Recently, the Financial Times interviewed me for a special report on Nigeria. The FT had interviewed me a few times before. So, when I received a call from David Pilling, the newspaper’s Africa Editor, I knew he probably wanted to interview me again. “I read your article on Tinubu’s economic reforms,” Pilling said. “I want to speak to you about it as I’m writing a report on Nigeria.” Of course, David, happy to talk, I replied. So, we spoke.
About two weeks later, on July 10, the report titled “Tough times and tough measures” was published in the newspaper’s “Big Read” section. The FT said, rightly, that I described the economic reforms of Bola Tinubu, Nigeria’s president, as “half-cooked”, and that I criticised the excess and profligacy of his administration. “You cannot say the economy is bad and spend money like a drunken sailor,” the FT rightly quoted me as saying.
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Indeed, I said that much in an article titled “The economic illiteracy at the heart of ‘Tinubunomics’” (BusinessDay, February 19, 2024). I argued that while the withdrawal of the fuel subsidy and the floating of the naira were, in principle, necessary, they were poorly introduced and badly implemented, without any consequential analysis.
Furthermore, I said the policies would fail without key complementarities and dependencies, notably increased exports and foreign exchange inflows to ease the pressure on the naira. In any case, I added, the policies were being undermined by Tinubu’s excessive borrowing and spending, which stoked inflation, exacerbated the cost-of-living crisis, and made a bad situation worse.
However, in the FT report, Tinubu’s aides described the withdrawal of the fuel subsidy and the floating of the naira as a “shock therapy” to put Nigeria’s economy on the right path. Tinubu himself was quoted as saying that the measures were the “repairs required to fix the economy over the long term.” Over the long term? John Maynard Keynes famously said: “In the long run we are all dead”. What about the short term? What about the medium term? Do they not matter?
Think about it. Millions of Nigerians are driven deeper into poverty, some dying from hunger and deprivations. The massive devaluation of the naira has crippled business activities and forced several businesses to close. Every economic indicator in Nigeria today is far worse than it was before Tinubu introduced his policies. No nation can prosper with inflation rate, interest rates, exchange rate, unemployment rate, poverty rate, etc, being where they are in Nigeria today. Shock therapy has not jolted Nigeria’s economy out of its sclerosis; rather, the economy is sinking deeper into the abyss, dragging ordinary Nigerians with it. But why?
Well, the truth, as the Financial Times later said in an editorial, is that “shock therapy alone will not cure Nigeria’s economic ills.” It is the height of economic illiteracy, as I argued in my article in February, for anyone to think that withdrawing the fuel subsidy and floating the naira alone would transform Nigeria’s economy without the existence of all the major complementarities and dependencies, including tackling inflation through fiscal rectitude. What’s more, the failure to mitigate the adverse consequences of the policies, such as the cost-of-living crisis and the steep devaluation of the naira, will be counterproductive, harming the economy even more and deepening poverty and misery in Nigeria.
We were told that the fuel subsidy enriched subsidy fraudsters, which is true. But today, the fraudsters are enjoying their illicit billions, untouched, while ordinary citizens are paying the price of the subsidy removal, with the tripling of fuel prices and the soaring costs of transport, food etc. We were told that the multiple exchange rates benefitted those gaming the system through arbitrage, which is true. But today, the unprecedented devaluations of the naira, and the associated hiking of interest rates, are decimating the manufacturing sector and forcing foreign multinationals to flee Nigeria. Portfolio investors may bring in hot money to take advantage of the excessively high interest rates – at 26.25 per cent – but foreign direct investors, the harbinger of innovation and technology and the creators of quality and well-paid jobs, are exiting an economy where inflation is three-decades high at 34 per cent, where there is a crippling dollar scarcity. Put simply, the economy is hostile to business growth.
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But there are human and leadership angles to all this. Tinubu sees his “reforms” as a “shock therapy” with long-term, pie-in-the-sky benefits while ordinary Nigerians are condemned to subhuman existence, thanks to extreme poverty and hunger. That is proof positive that he is mindlessly out of touch and indifferent to human suffering. Indeed, Tinubu further demonstrated his hard-heartedness when he unleashed the police and the military on the #EndBadGoveranceInNigeria protesters. Nearly 20 people were killed, according to the BBC. Of course, he also betrayed the same insensitivity when, nearly a week after the protests started, he gave a speech that failed utterly to acknowledge and address the concerns of the protesters, who were provoked by the extreme hunger and hardship in Nigeria.
Instead, Tinubu reeled off the “achievements” of his government. But no one who has read George Orwell’s classic polemic ‘Politics and the English Language’ would be beguiled by Tinubu’s vacuous speech. For, as Orwell said, “political language is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind.” In his speech, Tinubu talked about “My vision for our country.” But what’s that vision? Surely, if he believes, as Thomas Jefferson said, that “the care of human life and happiness is the only legitimate object of good government”, then he won’t spiel off meaningless “achievements” that do not improve the living standards and wellbeing of ordinary Nigerians. Tinubu’s speech showed a lack of empathy for the unbearable human suffering ordinary people are experiencing in this country.
“What’s more, the failure to mitigate the adverse consequences of the policies, such as the cost-of-living crisis and the steep devaluation of the naira, will be counterproductive, harming the economy even more and deepening poverty and misery in Nigeria.”
Take the so-called new minimum wage of N70,000 ($44.00) per month. According to the World Bank, extreme poverty is living on less than $1.90 per day. As of today, $1.90 is about N3,028. Now, divide N70,000 by 30 days, you get N2,333 per day. So, someone earning N70, 000 per month is living well below the extreme poverty threshold. What about coverage? According to the Nigerian Bureau of Statistics, NBS, around 8 percent of the adult working population are employed in the public sector and 9 percent are employed in the private sector, including religious organisations, while the remaining 83 percent are self-employed. So, only 17 percent of the adult working population will receive the minimum wage, the remaining 83 percent, in the informal sector, won’t. Yet, it’s such a trifling minimum wage, with such a piffling coverage, that Tinubu is trumpeting it as an “achievement”.
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In its recent “Jollof Rice Index”, the research outfit, SB Morgen, said a family on the new N70,000 per month minimum wage would spend 30 percent of their income on a single pot of Jollof Rice, Nigeria’s favourite meal. As SBM put it, “that’s a single mean in a month of meals.” This newspaper also brought the issue into sharp focus in an editorial titled “Nigerians feeling the pinch: ‘Shrinkflation’ shrinks wallets” (BusinessDay, July 22, 2024). Truth is, “shrinkflation” makes the minimum wage of N70,000 per month utterly worthless. Anyone who owns a dog in Tinubu’s government probably feeds it with more than N70,000 a day!
As I told the FT, although Nigeria’s economy is comatose, Tinubu’s government is spending money like a drunken sailor. Tinubu’s “shock therapy” only applies to ordinary Nigerians; it doesn’t extend to members of his bloated cabinet, and other cronies in his government, who leech off the state. He’s mindlessly insensitive!
