• Friday, April 19, 2024
businessday logo


Tinubu’s dilemma amid reform backlash

Bola Tinubu’s dilema

A reformer faces the ire of his people

Then-candidate Bola Ahmed Tinubu’s manifesto came in a sleek PowerPoint presentation of twenty-nine slides prepared by his team and signed off by Femi Pedro, his former deputy governor and Babatunde Ogala, a senior advocate of Nigeria. Nine months into his administration, examining the poetry of election campaigns with the prose of governing is timely. The focus is the BAT manifesto released before last year’s elections. It is poetic and reels many exciting initiatives and bold views of the future.

This review is more pressing as countervailing forces rally against the speed and spread of Tinubu’s reformagenda to transform the economy. Tinubu’s policies hinge on the floatation of the naira and the removal of petrol subsidies. They have caused considerable hardship from runaway inflation.

In his Bola Ahmed Tinubu manifesto, Tinubu envisioned Nigeria as a “role model for all black people worldwide and respected among other countries.” It would also be a country with a robust economy, where everyone broadly shares prosperity irrespective of class, region, and religion”. Nigeria would be a nation of justice, peace, and prosperity.

His “actionable social contract with the Nigerian people” affirms his resolve to run an inclusive government. “I do not intend to go it alone”, Tinubu stated. He would govern with the people’s consent and active participation.

The BAT Manifesto assured the federal government would “optimise economic growth and employment.” Specifically, the Tinubu government “will build an efficient, fast-growing, and diversified emerging economy with real GDP growth averaging 12 per cent annually for the next four years, translating into millions of new jobs.”

The BAT Manifesto specifies rolling out a new National Industrial Policy, a National Policy on Agriculture, and a National Infrastructure Plan.

It envisages a major public works program with significant and heavy investment in infrastructure and value-adding manufacturing and agriculture.

Under the National Industrial Policy, the Tinubu FG will devote particular intervention to textiles, cement, steel, oil, gas, petrochemicals, light manufacturing, food processing, and information technology. The government will focus on “areas with abundant raw materials and competitive advantage”.

The BAT Manifesto identified information technology, entertainment, music, and tourism as “new key drivers of the economy with special vehicles and funding mechanisms”.

In it, Tinubu promised: “I will establish new industrial growth centres by creating six Regional Economic Development Agencies. These agencies will create sub-regional industrial hubs to exploit each zone’s competitive advantage and optimise their potential. I will promote innovation and creativity through heavy investment in research, development, science, and technology.”

The BAT Manifesto goes beyond this general outline to provide specific details. It promises that the Tinubu government will generate 15,000 megawatts of electricity “distributable to all categories of consumers nationwide” within four years. We take the count to have commenced on 30 May 2023.

The BAT Manifesto assured that the government will “immediately privatise NNPC, compel exploration companies to list their equity on the Nigerian Stock Exchange, and contribute greatly to the Sovereign Wealth Fund”.

The Tinubu Government promised in the document that it would devolve the management of the solid mineral sector to the state governments, saying “the Federal Government will focus on exploration, research, and development to promote increased local and international investment in the sector”.

My administration will strengthen the new Lagos Commodity

Exchange Board and promote the establishment of new ones for strategic agricultural products like cotton, cocoa, rice, soya beans, corn, palm kernel, and groundnuts, thereby guaranteeing minimum prices for all these cash crops, boosting productivity, and enhancing average farm income and growth in the rural economy.

There are more explicit promises on education in the manifesto.

Tinubu stated, “I am fully committed to overhauling the education sector and making a significant impact on education as a priority. I will triple education spending over the next four years from the current 8% to over 25%. I will embark on free daily school meals for millions of primary school children nationwide in partnership with the agriculture and food processing sector.

“I will revive technical and vocational education nationwide by establishing Local Technical Institutes in every state” to promote technical and vocational education. The new LTIs will provide free training to our unemployed youth so they can acquire the basic skills necessary under the new Infrastructure Plan.

