President Bola Tinubu last week addressed Nigerians on the economy, outlining measures to cushion the hardships bedevilling the nation. JOSEPH INOKOTONG, in this write up, examines the plans to alleviate the pains of the masses.
IT was not expected. President Bola Ahmed Tinubu’s national broadcast Monday last week, which outlined his vision of how he intends to alleviate the excruciating hardship Nigerians are being subjected to by the president’s economic policies, caught many people unawares in the manner it was delivered.
It was full of empathy and dripped wet with patriotism. How the emotional broadcast would translate into solving the enormous economic challenges confronting Nigerians will be determined by time and space, although it seems that the president means well for the generality of the citizens.
“Our economy is going through a tough patch and you are being hurt by it. The cost of fuel has gone up. Food and other prices have followed it. Households and businesses struggle. Things seem anxious and uncertain. I understand the hardship you face. I wish there were other ways. But there are not. If there were, I would have taken that route as I came here to help not hurt the people and nation that I love. What I can offer in the immediate is to reduce the burden our current economic situation has imposed on all of us, most especially on businesses, the working class and the most vulnerable among us.
“Fellow Nigerians, this period may be hard on us and there is no doubt about it that it is tough on us. But I urge you all to look beyond the present temporary pains and aim at the larger picture. All of our good and helpful plans are in the works. More importantly, I know that they will work. I plead with you to please have faith in our ability to deliver and in our concern for your well-being. We will get out of this turbulence.
“Fellow Nigerians, I made a solemn pledge to work for you. How to improve your welfare and living condition is of paramount importance to me and it’s the only thing that keeps me up day and night. Our commitment is to promote the greatest good for the greatest number of our people. On this principle, we shall never falter. I assure you my fellow country men and women that we are exiting the darkness to enter a new and glorious dawn.”
These few lines in Mr President’s broadcast really touched the soft side of many Nigerians.
Beyond the empathy shown by President Tinubu in his speech, he has already swung into action by announcing his administration’s close working relationship with states and local governments to implement interventions that will cushion the pains of the people across socioeconomic brackets.
Indeed, a scrutiny of the document reveals a package with the intents and purposes of creating a shared prosperous future for all Nigerians, especially the economically disadvantaged segments of the society.
On this note, the aspect that comes in handy is the administration’s recognition of the importance of Micro, Small and Medium-sized Enterprises (SMEs) and the informal sector as drivers of growth. The plan to energise this very important sector with N125 billion is a welcome development, especially as the government intends to spend N50 billion out of the sum on conditional grant to one million nano businesses between now and March 2024.
The target, as envisaged, is to give N50,000 each to 1,300 nano business owners in each of the 774 local governments across the country. The ultimate goal of this programme will further drive financial inclusion by onboarding beneficiaries into the formal banking system, in like manner with the plan to fund 100,000 MSMEs and start-ups with N75 billion. Under this scheme, each enterprise promoter will be able to get between N500,000 and N1 million at nine percent interest per annum and a repayment period of 36 months.
In the estimation of many people, these palliative measures, as espoused by the president, would help in no small way in ameliorating the sufferings of many Nigerians.
In spite of the potential benefits of the policy, experts still believe it could have been done in a better way. They picked holes in the poverty reduction incentives.
Aliyu llias, a financial analyst who has done extensive research in the area of poverty reduction, said: “We have had a lot of poverty reduction programmes. If you are giving us poverty reduction programme, it must be from the bottom up. You should examine what SMEs want, what the smallholder farmers want. One of the major challenges is logistics. During former President Muhammadu Buhari’s era, there was an Ease of Doing Business Office. We want it to be institutionalised and structured. They should go back and structure these poverty reduction programmes so that a place would warehouse them and it would be bringing it out gradually, and there would be monitoring and control.”
Perhaps, the inability of the administration to outline in detail how the measures would be implemented could be traced to the absence of ministers who would superintend over the implementation.
The government went further to extend support to the manufacturing sector which has been reeling in severe pains induced by recent economic reforms. Last week, GlaxoSmithKiline, which was incorporated in Nigeria in June 1971 and commenced business the following year, said it was leaving the country due unfavourable business climate. After 51 years of operation in Nigeria, the British pharmaceutical giant has sadly announced plans to end its prescription medicines and vaccines in the country.
In a statement sent to the Nigerian Exchange Limited (NGX), the multinational pharmaceutical company said it would transition to a third-party direct distribution model for its pharmaceutical products. At the same time, the company said it is now working with its advisers to agree on the next steps, while it plans to submit a scheme of arrangements to the Securities and Exchange Commission (SEC) for the possible return of cash to its local shareholders. This action underscores the dire economic predicament confronting many companies in Nigeria at present.
