BAYO ONANUGA FROM INDEPENDENT
The removal of fuel subsidy and the move to merge foreign exchange rates, two headline reforms introduced by the Tinubu administration since late May, triggered problems such as high fuel prices and the depreciation of the Naira, two monstrosities which combined to cause a general spike in costs of services and goods.
Today, many Nigerians complain of a rise in the cost of living.
According to the latest National Bureau of Statistics (NBS) report, Nigeria’s inflation, which rose to 26.7 percent in September, again rose to 28.2% in November from 27.33% in October. Food Inflation remains untamed, rising from 31.52% in October to 32.84% in November 2023.
To compound the economic problems, few multinational companies such as GlaxoSmithKline, Procter & Gamble have announced their exit from our country, complaining about the difficult operating environment and the scarcity of dollars.
The truth is that the new policies alone are not solely responsible for the economic problems we are facing today.
We were destined for the tough and rough patch, where we are today because of the prevailing conditions before Tinubu took over on 29 May.
As at June 2023, the budget deficit was N10.8 trillion. Actual Debt service was 98.95 percent of revenue, far higher than the projected 59.37 percent. Inflow into the country’s foreign reserves came in trickles. And so bad was the state of affairs that Nigeria could not remit about $800 million fund of foreign airlines.
JP Morgan exposed our near insolvency by claiming in a report that our net foreign reserve was just about $3.7 billion, not the $33 billion plus flaunted by Emefiele’s Central Bank of Nigeria (CBN).
President Bola Tinubu, who promised during the campaign to take hard and difficult decisions, moved to tackle the economic problems from Day One, by first dispensing with the wasteful fuel subsidy that was billed to consume about N7 trillion this year, five times more than what was provisioned for capital spending.
President Bola Tinubu is quite aware of the side effects of his move to reset our economy. Though his administration has earned plaudits from the World Bank, the International Monetary Fund (IMF) and rating agencies such as Moody’s and Fitch, he is not carried away by the praises.
He is focused on turning the economy round for growth, development and prosperity.
The moves are yielding some good effects. Amidst what some sections of the media perceive as general gloom, some silver linings are emerging, signposting that with a little more patience, our material conditions will improve and inflation will be tamed. For businesses, operating conditions will also improve.
In its third quarter report for the year, the NBS reported that GDP grew by 2.54percent. In a similar period in 2022, Gross Domestic Product (GDP) recorded a growth of 2.25%. To demonstrate that the sun may be shining on us again, the 2.54% GDP growth recorded in Q3, was also higher than the 2.51% recorded in Q2.
The service sector, made up of information and communication, financial and insurance, was responsible for the growth witnessed in Q3. It had a 3.99% growth, contributing 52.7% of the aggregate GDP. The agriculture sector declined from 1.34% growth in Q2 to 1.3percent in Q3.
Growth was also recorded in construction and real estate, metal ores (69.76%), coal mining (58.03%), chemical and pharmaceutical products (6.77%), Cement (4.2%) and construction (3.89%). Oil reported a negative growth of 0.85%, a major improvement to the negative 22.67% recorded at the same period last year. It was -13.43 in Q2 of 2022.
