One year on: Tinubu’s self-defeating economic policy
In addition to the complicity of the government itself in undermining its own policy, a broad range of critical constraints exist to bring the outlined road map to “prosperity”, a favourite but bogus slogan of President Ahmed Bola Tinubu to a dead end. This is not to suggest that Mr Tinubu lacks goodwill or even […]
President Bola Tinubu
In addition to the complicity of the government itself in undermining its own policy, a broad range of critical constraints exist to bring the outlined road map to “prosperity”, a favourite but bogus slogan of President Ahmed Bola Tinubu to a dead end.
This is not to suggest that Mr Tinubu lacks goodwill or even good intention but like many others before him, the reality of the objective constraints, still, not searched for, undiscovered and largely unattended to, lay in the wait to vitiate the wished-for trajectory of Mr Tinubu’s “prosperity”.
Already, the two major policy planks of the government: the removal of petrol subsidy and floating of the exchange rates have been undermined by the government and its agencies that any prospects that the policy will result in the intended objective is a grand mirage.
On his assumption of office on May 29 last year, the president announced that “subsidy is gone.” While the pronouncement was clearly ill-thought out, the government and their mouth-pieces claimed the action was a courageous one. The government however, went on to reap a wind fall of billions of Nigerian naira from the subsidy removal, issued from the inaugural address of a president that was less than 24 hours in office then. However, what followed with a sudden increase in the revenue of government at all levels was outstanding in its further distortions and disarticulation of an economy, whose structural stress is at a breaking point.
With more cash at all levels especially at the state governments and MDAs, what would have rightly been invested in rural revitalisation through provision of critical infrastructures, especially in reviving rural feeder roads, and other life enhancing facilities, as rural water supply, primary healthcare centers, massive rehabilitation of primary schools; rather opened a fresh vista for wild and free spending across the spectrum of all political actors.
The government’s other policy plank of floating the exchange rate played directly into the waiting arm of the excess revenues in the government coffers from the removal of the fuel subsidy. The excessive and even desperate demand for foreign currency, especially the US dollar from among the government circles at all levels triggered the super dive of the local currency, the naira to unprecedented lows.
With the huge revenue accruing to government at all levels from the removal of petrol subsidy, far from being invested in critical sectors to unlock existing potentials, these monies are mostly converted to foreign currency and stashed away to prepare for the next elections and to fund jamborees. With rising and persistent pressure on the naira due to excessive demand for the U.S. greenback, the naira continued in its miserable fate of free fall. The government’s response to the CBN’s policy of pouring more foreign exchange into the market to stem the haemorrhage of the local currency worsened the matter because the constant and persistent run on the local currency from the insatiable demand of the foreign exchange was fuelled by the increasing liquidity of the local currency in the bourgeoning kits of the various tiers and agencies of the government.
To add comedy to an otherwise serious matter, government security agencies including the Economic and Financial Crimes Commission (EFCC) deployed its personnel on the street to hunt down currency traders. It did not occur to the purveyors of the thoughtless action that those with huge transactions of the foreign currency, especially those awash with the naira, who are most likely to be those in government or their cronies need not come to the physical vicinity of the currency traders.
They naively occupy the physical space, where currency traders stay and foolishly assume to have disrupted the illegal currency market, whereas, the real market is not a physical space but a transaction that can happen anywhere and in any format. The cumulative result of the CBN monetary policy of targeted injection of foreign exchange to the market, which is easily absorbed for the reasons I have just outlined, makes the policy as it has seemingly become, a rolling stone that gathers no moss. These twin policies, which the government initially claimed would stabilize the economy and redirect it to productivity have had the opposite effect.
With excessive cash in their kitty especially the foreign currency, no major investment of the type that would unlock, potentials in agriculture, industry, education or health has been initiated or rather, is sustainably ongoing. Palliatives, which no serious government would utter fronted to douse the inefficacy of a sterile economic policy, which as a measure since the previous governments has absolutely done nothing to alleviate or ameliorate poverty but has unconscionably maintained people in excruciating poverty.
With President Tinubu’s government policy roadmap drowned in the vast intrigues of his co-travellers in power, how dare, would prosperity be achieved for millions of Nigerians who profess voraciously that life under the ‘Renewed Hope’ of President Tinubu has become more precarious?
Against the background of extant policy failures, the mantra of the government to attract foreign investment is an even bigger mirage. A key fact to know about foreign investment is that they look out for performing economies with the prospect of quick profitable returns on investments. They are not international humanitarian organisations like Red Cross, Red Crescent or Doctors without Borders that look out for crisis areas, where to intervene and mitigate human suffering and save lives.
To be attractive to foreign investors, especially real investors and not portfolio speculators, stability in the area of monetary policy, and proactive fiscal policy to expand the space for demand of goods and services that foreign investors would likely offer must be reasonably guaranteed. Where the labour force or a major swath of the population, which constitutes a potential market for the prospective investors are poorly paid and abysmally earned, thereby characterised by extremely low purchasing power, wooing real foreign or even domestic investors is an exercise in self-delusion.
Investors of any type especially real and serious ones do not care so much about government goodwill as much as they do for profitable and viable markets. And in the current clime of President Tinubu, these existential conditions are evidently absent. The topsy-turvy in the foreign exchange market and the government’s endless and shifting narratives ensure that the very volatility that foreign investors fear and avoid is dangerously looming.
Politics and the nature of power are the reasons why economic and social policy are in shambles and fatally unable to address the serious challenges of the country.
The nature of power which prioritises entitlements and privileges for its holders, instantly disconnects government officials from the dire realities that Nigerians face. It has become a tradition that people elected or appointed to public office, first address their entitlements and privileges; brand new cars, brand new houses, allowances, rents extracted using their vintage new offices and feverish preparations for the next elections.
As President Tinubu’s government has marked one year in office, it should reflect more profoundly and appreciate the burden it must carry with a profound sense of purpose and duty and stop the delusions of having ‘renewed hope’ whereas the reality, Nigerians live and experience in their daily routine is of hope and future stolen.
Onunaiju wrote from Abuja