However, President Tinubu seems set to tackle this problem when he announced spending N75 billion between July 2023 and March 2024 to fund 75 enterprises with great potential to kick-start sustainable economic growth, accelerate structural transformation and improve productivity.
According to the plan, to strengthen the manufacturing sector, increase its capacity to expand and create good-paying jobs, each of the 75 manufacturing enterprises will be able to access N1 billion credits at nine percent per annum with maximum of 60 months repayment for long term loans and 12 months for working capital.
The government’s effort to alleviate the sufferings of Nigerians did not end there. To further ensure that prices of food items remain affordable, the government said it had a multi-stakeholder engagement with various farmers’ associations and operators within the agricultural value chain.
In the short and immediate terms, the plan is to ensure staple foods are available and affordable. To this end, the government said it has ordered the release of 200,000 metric tonnes of grains from strategic reserves to households across the 36 states and the Federal Capital Territory (FCT) to moderate prices. This did not stop the recently reported looting by some hungry people, tagged hoodlums by the government, of the National Emergency Management Agency (NEMA) warehouse in Yola, Adamawa State. This again, demonstrated in clear terms the prevailing food crisis in the country.
Also, President Tinubu announced that his administration is providing 225,000 metric tonnes of fertilisers, seedlings and other inputs to farmers who are committed to the food security agenda. The plan, he explained, is to support the cultivation of 500,000 hectares of farmland and all-year-round farming practice remains on course. Specifically, he said N200 billion out of the N500 billion approved by the National Assembly will be disbursed as follows: “Our administration will invest N50 billion each to cultivate 150,000 hectares of rice and maize. N50 billion each will also be earmarked to cultivate 100,000 hectares of wheat and cassava.”
According to him, this expansive agricultural programme will be implemented targeting small-holder farmers and leveraging large-scale private sector players in the agric business with strong performance record. In this regard, he added that the expertise of Development Finance Institutions, commercial banks and microfinance banks will be tapped into to develop a viable and an appropriate transaction structure for all stakeholders.
Similarly, the approval of the new Infrastructure Support Fund, which will enable states to intervene and invest in critical areas and bring relief as well as revamping the decaying healthcare and educational infrastructure is another way of repositioning the economy for growth. As explained by the president, the fund will also bring improvements to rural access roads to ease evacuation of farm produce to markets. With the fund, the states will become more competitive and on a stronger financial footing to deliver economic prosperity to Nigerians.
Another strand of the government’s programme is to roll out buses across the states and local governments for mass transit at a more affordable rate. Already, the government said it has made provision to invest N100 billion between now and March 2024 to acquire 3,000 units of 20-seater Compressed Natural Gas (CNG) fuelled buses. These buses, it said will be shared to major transportation companies in the states, using the intensity of travel per capital and participating transport companies will be able to access credit under this facility at nine percent per annum with 60 months repayment period.
In the same vein, the president said his administration is also working in collaboration with the labour unions to introduce a new national minimum wage for workers and that once an agreement is reached on the new minimum wage and general upward review, he will make budget provision for it for immediate implementation. Interestingly, many private employers in the organised private sector have already implemented general salary reviews for employees.
The government should be able to complete this process speedily and effortlessly since it has admitted saving over N1 trillion in a little over two months, an amount it said would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters. That money should now be used more directly and more beneficially for all Nigerians.
Government should fulfill its promise to make education more affordable to all and provide loans to higher education students who may need them. No Nigerian should abandon studies because of lack of money.
The administration’s commitment should not falter on promoting the greatest good for the greatest number of people and should be adhered to strictly, especially the effects of the exchange rate and inflation on gasoline prices.
“We are also monitoring the effects of the exchange rate and inflation on gasoline prices. If and when necessary, we will intervene,” President Tinubu said.
The overriding need and urgency to monitor the effects of the exchange rate and inflation on petrol prices can be appreciated when viewed from the perspective of Gbenga Fapohunda, Group Chief Financial Officer, Dangote Cement, when he appeared on the Arise TV’s Global Business programme
Fapohunda said, “I had a $1 loan that was being priced at N465. All of a sudden devaluation came that same $1 loan was being priced at N756; we have to take the impact.
“From a Dangote perspective, we are working towards having an FX-neutral environment. I am doing a lot of exports and I am investing in doing more. I intend to do more so that I can have a lot of FX to mitigate those impacts and use them to buy my input materials like spare parts. That is a strategy from Dangote’s perspective.
“From the government perspective, I think the government is going in the right direction. I think ultimately when we get it right with the floating of the currency, I think availability will be there once we get it right at the end of the tunnel. It is going to be a turbulent journey but it would be more beneficial to businesses because you can predict what your prices would be and it would be more available. So, you can include that in your pricing, cost reduction initiatives to achieve a certain goal as set by the business.”
