REUTERS
LAGOS, June 27 (Reuters) – New Nigerian President Bola Tinubu has moved at lightning speed in his first month in office, implementing a raft of radical changes aimed at finally unleashing the full potential of Africa’s sluggish economic giant.
But while his rapid headway on reforms has wowed investors, some analysts, observers and business leaders warn that bigger challenges await and question whether the 71-year-old – viewed by many as part of Nigeria’s old guard – is really the man to take them on.
“There has been a big policy shift (but) I think there are things that investors would like to see happening to really be convinced that this is a clean break from the past,” said Jason Tuvey, deputy chief emerging markets economist at Capital Economics.
Nigeria today faces record debt, unemployment is worryingly high, and power shortages have contributed to years of anaemic growth. Oil output is shrinking. And rampant insecurity has placed swathes of the countryside outside government control.
Solving those problems would be hard. But the task is made harder, observers say, by the rampant corruption and entrenched patronage networks so often blamed for the country’s woes.
“The path to political power in Nigeria, over time, has always been through these vested interests,” said Bismarck Rewane, CEO at Financial Derivatives Company in Lagos.
“When you deny them of their source of livelihood, then they will fight back.”
KEEPING THE PEOPLE ON SIDE
Days after his inauguration, Tinubu scrapped a decades-old petrol subsidy. He then quickly suspended the central bank governor and freed up the exchange rate.
Both reforms should have long-term payoffs. Cementing them in the near-term won’t be easy, however.
In a televised appeal, Tinubu argued ending the costly subsidy would free up money for education, regular power supply and healthcare, and “save our country from going under”.
But the subsidy was popular.
Petrol prices have nearly tripled, hitting millions of households and small businesses that rely on petrol for power because the national grid is patchy. Transport fares have soared for workers and farmers taking produce to market.
“Tinubu said he was the best man for the job but we go suffer already,” said Lagos driver Tunau Taiwo, 38. “What will happen after six months?”
An attempt to reduce the subsidy a decade ago provoked protests, forcing the government to backtrack. And unions are calling for Tinubu to reverse course or, failing that, impose a six-fold hike in the minimum wage.
Ending forex restrictions and unifying the exchange rate to end chronic dollar shortages will cause further pain.
The resulting naira devaluation could accelerate inflation in a country where four in 10 live below the poverty line.
Tinubu won’t be able to count on post-election popularity while he waits for reforms to bear fruit, having garnered the fewest votes of any president since military rule ended in 1999.