‘I will initiate a new creative means of funding tertiary education by granting universities the financial autonomy to explore new sources of financing through grants, corporate sponsorship, tuition fees, etc. My administration will collaborate with all the tertiary education sector stakeholders, including students, parents, the academic community, relevant unions, and the government.

One bold promise: “I will instantly end the culture of strikes and the shutdown of higher institutions in Nigeria and predictably harmonise the school calendar.”

President Bola Tinubu built a reputation as a free-market exponent and a federalist. In the last nine months, his well-chronicled philosophies have come under close scrutiny, all flowing from his first-day policy declaration that some have said were not backed by a sustainability plan. For instance, the closest thing to federalism has been a statement on state police without any action plan.

Tinubu has repeatedly said he will not reverse his reforms, but a close examination after nine months shows that he is facing strong headwinds.

On May 29, the petrol subsidy was banished. Still,economists now say the petrol subsidy today is in the region of N1trn monthly, more than twice the amount when his predecessor left office. While the state-owned

The oil company NNPCL has yet to provide data on how this subsidy or under-recovery is being met; it is safe to presume that it is being paid for by what should be going into the federation account, FAAC. After waking up the organised labour, it is unlikely a green light will be given for an increase in the petrol price in Nigeria any time soon.

Another area of new subsidy or ballooning subsidy is electricity. After struggling for years, the last administration virtually cleared this subsidy category by progressively allowing DisCos to raise consumer tariffs. Tinubu’s government has vehemently resisted any hike in electricity tariff, and as a result, the subsidy is north of N160bn monthly. President Tinubu’s reluctance to permit free market reign is understandable. A note by the Economist Intelligence Unit sent to clients on Monday, 11 March 2024, said Tinubu “has attempted a transformation of the country’s economy since coming to power at the end of May 2023. Major market reforms have been undertaken, but implementation has been hurried, and the government is failing to bring the country on board.”

The EIU note added, “Inflation, which has spun out of control since a collapse in the currency, is driven by high food prices.” The note said the current hardship can “be traced directly to government policy.”

Protests have been reported in a number of cities including in the president’s base in the southwest and debilitating incidents of mass kidnapping and killings in parts of Nigeria are helping to further stoke the fire of anger across the land.

Tinubu has often said that he is willing to be unpopular in his mission to fix Nigeria’s economy, which was struggling under the weight of various market distortions before he came to office. He has also appealed to Nigerians to be patient and to wait for improvements to be felt in job creation and investment. However, according to analysts at EIU, “as a result of him lifting petrol subsidies and liberalising the exchange rate almost simultaneously, and without first priming the market or consumers, inflation is now running at about 30%, led by surging prices for food. As mitigation, the authorities have announced that cash transfers to 15m households will resume, although corruption and inflation have undermined the effectiveness of the policy, originally announced by President Tinubu in October 2023. Grain warehouses and silos are being ransacked, including in the capital, Abuja. At least one subnational state, Niger state, in central Nigeria, has banned the sale of agricultural produce outside its borders.

“Trade unions have held protests about the high cost of living, demanding that the pre-Tinubu status quo of a managed exchange rate and low petrol prices be restored. Nationwide strikes are a growing probability, which internal security staff have warned would lead to anarchy. It is one of the most serious food crises since the start of democracy in 1999.”

President Tinubu is in a dilemma. According to the EIU, “if he reverses the economic reforms entirely, his reputation as an iron‑willed reformist will be shattered. Staying the course will almost certainly stop him getting re‑elected in 2027. The thinking in government appears to be finding a grey area. Petrol prices have de facto been fixed since mid‑2023, in a clear sign that the government is responsive to its unpopularity. More recently, Tinubu’s government directed Nigeria’s cement manufacturers to reverse recent price increases. This action not only contradicts his market-oriented economic plan but also lacks legal basis, exceeding the interventions of even more statist governments in the past.”

For Tinubu his vision for Nigeria is of “..a nation transformed into greatness, the pride of Africa, a role model for all black people worldwide, and respected among all other countries.” There may yet be time for him to bring his dreams to reality.