. Therefore, at the ongoing 78th UNGA, Tinubu must compare notes and learn from those who have made giant strides towards attainment of the SDGs.
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