On Sunday, the Presidency refuted assertions that President Bola Tinubu’s policies are to blame for Nigeria’s greatest economic crisis in a decade, emphasizing that the issues were passed down to the current administration.
In response to an article published on June 11 in the New York Times (NYT) headlined “Nigeria Confronts Its Worst Economic Crisis in a Generation,” the president outlined the reasons for the country’s economic problems as well as the steps being taken by the current government to reverse the trend.
The Nigeria National Petroleum Company Limited (NNPCL) accumulated trillions of naira in debt in order to pay for the unsustainable subsidy payments, while the fuel subsidy regime swallowed $84.39 billion between 2005 and 2022, according to the rejoinder written by Bayo Onanuga, Special Adviser to President Tinubu on Information and Strategy, and made available to correspondents on Sunday.
The rebuttal said that up until recently, the government had been spending $1.5 billion per month to protect the naira.
It claimed that due to a severe infrastructure deficit and debt payments that required up to 97% of the previous administration’s income, it had to take on significant debt in order to make ends meet.
The administration said that the New York Times mirrored the customary, preset, reductionist, disparaging, and dehumanizing manner that international media organizations covered African nations for a number of years.
It claims that the report’s most important aspect is how it depicted the terrible experiences of a few Nigerians during the country’s recent inflationary spiral and laid the blame squarely on the new administration’s policies.
It said that the study, which was based on several interviews, was at best skewed and full of negativity since it failed to highlight either the good things happening in the same economy or the helpful measures that the federal and state governments were putting in place.
The presidency added: “To be sure, President Tinubu did not create the economic problems Nigeria faces today. He 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.
“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.
“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.
“The state oil firm, NNPC, the sole importer, had amassed trillions of naira in debts for absorbing the unsustainable subsidy payments in its books.
“By the time President 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.
“President Tinubu had to deal with the cancer of public finance on the first day by rolling back the subsidy regime and the generosity that spread to neighbouring countries. Then, his administration floated the naira.
“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.”
The presidency was of the view that 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,” it pointed out.
