Just over three months ago, markets hoping for a quick pivot to reforms cheered the new President Bola Tinubu administration amid a wave of optimism.
Tinubu is from the same party as his predecessor, Muhammadu Buhari, dubbed “Baba Go-slow” for his slow pace – he took six months to appoint cabinet members.
By contrast, Tinubu, without fanfare, announced ‘petrol subsidy is gone’ at Eagle Square after taking office on May 29 and suspended the controversial central bank governor, Godwin Emefiele, some ten days later.
Reuters, a foreign news agency, even labelled him as ‘Baba-Go-Fast’. The word ‘reforms’ increasingly appeared next to his name in generous endorsements by multilateral development agencies and foreign investment banks.
In response, Nigerian stocks gained 5.23 per cent on Tinubu’s first day in office (May 30), the biggest stock gain recorded on the first day of office of any Nigerian president since 1999.
“Just the fact that you have seen quite a bit of movement in a relatively short time has excited many people in the market,” said Andrew Matheny, an economist at Goldman Sachs.
Read also Full text of inaugural speech by President Tinubu
Tinubu’s Policy Advisory Council also said addressing oil theft and pipeline vandalism, growing oil and gas production, and resolving the cash shortage are significant tasks before the president in the first 100 days.
“We shall remodel our economy to bring about growth and development through job creation, food security, and an end of extreme poverty,” Tinubu said in his inaugural speech.
One hundred days later, there is a growing concern that the Tinubu approach shows weak execution in sustaining the momentum of reforms or unleashing the full potential of Africa’s biggest economy.
For instance, they say the inevitable removal of petrol subsidies without a detailed nature and scope of palliatives has caused serious confrontation from labour unions, insisting the nation’s four refineries should be functional before subsidy removal.
“The impact of petrol subsidy removal was immediate and far-reaching. On the other hand, there was little clarity or surefootedness in the immediate on how the government would provide needed relief,” a senior executive in the oil and gas sector said.
“The palliative plan had to be forced out of the president, and when it finally came in bits and pieces, the plan was — and is still — all over the place,” he added.
On Monday, the National Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE) issued a statement saying all banks will be shut down on Tuesday (today) and Wednesday.
Read also Fuel queues appear in Osun after President Tinubu’s inaugural speech
According to the NUBIFIE’s statement, the notice aligns with the Nigeria Labour Congress’ resolution to embark on a two-day strike action, which was made after the National Executive Council meeting held last Thursday.
“We hereby direct all our organs to comply with this directive by ensuring all our members stay off duties for the two days.” Mohammed Sheikh, the union’s general secretary, said in a circular seen by BusinessDay.
Kelvin Atafiri, CEO of Cavazanni Human Capital Limited, said Tinubu’s government failed to address issues in the downstream sector, such as trade finance, guarantee strategic stock, and provide access to crude oil for refineries before the complete removal of petrol subsidy.
“We need actions in terms of palliatives in the form of public transportation and freight of agricultural produce, not bags of rice or cash transfer,” Atafiri added.
Beyond subsidies, Nigeria is finding that it will take more than three months to undo the eight years of damage done to confidence in its foreign exchange market, as the bold move to a more flexible exchange rate in June has not started yielding the desired results.
Read also 8 palliative plans from Tinubu’s speech
The dollar supply remains thin, piling pressure on the naira, which traded at 917 per dollar on Monday, according to multiple traders who spoke with BusinessDay.
The gap between the official and parallel market rates, which had narrowed in the early days after the naira was floated, has opened up again. With the official rate closing at N915 per dollar on Monday, the gap is now at N175 per dollar.
“Liberalising the FX market is a great idea, but it has to be followed with consistent monetary and fiscal reforms that would deliver the benefits of a liberalised market,” said Abiola Rasaq, an economist and former head of investor relations at United Bank for Africa.
The Central Bank of Nigeria has faced criticism for going to sleep after taking the critical first step towards fixing its broken FX market after it allowed demand and supply to determine the exchange rate again after years of pegging it.
The move was, however, never intended to be the sole solution to Nigeria’s acute dollar shortages. Still, the critical steps the market expected will follow the shift in policy have not happened.
Importers of a list of blacklisted 43 items continue to be shut out of the official market, forcing demand to the black market. At the same time, the apex bank has failed to come clean on its actual level of dollar reserves, with independent estimates suggesting it is half of the amount publicly declared.
Read also Subsidy removal, naira volatility…, key issues Tinubu’s speech will address
The lack of transparency around the allocation of foreign exchange has also not helped the naira, according to Ari Aisen, the International Monetary Fund’s mission chief for Nigeria.
“Access to foreign exchange must be transparent with the right macroeconomic policies in place to reduce volatility,” Aisen said.
He stressed the need to mop up excess naira liquidity to stabilise the currency.
Concerning Tinubu’s ministerial list, analysts who spoke to BusinessDay after the list was released said it was full of recycled politicians who might help him in the event of a rerun, expressing doubts that this set of ministers would take Nigeria to greater heights in the Tinubu era.
Politicians dominate his cabinet, including ex-governors and serving and former Senate and House of Representatives members. This development has made analysts question their ability to deliver.
Shehu Sani, a former lawmaker and president of the Civil Rights Congress of Nigeria, said the president has embraced “some serpents with a known history of treachery and rewarded some vultures for playing the Judas”.
“Appeasing a snake in a palace doesn’t spare the King,” he tweeted.
“The economy cannot grow if we continue with the same template that has made us poor over the years,” Henry Luqman, senior economist at Cavazanni Human Capital Limited, said.
