I was already halfway through the article for publication today which I entitled “Tinubu, Nigeria is Not Lagos!” when President Bola Ahmed Tinubu announced a coup against me last night!
What I had in mind, and had assembled much of the facts and data, was to analyse the two prong economic decisions of the government, their implications and the pending national meltdown when the President pulled the plug on me; rather on organized labor and many Nigerian people who had tooled up for a nationwide protest effective August 2 against the biting effects of these decisions: the removal of subsidy on petrol and the liberalization of the exchange rates market.
See the first three paragraphs of the intended article:
“Asiwaju Bola Ahmed Tinubu, Nigeria’s President, is a dyed-in-the-wool politician. As far as Nigeria’s political system goes, Tinubu is one of the best! And Nigeria’s politics is so woven into the-more-you-see, the-less-you-understand.
“From being a senator during the ill fated third republic, to being one of the runaway NADECO leaders during the Sani Abacha military dictatorship, to being a two-term governor of Lagos State, to holding Lagos by the jugular since he left office in 2007, the President has come full circle.
“No other member of his 1999 class of governors has been able to hold his state as firmly as Tinubu has done over Lagos. In fact, none has”.
With the president’s coup, I will now have to analyze part of his last night’s address to the nation, even if as a wet-painted analysis. His coming on air to address the nation two days to the planned protests is effectively a coup well executed against organized labour, the Nigeria Labour Congress and the Trade Union Congress. Even though labour unions insist they will carry out their protests, their arsenals have been weakened considerably. The protests, if they hold, will be localized, ineffective and will not last long.
First is to commend the President for quickly addressing the Nigerian people on the state of the economy, even if it came two days to the planned nationwide protests. I do not remember this kind of response from a President in recent history. Please, note that the response here is not referring to the content of the address (which I will analyze shortly), but rather the speed at which the government decided to talk to Nigerians. By addressing the nation, president Tinubu has shown that he is indeed a deft and astute politician. And I commend him for that. In the immediate past, we would have waited until the 1st October bland, even drab presidential Independence address!
It should be noted that these two economic decisions have had telling effects on most Nigerians and organisations. To be sure, and as Reflections! had earlier canvassed, the removal of subsidy on petrol was long overdue. Nigeria was technically just throwing money away in the name of subsidy for petrol. It ought to have ended years earlier; but no president had the political will to do so. All they did was just to increase the price of the product. Since 1986, only the governments of Ernest Shonekan, Sani Abacha and Musa Yar’Adua did not increase fuel prices.
The liberalization of the exchange rates market, also known as floating, is the culprit behind the near collapse of the economy much more than the removal of the subsidy regime in petrol. Early June when the effect of the subsidy removal hit home, Nigerians had started to adjust to the reality of a new life. But the liberalization of the exchange rate regime further led to additional increases of prices on petrol thus increasing inflation and all the attendant effects on most Nigerians.
Irrespective of the advice and the compelling reasons for the exchange rates liberalisation, the timing was perfectly wrong. The government ought to have waited for the subsidy removal adjustments to settle, constituted its federal executive council and released its fulsome economic policy before further devaluing the Naira by over 40 percent in the name of floating the currency.
As it stands, many negative consequences are on the table. Inflation has refused to be tamed, increasing every month since the start of the year. Warehouses are filling to the brim as disposable income of many people have dwindled if not completely wiped off.
Petrol stations have far too few vehicles turning up for fuel. That has implications for the profit margins of operators as well as the security of jobs of some fuel attendants. Road traffic in Lagos and other cities has all but disappeared. Even though low traffic jams are a good and unanticipated consequence, this has a lot of implications on street hawkers.
We may not like street vendors as they constitute a nuisance. But for as long as unemployment rates remain high, we will need to live with it. If we could put up with beggars everywhere, why should we not have hawkers who are economically productive! In fact, let me stretch the imagination by putting this in perspective: at one of the The Platform events powered by Pastor Poju Oyemade’s Covenant Nation, Biodun Adedipe, a first class economist and a professor stated that somewhere around N1 billion worth of sales was being transacted by Lagos street vendors daily. You can do the maths nationwide!
At a macro level, the effect of the Naira’s summersault is huge and immediate. By end of June, just two weeks after its being floated, the currency actually floated at N730 to 1USD. On 14th July, the Naira crossed the 800/1 mark at the Investors’ and Exporters’ (I&E) forex window. Never mind that investors are not coming nor are we exporting anything meaningful. As I write this morning, customers are being asked to bid for dollars at N900 to 1USD.
