It is over a month since President Bola Tinubu removed fuel subsidy sending prices of goods and services soaring and leaving many families in economic quagmire.
The removal of the fuel subsidy, long overdue, however, was done without any economic shock absorbers leaving many Nigerians wondering if there was any clear thought on the policy direction of the new administration.
The removal came on the heels of a report by the World Bank in its Macro Poverty Outlook for Nigeria in April 2023.
The Outlook stated that about 13 million Nigerians will fall below the national poverty line by 2025. This, according to the Bretton Wood institution is due to the country’s population growth outpacing poverty reduction.
Also, the National Bureau of Statistics, NBS, had in its 2022 Multidimensional Poverty Index survey stated that 63 per cent of persons living within Nigeria (133 million people) are multi-dimensionally poor.
The World Bank report stated further, “With Nigeria’s population growth continuing to outpace poverty reduction, and persistent high inflation, the number of Nigerians living below the national poverty line will rise by 13 million between 2019 and 2025 in the baseline projection.”
Tracing the genesis of the current situation, the World Bank said “Macroeconomic stability has weakened considerably due to multiple FX rates, high and increasing inflation, rising fiscal pressures, and declining forex reserves. Nigeria’s fiscal position has deteriorated since 2015 due to declining oil revenues and rising expenditures, resulting in persistently high fiscal deficits. To finance the growing deficit, the government has resorted increasingly to costly financing from the central bank, which in turn has increased interest costs, crowding out private sector credit, and contributing to inflation.”
While it is a good thing that the federal government has removed restrictions of multiple FX rates, the free floating has posed new challenges as the Naira has weakened considerably against the U.S. dollars.
However, it is a good thing that President Tinubu is working to redress the tax regime in the country and has started with removing taxes on certain goods, but that is not good enough.
The issue of rising cost of energy remains a great disincentive and has continued to weigh terribly on businesses especially small and medium enterprises.
It is expedient that now more than ever, the federal government should rollout palliatives on critical areas of national living even as labour works out a template.
Nigerians can ill-afford to bear the brunt of a spur-off-the moment decision as the president has admitted while he and his coterie of new palace courtiers swim in opulence and annoying endless stretch of convoys.
The president needs to demonstrate that his Renewed Hope mantra is more than a political gimmick by pro-people policies.
The directive to the National Economic Council, NEC, led by Vice President Kashim Shettima to devise an approach and begin the process of working on interventions to mitigate the impact of subsidy removal on Nigerians is taking too long in coming up with quick fixes, and this is not good enough.
It should be noted that the honey moon will soon be over and no amount of arm-twisting and publicity stunt will assuage the angst and poverty being experienced by Nigerians.
Like Nigerians say, let the poor breath!
