President Bola Ahmed Tinubu’s economic team faces an arduous journey as Nigeria grapples with escalating economic challenges, exacerbated by a legacy of a battered economy.
The path ahead for Tinubu’s ministers is laden with complexity and urgency as the nation contends with persistent inflation, soaring unemployment rates, and mounting trade imbalances.
The nation’s ongoing economic struggles have triggered a resounding call for astute leadership capable of effectively navigating these intricate issues and steering the economy towards a trajectory of stability and growth. The imperative for decisive and skillful economic management has never been clearer as Nigeria confronts a landscape defined by economic uncertainty and pressing challenges.
In recent years, Nigeria’s economic landscape has become increasingly ominous, with its very core rattled by grave challenges that seem unyielding. The dissonance between the mandates laid out in the Central Bank of Nigeria Act (2007) and the current state of the economy is glaringly evident. As the Central Bank of Nigeria (CBN) grapples with responsibilities encompassing maintaining price stability, managing reserves, and safeguarding monetary and financial stability, experts’ voices underscore the severity of the situation.
This grim reality finds its reflection in escalating costs – a domino effect felt across various facets of life. The transportation of goods and people, particularly inter-state travel, has witnessed an exponential doubling of expenses.
President Bola Tinubu’s inauguration announcement on May 29, proclaiming the elimination of fuel subsidies, served as a harbinger of increased hardships for Nigerians already grappling with economic adversity. This announcement translated to a surge in Premium Motor Spirit (PMS) prices from N195 to an average of N500 per liter. This, however, marked only the inception of the economic storm, as subsequent price adjustments propelled by global market dynamics led to a staggering N617 per liter in the FCT and other regions.
Andrew Amate, a resident of the FCT and owner of a Sports Utility Van, shares his escalating financial burdens, revealing the exorbitant expenses he incurred. In May 2023, fueling his vehicle cost him N17,000; in June, this escalated to N46,000, and a further rise to N54,000 in July. Similar tales of escalating costs afflict public transportation nationwide. Bus fares between regions have doubled or even tripled, escalating the financial burden on citizens.
A pivotal driver behind these escalating expenses is the cost of fuel, intricately entwined with the high cost of foreign exchange. To mitigate the surging fuel costs, economic experts urge the federal government to intervene in the foreign exchange market. Failure to do so, they warned, could potentially propel petrol prices to the staggering threshold of N1000 per liter – a catastrophic outcome for an already burdened populace.
Proposed solutions encompass providing temporary preferential foreign exchange rates for petrol importers, refurbishing local refineries for domestic petroleum product refining, and establishing modular refineries to address potential shortfalls.
Dr. Felix Echekoba, a finance lecturer at Nnamdi Azikiwe University, underscores the importance of combatting oil theft to meet OPEC production quotas, thereby boosting foreign exchange earnings.
In tandem with this economic turmoil, the cost of food has spiraled beyond the reach of many. The price of rice increased by 29 per cent between June and August. In the face of stagnant incomes, job losses, and a staggering food inflation rate of 26.98 per cent, a growing number of Nigerians grapple with tightening their belts to a point where it becomes stifling.
Ubong Edet, a Lagos resident, shares the sobering reality of his experience. His N70,000 salary, which previously provided adequate sustenance for his family of three, now falls short. Such hardships reverberate across societal strata.
Mama Uche, an Akara seller in Lagos, recounts how increasing food costs have constrained her family’s daily food ration. Her clientele dwindles as her customers grapple with escalating expenses.
Amid this backdrop of spiraling costs, the inflation rate stands at 24.08 per cent, with food inflation reaching an astonishing 26.98 per cent on a year-on-year basis. The cumulative effect of these factors compounds the hardships faced by citizens.
Adding to this challenge, the government has overseen a series of price hikes across various sectors. The imposition of fees for proof of ownership certificates for vehicles and the escalation of fees for Federal Government Colleges raise further concerns as parents contend with financial burdens, public universities follow suit, escalating charges for students.
Moreover, the cost of foreign exchange has led to increased drug costs. Laureta Ogamba, a diabetic sufferer, finds herself struggling to afford essential medication due to the absence of health insurance. Her predicament underscores the broader impact of escalating costs on citizens’ health.
As Nigerians face this crescendo of challenges, the struggle transcends mere inconvenience – it evolves into an excruciating reality. The removal of fuel subsidies, coupled with currency fluctuations, rising inflation, escalating unemployment, and soaring costs of essentials, paints a bleak portrait of adversity for the masses.
“In light of this situation, it becomes imperative for both federal and state governments to acknowledge the widespread hardship and implement practical measures to provide relief for Nigerians. Unfortunately, it seems that the government lacks clear solutions to restore stability. It resorted to the ineffective tactic of conditional cash transfers to so-called impoverished citizens, which the Muhammadu Buhari government mismanaged, squandering substantial resources allocated for this futile endeavour and only backtracked after public outrage,” said an economic analyst, Julius Bakare.
Furthermore, the African Development Bank projects subdued real GDP growth for Nigeria. The removal of fuel subsidies, coupled with increased revenue, may potentially narrow the fiscal deficit to below 5 per cent of GDP in 2023–24.
The perpetual cycle of escalating costs, stagnant incomes, and diminishing standards of living necessitates a resolute response. Confronting this reality demands innovative measures, proactive policy adjustments, and the steadfast commitment of leaders to alleviate the suffering of Nigerians, ensuring that the future offers hope rather than despair
A sobering fact compounds Nigeria’s economic challenges: the population growth rate is at 3 per cent, and to achieve a meaningful impact on the economy, GDP must grow by at least 6 per cent, a feat that has eluded the nation for the past seven years.
With the gravity of Nigeria’s economic challenges and the inherited state of the economy, the seasoned insights from these experts underscore the necessity of an experienced economist to reshape the bank’s trajectory and steer it back to a position of strength. As the country strives to overcome these daunting hurdles, the right leadership choice has the potential to transform Nigeria’s economic trajectory and usher in a brighter future for its citizens.
