Tuesday Column By VICTORIA NGOZI IKEANO
vikeano@yahoo.co.uk | 08033077519
In a write up soon after Asiwaju Bola Ahmed Tinubu was sworn in as Nigeria’s 16th president, I said that I felt sorry for him as he is assuming office at a most critical junction in Nigeria’s history — when the country is to all intents and purpose, practically broke. Asiwaju was very successful as governor of Lagos state and especially lauded for cleverly finding a creative way to navigate through the withholding of the state’s statutory allocation during the Obasanjo regime. However, I pointed out that the times and environment are different. Lagos is not Nigeria. Essentially, much water has passed under the bridge since over 15 years when he was governor, albeit governor of a state that is Nigeria’s commercial nerve centre and most populous . Nigeria as a whole has changed significantly since then in all aspects, socially, economically and even geographically. Whereas one could solve problems at the sub regional, state, micro level using a ‘single lane’ approach, tackling them from one perspective; at the macro, national level you have to take several factors into consideration. Because of the diverse and complex nature of our country with competing and even conflicting interests (what is good for one region may not be good for the other) any Nigerian leader to be fairly successful, has to learn the art of deftly balancing the various interests in taking a decision.
President Tinubu had somehow set a rather high expectation for his presidency when he asserted that he asked for the job, campaigned for it and would not disappoint Nigerians. On reflection, I hold the view that he and his team should have moderated the expectations of Nigerians or warned them about the difficult times ahead, at least in the initial first year and so lessen whatever disappointment they may experience during these months. As it is, President Tinubu would have come to the stark realisation that he has a mountain to climb in his avowed commitment to stabilise, rejig Nigeria economically, socially and politically. He is now literally fighting many wars in many fronts in less than 100 days in office. More worrisome is that both the masses and the elites are apparently not on his side because they are both feeling the biting effects of his policies. Well intentioned as they appear on paper, they are having a negative effects on both the rich and the poor, everyone.
The crying started a few minutes after the new president was sworn in on May 29,2023, when he declared in his inaugural speech that “subsidy is gone”. Immediately, virtually all the retail fuel stations nationwide closed shop. By the next day, Nigerians discovered to their amazement that retail price of petrol had skyrocketed to between N500 to N550 per litre, depending on your location. It was almost similar to the fate that befell Nigerians when the Jonathan administration increased pump price of petrol on the very first day of January. Many people who had travelled for the Christmas and New Year festivals suddenly found themselves stranded as transport fares jerked up beyond their budget.budgets. Some had to sell their handsets in order to make up the additional transport fares to be able to return to their bases. There is a difference between both scenarios though. While Jonathan’s subsidy removal involved a relatively marginal increase, the one witnessed at end of May was rather high- over 50 percent above the then official pump price. Like all other increases in petrol retail price, it had the spill over effect of also affecting transport costs and to wit, prices of all goods and services. Both the ordinary man/woman on the street and the middle class were both hit as the average car owner could no longer afford to fill up his/her tank, given the exorbitant cost of doing so.
And just as Nigerians were resigning themselves to fate, reluctantly accepting that the rather high retail petrol price with its multiplier effect is something they have to live with, marketers last month again raised the price to N600 per litre, about N100 increase. They attribute the increase to the depreciation of the naira. So much naira is needed to buy one US dollar, the currency of international trade. We do not refine any petroleum products in our country even though we are a major exporter of crude oil from which these products are refined. All of our refineries are non functional. And the Dangote Refinery that was launched with pomp and ceremony in the dying days of former president, Mohammadu Buhari is yet to start production, over two months after its commissioning. So, the country ironically imports the various by-products of crude oil ( petrol, diesel, aviation oil, keresine, etc) and pay in scarce dollars. And now, the marketers have put us on notice that petrol prices are going to be jerked up yet again, next week. It will be selling for N700 per litre, yet another whooping N100 increase. Nigerians are flabbergasted. Again, the reason is the continuous depreciation of our Naira vis a vis the dollar. Are we to be expecting upward reviews of petrol pump prices every month, given that the continuous naira slide against the dollar appears unabating.
Soon after removal of fuel subsidy, the Tinubu administration announced deregulation of the foreign exchange market, that is, that the naira’s exchange rate would be determined by market forces of demand and supply. This had the immediate effect of crashing the naira’s exchange rate in relation to the dollar at both the official and parallel (black) market. It had continued its free fall since then and today the dollar is selling at nearly N1000 at the parallel market. This is something many Nigerians would have considered impossible in January, 2023. It turns out that the Central Bank of Nigeria had been shoring up the naira exchange rate at the official window through heavy borrowings from international bankers, running into billions of dollars. This huge debt which the CBN is apparently unable to pay is now is affecting the country’s credit worthiness and continuous depreciation of the naira. Most of the elites have their wards/children in foreign schools and they now need millions and millions of naira to be able to buy the equivalent dollars for their school fees. As it stands, the elites, rich, middle class, the poor, all strata of the social ladder are not smiling. The administration has urged patience, promising that things would brighten up by next year. Given the harsh realities on the ground, the administration has to take some drastic measures to mitigate the slide, lest things boil over.
