The incoming administration will be inheriting a lot of challenges that defied
solutions under President Muhammadu Buhari’s tenure.
In less than two months, precisely May 29, Bola Tinubu will be inaugurated
as the President of the Federal Republic of Nigeria.
Nigeria has been riddled with lots of economic challenges ranging from high
rates of loans, inflation, unemployment, poverty, among others.
A report by the United Nations, UN, had claimed that Nigeria’s economy
under Buhari is worse than 10 years ago.
The UN, in its 2023 World Economic Situation and Prospects report published
on its website, said high inflation and power supply issues are impacting
growth in Nigeria.
In its flagship report titled ‘Global Economic prospect,’ the UN said:
“The
pandemic has reversed at least a decade of gains in per capita income in
some countries— in almost a third of the region’s economies, including
Angola, Nigeria, and South Africa, per capita incomes are forecast to be lower
in 2022 than a decade ago.”
DAILY POST identifies some economic issues Tinubu’s administration would
have to tackle upon resumption of office.
Monetary Policy
Prior to the 2023 presidential election, the Central Bank of Nigeria, CBN, had
announced the redesign of some denominations of the naira. The apex bank
redesigned the N200, N500, and N1000 notes, a situation that brought about
so much hardship in Nigeria.
The policy almost brought Nigeria’s economy to a standstill as citizens found
it difficult to have access to their money, thereby, making it hard to perform
transactions.
During his campaign, Tinubu had accused some elements in the corridors of
power of using the naira redesign and fuel scarcity to frustrate his
presidential ambition. Despite the release of cash, the effect of the policy
lingers in the country. It is left to be seen how the incoming Tinubu
government would tackle it.
Loans
Despite Nigeria’s debt profile currently standing at 44.25 trillion, the Federal
Government last week hinted that it had secured an $800 million loan from
the World Bank to be used as palliatives for post-fuel subsidy removal in
June 2023.
Apart from the World Bank loan, the Debt Management Office said as at
March 31, 2020, the Total Borrowing by Nigeria from China was $3.121 billion,
this amount represents 3.94% of Nigeria’s Total Public Debt of USD79.303
billion as at March 31, 2020.
Similarly, in terms of external sources of funds,
loans from China accounted for 11.28% of the External Debt Stock of
USD27.67 billion at the same date.
The worrisome growing loan facility, which is almost becoming unserviceable,
is one major issue that would stare the next government in the face.
Insecurity
One of the uphill tasks Tinubu would face upon resumption of office is that
of insecurity across the country.
While Boko Haram and bandits are ravaging
the Northern part of the country, unknown gunmen are rocking havoc in the
Southeast. The activities of these gunmen had widely affected Nigeria’s
economy under Buhari, hence Tinubu’s administration would have a lot to
tackle.
Unemployment
KPMG has stated that the Nigerian unemployment rate had increased to
37.7per cent in 2022 and will further rise to 40.6per cent, due to the
continuing inflow of job seekers into the job market.
The multinational consulting firm, in a newly released report tagged ‘KPMG
Global Economy Outlook report, H1 2023,’ said unemployment will continue to
be a challenge due to the slower-than-required economic growth and the
inability of the economy to absorb the 4-5 million new entrants into the
Nigerian job market every year.
“Unemployment is expected to continue to be a major challenge in 2023 due
to the limited investment by the private sector, low industrialization and
slower than required economic growth and consequently the inability of the
economy to absorb the 4-5 million new entrants into the Nigerian job market
every year.
“Although the National Bureau of Statistics recorded an increase in the
national unemployment rate from 23.1per cent in 2018 to 33.3per cent in
2020. We estimate that this rate has increased to 37.7per cent in 2022 and
will rise further to 40.6 per cent in 2023,” it said.
Inflation rate
Prior to 2015, Nigeria’s inflation rate remained at a single digit– even as
analysts opined at the time that it was high. For instance, in the whole of
2014, the nation’s inflation rate moved between 7.7 per cent, which was the
lowest, to the highest point of 8.5 per cent, official data shows.
When Buhari took over power, the inflation rate averaged 9 per cent. Since
then, the nation has seen a surge in inflation rate. Data released by the
National Bureau of Statistics, NBS, had shown that under Buhari, Nigeria’s
inflation rate hit a 16-year high amid an increase in prices and poor
purchasing power, a situation Tinubu would confront upon assumption of
office.
Fuel Subsidy
A few months to the end of Buhari’s tenure, plans have been concluded for
the removal of petrol subsidy in Nigeria.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, had
hinted at the removal of subsidy before May 29.
In the last few years, Nigeria spent over N3.27 trillion in subsidising petrol,
equaling an average of N272 billion monthly.
Commenting on the issues, the Lead Director of the Centre for Social Justice,
CSJ, and a Financial expert, Eze Onyekpere, said Tinubu and his men would
determine if Nigeria’s economy would improve in the next four years.
Onyekpere said the economy could improve under Tinubu’s administration if
all relevant stakeholders are carried along.
Onyekpere told DAILY POST that:
“The economic issues bedevilling the
nation, have they changed? They are still there. We have low revenue,
unemployment, inflation rate is hitting the rooftop, it’s actually all the things
we have been discussing in the past seven years, and they would need his
attention.
“At least, we must have the revenue to run the government by paying
salaries, building infrastructure, maintaining law and order, and servicing
security.
“We also have the fuel subsidy crisis, but how do you remove it without
cushioning the effect on the economy? So, we have to talk to the organised
labour and other stakeholders to determine the roadmap and what he
needs to do.
“The issue of whether the economy will improve or deteriorate is based on
Tinubu and his party men. First, Nigeria is more divided today than before
the election; even though he has been declared the winner, his team
members are still in the fighting mood.
“If they understand that they are going to form a government and need to
carry everybody along, and they do so by dousing the tension, then there
would be a chance of progress.
“If all we do everyday is to yell at each other on social media, then there is
no way we can build that consensus for us to make progress.
“If you see Nigerians going on social media to call their president a drug
baron, and there are all kinds of kidnappings going on; if you are a foreign
investor coming to Nigeria, wouldn’t you hold your money and watch what is
happening with the threats of ethnic violence. All these won’t encourage
anybody to come into the country and invest.
“So, the first thing for economic improvement is the sense of unity and
purpose, some form of national unity. The kind of belligerence being spoken
of today is clear that people have gone into their trench, and they are not
coming out.”
