BY PUNCH EDITORIAL BOARD
AFTER 18 months in office, Bola Tinubu’s first presidential media chat gives nothing away. The President trod wearily on the old paths: the removal of petrol subsidies, the uncontrolled cost of governance, including the bloated cabinet, corruption, and a lack of domestic production. In the end, Tinubu created the impression of hope but the reality on the ground is a different ball game.
The President made sense regarding the administration’s tax reforms. He is right that Nigeria’s tax laws are obsolete. The proposals will widen the tax net and relieve the lowly-paid workers. The main antagonists are the political leaders from the North and some state governors.
At between 6.3 per cent and 10.6 per cent of GDP, Nigeria has one of the lowest tax ratios in the world. The African average is 15 per cent, and the OECD made 33.9 per cent in 2023. The World Bank recommends a minimum of 15 per cent. Tinubu’s target is 18 per cent by 2026.
In many ways, the opposition to the new VAT distribution formula, which is derivation-based, is a pushback against federalism. The reforms are right to put more money in the hands of the lowly paid for consumption and savings.The wealthy should pay more. Tinubu should press on but engage the opponents of the tax reforms more.
The removal of the petrol subsidies, a decision he made within his first hour in office, continues to haunt him. Sounding defiant, Tinubu abjured the retention of the subsidies or its phased removal. “There is no way that you give out fuel and allow all the neighbouring countries as Father Christmas,” he said. “I don’t have any regret whatsoever in removing the subsidy. It is necessary. We cannot spend our future generations’ investments upfront.”
The President is focused solely on government revenue. From N200 per litre in May 2023, petrol sold for N1,300 per litre about two months ago though with the Dangote Refinery and competition, the prices have reduced. This has created a huge financial hole in the pockets.
In a country where the minimum wage is about $40 per month compared to $16.50 per hour in California, Nigerians are living in extreme hardship. It is not easy for businesses as well. The President misses the point by saying those who own luxury cars should reduce their ostentatious lifestyle. Even manufacturers are struggling with high energy bills. This is seen in the closures and the exit of multinationals.
Rightly, Tinubu declares: “Babajide (Otitoju), I don’t believe in price control.” This is a fundamental principle at the heart of successful modern economies. It forms the basis of the withdrawal of petrol subsidies and the cancellation of the subsidies for Band ‘A’ electricity consumers.
To make it count, Tinubu should expressly walk the talk. After removing the petrol subsidies, he should have commenced the privatisation of the four NNPC-owned refineries. The government should not control the means of production; it is a recipe for corruption, inefficiencies, joblessness, and importation of what the country has a comparative advantage in.
The liberalisation of the telecoms sector in 2001 proved that the Nigerian government is unwise to hold on to the critical points of the economy, especially in the steel, petroleum, and electricity sectors. If Tinubu does not believe in price control, he should allow private capital to work in Nigeria.
The President resisted the suggestion to reduce the size of his bloated cabinet. His argument that Nigeria is a large country betrays prioritising politics over logic. Nigeria has a population of 230 million and a $362.8 billion GDP.
Apart from nearly 50 cabinet members, the President has a slew of aides of full cabinet rank. He acquired an aircraft with $150 million and luxury Escalade vehicles for presidential use. In a video circulating online, a Nigerian woman was seen trekking to work alongside Mark Rutte, the former Netherlands’ prime minister.
The federal parliament is a house of unbridled consumption and waste. The Economist of London describes members as the highest paid in the world. Legislators receive N21 million monthly; ranking legislators receive N500 million yearly as constituency allowance. Waste.
In contrast, the United States, with a population of 334.9 million and a $27.36 trillion GDP, operates with a 16-man cabinet. Tinubu should get competent people on board and stop making excuses. Canada has a $2.14 trillion GDP and operates a 35-member cabinet, including the Prime Minister, Justin Trudeau.
In the First Republic, the premiers ran with lean cabinets. Governor Adekunle Ajasin ran Ondo State with a compact cabinet in the Second Republic. Tinubu should cut Nigeria’scoataccording to itseconomic size.
Nudged about his ambitious target to slash inflation from 34.60 per cent to 15 per cent in 2025, the President reiterated his earlier promise during the 2025 budget presentation. He hinged this on domestic production, ranching, improved security, and mechanised farming (agriculture rather than subsistence farming).
This is a mixed bag. Inflation has been relentless since Tinubu cancelled petrol subsidies and floated the naira. Worse, the lending rate is 27.5 per cent. This disincentivises borrowing for production.
Food inflation is far higher. In the core food-producing states, bandits, Islamic terrorists, kidnappers, and Fulani herders have combined to send the farmers packing from the land. Although it is harvesting season, tomatoes, onions, peppers, and beans are overly expensive. At N90,000 per 50kg bag, only princes can afford rice in a country where the minimum wage is N70,000 monthly.
In truth, the security system is still very weak. He has promised to end banditry, but the policing system is archaic and unfit for a modern era or a federal system of government. Unwisely, Nigeria is the only federal system operating a single police structure. Most officers are assigned illegally to protect VIPs to the detriment of all citizens. State police is the way forward.
The President is excited about his fight against corruption. He cited the seizure of 753 duplexes in Abuja from an individual, the payment of N70,000 as the minimum wage and the student loan as proof. The seizure is without full disclosure, which gives a hint of elite protection. His cabinet is ringed with ministers with questions about their moral credentials. Grand corruption and budget paddingare irredeemably high.
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