By Leonard Karshima Shilgba
Here are some undeniable facts since President Bola Ahmed Tinubu was sworn in as President of the Federal Republic of Nigeria on May 29, 2023: The pump price of Nigeria’s beloved petrol ballooned from less than N200 a litre to above N1,000 a litre, the exchange rate of naira to US dollar has madly swung from about N300 to $1 to above N1,600 to $1 (far above even the benchmark mark exchange rate of N800 to $1 stipulated in the 2024 Appropriation Act!).
Ineluctable with these indices is the horrendous dip in the real incomes of everyday Nigerians by at least 400%! To illustrate this scenario, I should state that while the highest paid professors at federal universities went from earning about $3,000 a month pre-Buhari era to earning less than $1,000 a month by May 29, 2023 (a loss of 200%) in about eight years, the same professors went further downwards from earning barely $1,000 a month to earning less than $500 a month in less than one year! I concede that the harsh economic situation under President Tinubu (less than two years into his tenure) has cost him many admirers already.
l must, however, state the not so obvious facts as follows: (1). The current inflation in Nigeria is driven primarily by very high energy costs (e g. costs of petrol, diesel, gas, aviation fuel), which, in turn, have made electricity tariffs to be hiked. The federal government sustained “fuel subsidy” as a policy rather than a palliative for TOO LONG, whereas, all subsidies are supposed to be only a stop-gap approach to temporarily support the weak (people and industries) while being enabled to be strong and self-supporting.
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Unfortunately, one national government after another in Nigeria was too fearful or lacking in initiative to remove the public funds-guzzling hole called “fuel subsidy” at the APPROPRIATE TIME. And what were its opportunity costs? Public Education, Development Infrastructure, Public Health, Living Wages for government employees, etc., became opportunity costs. Budget deficits grew as “fuel subsidies” became a permanent policy rather than a temporary palliative. It got so bad that the Nigerian government started staking crude oil in the ground against foreign borrowing!
(2). President Muhammadu Buhari signed the Petroleum Industry Act (PIA) in October 2021, which officially scrapped the long overdue “fuel subsidy,” while President Bola Tinubu had the onerous responsibility to fully implement the PIA. Some Nigerians argue that why was President Jonathan resisted when he removed “fuel subsidy” in 2012 while some people who opposed his decision at the time (e.g. Tinubu and other patriots such as my humble self) now support the removal of “fuel subsidy”?
The reason is apparent, isn’t it? There is a time for everything, says the Holy Scripture. At the time President Jonathan announced the removal of “fuel subsidy” Nigeria lacked local petroleum refining capacity, and there was no prospect that she would get such capacity even in a decade. Today, Nigeria has local petroleum refining capacity both for domestic consumption and export. Accordingly, she doesn’t have to rely on imported refined petroleum products post-subsidy removal. Secondly, removal of “fuel subsidy” by presidential fiat in 2012 rather than through a well thought-out Act of the National Assembly (which has now cleaned and opened up the oil sector) was poor management of the situation.
(3). From October when Nigeria officially stopped importing petroleum products, it is economically reasonable to expect that demand for foreign exchange for their import would gradually taper towards the zero level, thus driving up the value of the Nigerian naira, national income, household incomes, while progressively reducing inflation or cost of living.
(4). One of the bills that President Tinubu sent to the National Assembly a few days ago aims at requiring 30% of annual accruals to the Tertiary Education Fund (TETFUND) for zero-interest student loans. If this passes and the end result is faithfully implemented, public universities and other tertiary education institutions shall be well funded thereby, because they could charge appropriate market value for the education they offer. What has been going on is that directives forbidding tuition and moderating other charges in federal tertiary education institutions have deprived them of needed funds while, at the same time, the federal government’s inability to generate high revenues (due, in part, to various “subsidies” and loopholes in our tax or revenue collection buckets) has hampered its ability to offer them the desired operating funds.
What President Tinubu is doing is gradually handing back autonomy to federal universities and other tertiary education institutions, growing federal revenues, blocking leakages in the system, and allowing real market-driven prices in our economic system.
Many Nigerians are feeling the heat economically, and this is understandable and indubitable. By May 29, 2025, let us revisit this discussion.
Anyone that has better ideas should offer them.