The Chief Economist of the World Bank, Indermit Gill, attracted a deserving response after saying at the opening plenary of the just concluded Nigerian Economic Summit that economic reforms in Africa’s most populous nation will need to run for ten to fifteen years to produce enduring results. Nigerians who have derided the comment by the respected economist believe that he did not address the whole matter and chose instead to remind them of the acute and sometimes dehumanising pain that ongoing reforms by the government have inflicted on them.
“Reforms necessarily come with pain, but there are known ways of mitigating this pain, especially for the very poor, and there are also reform measures that this government has failed to embark on, which can result in huge benefits with little or no pain for Nigerians.”
“But this is only the beginning,” said Gill. “Nigeria will need to stay the course for at least another 10 or 15 years to transform this economy. And it will become an engine of growth in sub-Saharan Africa, and it will have to transform sub-Saharan Africa.”
Gill has become a good salesman for Nigeria. In a recent op-ed in the Financial Times, the World Bank economist said, “Nigeria’s government deserves the world’s support in this endeavour. Failure in Nigeria would set back the cause of reform across Africa, besides ruining the prospects of yet another generation of young Nigerians. The country’s elites must forge a political consensus in support of these reforms because their long-term interests lie in a broadly prosperous and stable society. For its part, the international community should do everything in its power to help the government succeed.”
All of this is good. The problem with Gill’s statement, however, is that he did not speak out at the government’s failure to follow through on its limited reform measures by attacking why Nigerians have suddenly become unhappy with the government’s reforms, which they embraced in May of last year. Reforms are not just about pain.
Gill’s pronouncement presupposes that the scope and completeness of the ongoing reform in Nigeria is anywhere near what should and can be done. It is the reason many Nigerians took his comments to mean an endorsement of the needless pain that the reform has inflicted on them. Reforms necessarily come with pain, but there are known ways of mitigating this pain, especially for the very poor, and there are also reform measures that this government has failed to embark on, which can result in huge benefits with little or no pain for Nigerians. The people believe that the reform burden they are being asked to bear is disproportionate, and this is leading those who bear this pain to doubt the sincerity of the government’s reform.
Read also: T-Pain or T-Hope: The World Bank applauds President Tinubu’s reforms
In truth, the removal of petrol subsidies and the elimination of the corrupt multi-exchange rate regime are key reform measures that should long have been implemented, and it is to the credit of most Nigerians that they welcomed the “subsidy is gone” announcement made by President Bola Tinubu at his inauguration on May 29, 2023. That the same Nigerians are now complaining a year later is a pointer to poor communication and also the failure of leaders in the legislative and executive arms of government to demonstrate that they can lead by example. Nigerians link their pain to the high level of spending and corruption in government that have remained unacceptably high at a time the people are being asked to tighten their belts.
While the World Bank’s chief economist requires more patience from Nigerians, there is not much to suggest that Nigeria is optimising the gains of its current reforms. Economists, including Tilewa Adebajo, are calling for a reset, insisting on a major change in the reform template.
“We do not agree with the World Bank’s position and timeline,” said Adebajo in a recent advisory. “The pronouncements are not backed by credible research or evidenced by data sets in its latest Nigerian economic report. It is, however, time for a reality check, as the control levers for economic growth and development rest firmly in the hands of the Nigerian government. The reform program, while commendable, has not been implemented properly. The cart was put before the horse. This led to a free fall of the currency, resulting in a 200 percent devaluation and a surge in inflation and money supply. The outcome of the reforms and failure of the social intervention program is an economic reform quagmire. It is therefore time for the government to hit the reset button, as it will take at least another budget cycle to achieve economic stability.”
In truth, there is a litany of areas where the government can do better. One major such area that requires change is the state-owned oil company, NNPC Limited. Taiwo Oyedele, who leads the President’s committee for fiscal policy and tax reforms, believes that in a different country, the same NNPC should be delivering between $18 and $20 billion into the Treasury as taxes yearly. Making the NNPC more efficient will bring no additional pain to Nigerians, but so far this government has failed to do what is required for change to happen at the NNPC. On Tuesday, the finance minister and coordinating minister for the economy, Wale Edun, moaned about
Nigeria’s worrying failure to catalyse an increase in oil production can quickly bring relief to the acute foreign exchange crisis confronting Nigeria. Edun’s worries are shared with Adebajo, who says, “Nigeria must permanently resolve its vulnerability to oil price fluctuations. It must emulate other oil-producing nations like Norway, with a US$1.6 trillion sovereign wealth fund. Last year, the Norwegian fund delivered US$213 billion in profits.” One way to make the move is by restricting NNPC so its ownership can mirror that of the highly successful Nigerian liquefied natural gas company.
Africa’s most populous nation also needs to get gas to its stranded power plants, and this can be achieved by privatising the Nigerian Gas Company Limited, but this will not happen without significant changes to the way NNPC is structured. And doing this will not inflict any additional pain on the people. Nigeria is said to have dead assets estimated at over N100 trillion, which should be made to work for the people by selling them or handing them over to private managers. But so far, this government has not shown any willingness to do this. Months ago, the Nigerians were treated to some noise about how the government is building a proper asset register; however, there has been no movement in this regard. There are good examples in Nigeria of how state-owned assets have been transformed by calling in private. The privatisation of the Eleme Petrochemical Plant is one case in point. This government must also launch programs that are capable of positively impacting the food situation in the country, firstly by dealing with the heightened insecurity in most of the farming belts. It can do this by approaching insecurity from a regional angle in which the states are grouped into regions with a focus on one region at a time. The huge farm-to-market waste must also be dealt with strategically and in a short time. Most interventions by this government around agriculture have been slow and lacking in rigour.
While the exemplary courage shown by the government in removing fuel subsidies is touted often by government officials, it is inexplicable that the government has so far failed to attempt some of the above transformative changes.
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