Prince Justice J Faloye
It has become our political culture that when a politician is seeking office, he promises heaven and Earth, but immediately he assumes office he lowers the expectations by claiming the previous government had emptied the treasury. Now, APC has taken the absurdity further by blaming the previous APC government even though they had campaigned for continuity. Like APC blamed PDP in 2015 for looting the treasury dry, APC is blaming the previous APC government in 2023 for ruining the economy, and the current price shocks and economic destabilization, which in reality was caused by poorly conceptualized and implemented policy changes made when Tinubu got into power.
Let’s accept that Jonathan and Buhari might have not left behind a top notch economy, it is not the absolute figures that causes economic instability but the rate of change in value over a short period due to the new ill-concieved policies introduced by the successors.
Economic management is not about playing to the gallery over corruption or other systemic failures, but to properly manage the effect of any economic policy change in order to allievate any devastating impact on the economy, and the vulnerable. This is called Change Management that Tinubu has woefully failed to apply and resulted in 300% increase in energy costs and 60% fall in Naira value, and therefore can’t claim a space Guineas Book of Records for being an economic reformer but an economic anarchist.
For years, I have argued that Buhari, Tinubu and the rest of APC leadership are guilty of economic treason because they knowingly made false statements, regarding our cash reserves and state of economy, in order to effect policy changes that widened the official and black markets rate for personal and partisan benefits through roundtripping. APC falsely claimed the previous government had cleaned out our cash reserves, while we still had $30b, and intentionally stopped the release of national statistics for two quarters to hide their lies. Obasanjo had met less than $5b in the national coffers but still built the economy without tampering with our forex mechanism that had been in place since it was reset by Babaginga after Buhari messed it up in 1984.
This time around Buhari went on to arrest our economic development for 8 years, never regaining the $500 billion GDP mark achieved under Jonathan until he handed over to Tinubu. And, the corruption excuses used to destabilize our economy increased, instead of being curbed. The annoying intellectually demeaning excuse for the crash in Naira value was we produced nothing and consumed everything. The simple question is, was there a 300% or even 3% percentage change in imports or exports that increased the demand for Naira or reduced supply of dollars, thereby making Naira fall by 300% within a few months Buhari took over from Jonathan. Yes, we don’t produce enough which was why Naira was N190 to a dollar, and imports didn’t skyrocket under Buhari, so what brought the change was a deliberate sabotage of Naira by Tinubu’s APC. This was done simply by haphazardly removing then re-adding things on the supply side, like Bureau De Changes, and school fees on the demand side, thereby destabilizing the market to make profit from the widening gap.
Once again, Tinubu is ridiculously placing the blame on Buharis APC, claiming he inherited a ruined economy. For nearly 15 years, the public has been calling for a cut in the cost of governance, but instead of cutting the outrageous amount fed to the political classes, Tinubu cut fuel subsidies that spurs economic growth of our economy dependent on petrol. The IMF report on subsidies shows that the global average for fuel subsidies was 7% of the GDP, while Nigeria’s subsidies were just 2% of our GDP. With regards to the ratio of subsidies to government expenditure, Britain spends 23% of its expenditure on various subsidies to boost their economy, but Nigeria will rather spend that amount and more on feeding the political administrative classes that represent less than 2% of the population but gulp more than 50% of our commonwealth.
Obviously since our economy is dominated by small and medium enterprises that rely on petrol for production of goods and services, the effect of Tinubu’s subsidy removal that increased fuel cost by 300% is the galloping inflation rate of about 27% per month. The USA, in order to curb inflation, brought out an Inflation Reduction Act (IRA) with over $300b for fuel subsidies. There are those that point out that the US energy subsidies are not only cash payments, but also to alternative sources of energy and transportation.
The Nigerian government should even pay Nigerians more subsidies to cover the costs that arise due to government failure to repair roads and stop police extortion which increases our transport costs, as well as their failure to develop alternative energy and transportation modes. As an afterthought and not well thought out, Gas is being recommended to replace petrol, without adequate studies on the supply of gas and its engine to every nook and corner, and whether the small businesses can adapt and afford the gas replacement, not to talk of health and safety issues.
Another unforced error by Tinubu’s APC government is allowing the Naira to float and sink. No country in the world, not even China, USA or EU, can allow their currency to float because they know currency speculators will always sink it to make profit. Every country in the world pegs their currency within a band of no more than 15%, but Tinubu watched as Naira lost 40% of its value, destroying many businesses since we import 70% of raw materials of what we produce. Instead he was drawing up plans to buy yacht and other luxuries for the political class.
APC apologists will argue that Buhari left no money to back the Naira or pay subsidies, but the question is shouldn’t the first priority be to reduce cost of governance estimated to be over N10 trillion, instead of increasing ministers and benefits to the political classes across the board? Shouldn’t a state of emergency have been declared on our refineries to get them working and have a few dedicated oilwells to supply cheap energy to boost the economy before removing the subsidies? Isn’t it a failure of governance to claim that there was corruption in oil subsidies, and is subsidy fraud not common in other countries like UK, USA etc, does that justify throwing away the baby with the bathwater?
Tinubu’s sport betting governance relies on scores to make profit, instead of addressing the real issue of providing economic liberating infrastructure like railways required to spur industrialization and heavy manufacturing. Instead of going to the manufacturing capital of the world, China the world’s infrastructure builder by far, he is going to Dubai, India, Europe and other unserious foreign investors.
The cluelessness was further confirmed by the CBN Governor Yemi Cardoso that advocated tightening the money supply to curb the galloping inflation, a cure for demand pull inflation caused by too much money supply, and not for the ongoing cost push inflation caused by 300% rise in petrol used to run 90% of our economy, and 40% rise in foreign exchange used to import raw materials for 70% of our domestic production. Another element of the cost push inflation will be the wage push inflation as poor workers demand increase in wages, and small and medium enterprises have to increase prices. Cardoso’s money supply tightening, in an economy that suffered liquidity crunch due to APC politically inspired botched currency change, will kill off the economy as those seeking finance to buy expensive raw materials and cope with increased wage bills will fail.
We can talk as much as we our mouths dry, but an obviously unserious wasteful government that believes in propaganda is not tuned to uplift us with economic and political development.