It is this swift erosion of the value of the currency that has literally brought everyone and institutions to their knees. Take Nigerian Breweries, by far Nigeria’s largest brewer. It has surprisingly recorded its first half year loss in about ten years. The floated Naira is the culprit as nearly half of its input is imported which caused the brewer to record a net loss N85b on forex transactions. About 85 per cent of the loss was incurred in the second quarter, coinciding with the time of the steep decline of the Naira. One can only imagine what the result would be by the end of the year.
Nigerian Breweries is not in the cold alone. Other industrial heavy weights are sneezing badly. MTN Nigeria, the country’s telecom behemoth and most capitalized firm in the bourse, Nestle, Dangote Cement, BUA Cement, Cadbury Nigeria and Eterna Plc have serious haircuts of over N400 billion foreign exchange losses in the first half of the year. This is about 651 percent from the corresponding period in 2022. MTN Nigeria’s half year profit weakened by 29 per cent while its revenue increased from N950 billion in six months to N1.2 trillion. Airtel Africa reported a loss of $170 million. Dangote Cement, second most capitalized by market value had a 16.7 per cent increase in revenue but PBT was down by 9.4 per cent and Profit After Tax a paltry 3.8 per cent increase.
Well to do individuals who have their wards in foreign universities are having toothaches over the value of the Naira. They cannot understand how in May one would require N450 to buy 1USD, and in July/August you would need twice the amount for the dollar. This is a perfect the-rich-also-cry scenario for them.
But it is the poorest of the poor who are feeling the heat of the economic crunch the more. Before the 40 per cent devaluation of Naira, Nigeria’s per capita was a paltry $2,000. This means an average household income was $2,000 per year. That has dropped to just over $1,200 (my figure, as there is yet no official data since the floating of the naira).
The very poor are in a very desperate situation. In Adamawa State, North East Nigeria, residents decided enough was enough and pried open private and public warehouses and stores and looted goods and equipment. The looting was so widespread and violent in some places that the governor had to declare a 24 hour curfew. The reenactment of the aftermath of the October 20, 2020 #ENDSARS protests in Adamawa is foretelling that this could be a nationwide uprising in the face of hardship across the land.
It is perhaps the dangerous happenings in Adamawa more than the planned protests by labour that caused the President to act fast by addressing the nation on the state of the economy as a national protest against his twin economic decisions would have been overbearing for the security forces and would have caused the government to have a rethink, something that is an anathema to the Tinubu administration.
Tinubu’s address last night was almost entirely pro-poor, and has demonstrated that it is not enough to ask people who are very poor, hungry, upset, down and out to exercise patience with nothing. He struck a chord with my philosophy for working in the public service. Hear him: “our commitment is to promote the greatest good for the greatest number of our people.” This, for me, is the reason for government. The decision to immediately release 200,000 metric tonnes of grains from strategic reserves to households across the country is a watershed if even 70 percent of that will find their way to the homes of those who need food urgently. In the past, party and government officials and middlemen had cornered the goods and sold them at exorbitant rates.
Providing 225,000 metric tonnes of farm inputs such as fertilizer, seedlings and such like, and to support the cultivation of 500,000 hectares of farmland with N200 billion is also in the right direction. But skepticism, following previous failed promises, reigns; and understandably so. Same with the planned N50,000 grant to the 1,300 nano business owners in each of the 774 local government areas. If well implemented, it will deal with extreme poverty in the country; and is better than the N8,000 gift to the poor. Same for the micro, small and medium enterprises where government intends to invest N75 billion as loans to 100,000 entrepreneurs. At nine percent, interest rate in the current economic situation is high; six percent rate is more like it. Other goodies in the address are also high in addressing some of the concerns of the poor. The question is on the How these promises will trickle down to the poor.
One keeps wondering why we’re in a state of food crisis with the blessings that the country is so blessed with: arable land, abundant rainfall, rivers and streams everywhere. One also wonders why the previous governments were not doing this. The reason may be in the trillions of naira government threw away in the name of fuel subsidy. And Tinubu’s party, the All Progressive Congress, did not just come into power last May; this happened over eight years ago. So, this government must take responsibility for the current state of affairs in the country.
Yet, the country is still in a precarious state. The first batch of ministerial nominees is uninspiring. To think that the President could not have the full list of ministers within 60 days of his inauguration is unfortunate. The floating of the naira seems to be favouring only the West who are grabbing cheap and devalued stocks in the capital market. Just last month, the capital market gained N1.8 trillion. Much of that is from foreign portfolio investors who have seen our shares as penny stocks. No real investment is coming into the economy to stimulate productivity, growth and employment.
There’s no doubt that the Tinubu presidency, if it lasts, will be pro-business. How sustainable and equitable this will be remains to be seen.
Esiere is a former journalist
