By Williams Anuku The Presidency has reacted to a report published in the New York Times criticising the Nigerian economy as facing ...
By Williams Anuku
The Presidency has reacted to a report published in the New
York Times criticising the Nigerian economy as facing the worst trajectory in a
generation.
Special Adviser to the President on Information and
Strategy, Bayo Onanuga, on Sunday reacted to the report credited to Ruth
Maclean and Ismail Auwal’s.
According to the Presidency, the feature story with the
title, ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’, published
on June 11, reflected the typical predetermined, reductionist, derogatory and
denigrating way foreign media establishments reported African countries for
several decades.
The Special Adviser on Information and Strategy said because
of the ‘misleading’ slant of the report, the government needed to clear up some
misconceptions conveyed by the reporters as regards the economic policies of
the President Bola Tinubu administration that came into power at the end of May
2023.
He said one significant aspect of the report was that it
painted the dire experiences of some Nigerians amid the inflationary spiral of
the last year and blamed it all on the policies of the new administration.
He also said the report, based on several interviews, is at
best jaundiced, all gloom and doom, as it never mentioned the positive aspects
in the same economy as well as the ameliorative policies being implemented by
the central and state governments.
Onanuga went on to say that Tinubu did not create the
economic problems Nigeria faces today.
According to the presidential aide, Tinubu inherited them.
“As a respected economist in our country once put it, Tinubu
inherited a dead economy. The economy was bleeding and needed quick surgery to
avoid being plunged into the abyss, as happened in Zimbabwe and Venezuela,” he
noted.
Onanuga said this was the background to the policy direction
taken by the government in May/June 2023: the abrogation of the fuel subsidy
regime and the unification of the multiple exchange rates.
According to the presidential aide, for decades, Nigeria had
maintained a fuel subsidy regime that gulped $84.39 billion between 2005 and
2022 from the public treasury in a country with huge infrastructural deficits
and in high need of better social services for its citizens.
Onanuga also alleged that the state oil firm, NNPCL, the
sole importer, had amassed trillions of Naira in debts for absorbing the
unsustainable subsidy payments in its books.
He said by the time Tinubu took over the leadership of the
country, there was no provision made for fuel subsidy payments in the national
budget beyond June 2023.
“The budget itself had a striking feature: it planned to
spend 97 percent of revenue servicing debt, with little left for recurrent or
capital expenditure. The previous government had resorted to massive borrowing
to cover such costs. Like oil, the exchange rate was also being subsidized by
the government, with an estimated $1.5 billion spent monthly by the CBN to
‘defend’ the currency against the unquenchable demand for the dollar by the
country’s import-dependent economy.
“By keeping the rate low, arbitrage grew as a gulf existed
between the official rate and the rate being used by over 5000 BDCs that were
previously licensed by the Central Bank. What was more, the country was failing
to fulfil its remittance obligations to airlines and other foreign businesses,
such that FDIs and investment in the oil sector dried up, and notably Emirate
Airlines cut off the Nigerian route,” he said.
Onanuga said to deal with the cancer of public finance,
Tinubu on his first day rolled back the subsidy regime and the generosity that
spread to neighbouring countries. Then, his administration floated the naira.
He said, “After some months of the storm, with the naira
sliding as low as N1,900 to the US dollar, some stability is being restored,
though there remain some challenges. The exchange rate is now below N1500 to
the dollar, and there are prospects that the naira could regain its muscle and
appreciate to between N1000 and N1200 before the end of the year.
“The economy recorded a trade surplus of N6.52 trillion in
Q1, as against a deficit of N1.4 trillion in Q4 of 2023. Portfolio investors
have streamed in as long-term investors. When Diageo wanted to sell its stake
in Guinness Nigeria, it had the Singaporean conglomerate, Tolaram, ready for
the uptake. With the World Bank extending a $2.25 billion loan and other loans
by the AfDB and Afreximbank coming in, Nigeria has become bankable again. This
is all because the reforms being implemented have restored some confidence.
“The inflationary rate is slowing down, as shown in the
figures released by the National Bureau of Statistics for April. Food inflation
remains the biggest challenge, and the government is working very hard to rein
it in with increased agricultural production.
“The Tinubu administration and the 36 states are working
assiduously to produce food in abundance to reduce the cost. Some state
governments, such as Lagos and Akwa Ibom, have set up retail shops to sell raw
food items to residents at a lower price than the market price.
“The Tinubu government, in November last year, in consonance
with its food emergency declaration, invested heavily in dry-season farming,
giving farmers incentives to produce wheat, maize, and rice. The CBN has
donated N100 billion worth of fertiliser to farmers, and numerous incentives
are being implemented. In the western part of Nigeria, the six governors have
announced plans to invest massively in agriculture.
“With all the plans being executed, inflation, especially
food inflation, will soon be tamed.
“Nigeria is not the only country in the world facing a
rising cost of living crisis. The USA, too, is contending with a similar
crisis, with families finding it hard to make ends meet. US Treasury Secretary
Janet Yellen raised this concern recently. Europe is similarly in the throes of
a cost-of-living crisis. As those countries are trying to confront the problem,
the Tinubu administration is also working hard to overturn the economic
problems in Nigeria.
“Our country faced economic difficulties in the past, an
experience that has been captured in folk songs. Just like we overcame then, we
shall overcome our present difficulties very soon.”
No comments