On the notion that the FX policy will usher in more forex from Foreign Direct Investments (FDIs) and if his company will benefit from it, Fapohunda responded, “Yes definitely it will. We have had sessions with foreign investors and multinational investors companies and clearly Dangote is one of the companies of choice; this is one of the largest companies in West Africa. It is something that will benefit us, help in pricing our shares, and make forex available for us in the environment. When FDI money is coming into the country, it would be huge, massive it helps in liquidity which helps in demand, supply and pricing.”
On this, experts say it can only happen in the long run and much depend on the implementation of the floating exchange rate system. Gbolade Idakolo, Managing Director, SD&D Capital Management Limited said, “President Tinubu’s address rolled out positive policy initiatives that should be applauded. If the frontal approach of the president to jumpstart the economy especially focusing on agriculture, manufacturing, MSME, etc, is properly implemented the economy will rebound in the next one year.”
This notwithstanding, it is pertinent to note that the speech rightly attracted scathing criticisms from economic experts soon after President Tinubu ended it. This should be taken in good faith and the points raised by the experts adequately considered for the overall well-being of the people.
Dr Chijioke Ekechukwu, Managing Director at Dignity Finance and Investment Limited, in his reaction stated that “Nigerians clamoured for this speech, which became necessary to give the citizens a hope that Nigeria was not heading for a crash.
“Our economy plummetted at an alarming level with all the narratives and indicators looking hopeless. My added recommendations are that we should ensure that our foreign financial obligations in the form of Letters of Credit are paid and banks are given enough access to foreign currency to meet these obligations, otherwise, getting into further international trade of either export or import will be difficult in subsequent months.
“We need to ensure that our oil production gets to the approved OPEC quota to close the revenue gap. More monies and loans need to be made available as fast as possible to all entrepreneurs of small and medium sizes at very low rates and must be done transparently and with integrity.
“We should make the importation of electric cars to be duty-free while the government provides charging points all over the country. I expected to hear the plans we have for our refineries in the short and long run. Either privatised to foreigners who will bring foreign currency to acquire or allow many modular refineries from foreign investors. We have to revisit the commodity export boards. This will make the government the of-taker of most agricultural produce and exports same while creating immediate market for the farmers. A lot of foreign currencies can be earned therefrom.”
In the words of Uchenna Uwaleke, Professor of Finance and Capital market at Nasarawa State University, “The president’s address to the nation is quite soothing. He spoke in clear terms and I think Nigerians should allow him the benefit of the doubt. But it was short on how the three arms of government will share in the pains of the governed, especially with respect to effecting a significant cut in the cost of running government.”
Despite the president’s address to the nation being quite soothing, it did not stop the organised labour, spearheaded by the Nigerian Labour Congress (NLC) and its affiliate bodies from embarking on a nationwide demonstration against the government’s economic reforms. The NLC took it a step further by taking to the streets on national protest to register the union’s displeasure in the manner the Federal Government handled the petrol subsidy removal and other economic policies without commensurate measures to cushion the unintended consequences of the reforms.
In all its ramifications, it appears that the president’s economic policies have struck the right cord in the World Bank President, Mr Ajay Banga, who has thrown his weight behind the administration’s economic reforms, saying that he is interested in the direction the president is going and not what happened in the past as the months and years ahead is crucial for the success of the reforms.
During an audience with Mr Banga last Friday at the Presidential Villa, Abuja, President Tinubu said a comprehensive forensic audit of the Central Bank of Nigeria (CBN) is underway, while a thorough overhaul of the civil service payroll is imminent.
“A comprehensive forensic audit is ongoing at the Central Bank. We are going to do a very serious structural review of the civil service payroll. I can’t believe in the numbers I am seeing and I have had that experience before at the state level. The reforms are in tandem with Nigeria’s Ease of Doing Business programme. We will block all financial loopholes. The reforms will be targeted at the way we work, change of attitude and equally on educating our people. It is costly but we will do it,” he told the visiting Banga, President of the Bretton Woods institution.
The turnings of sod last week Friday for the first phase (350MW) of the 1,350MW power generation project in Gwagwalada, Abuja and Mr Banga’s commendation of President Tinubu’s efforts in addressing the economic challenges of the country are testimonies to the administration’s resoluteness at addressing the economic challenges bedeviling the country.
Mr Banga’s words “Yes, we give money and our dollars are very important but where we are really helpful is our expertise and knowledge and our experience from many markets. In that way, we will always be your friend and partner, not just with the money, but with our minds and our hearts and you should rest assured about that,” is reassuring that Nigeria’s economic reforms are on the right trajectory to inclusive growth that would usher in the government envisioned shared prosperity.
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