The Nigerian economy is reportedly on the worst trajectory in a generation, according to a New York Times report, to which the Presidency has responded.
On Sunday, Bayo Onanuga, the President’s Special Advisor on Information and Strategy, responded to the article attributed to Ruth Maclean and Ismail Auwal.
The Presidency claims that the June 11 feature article titled “Nigeria Confronts Its Worst Economic Crisis in a Generation” reflected the customary, reductionist, disparaging, and demeaning way that foreign media establishments have covered African nations for a number of decades.
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The Special Advisor on Information and Strategy stated that the government needed to dispel some myths about the economic policies of the President Bola Tinubu administration, which took office at the end of May 2023, that the reporters had spread due to the report’s “misleading” slant.
One noteworthy feature of the study, according to him, was how it depicted the terrible circumstances faced by a few Nigerians during the previous year’s inflationary spiral and laid the entire blame on the new administration’s policies.
Additionally, he claimed that the report, which was based on multiple interviews, was at best skewed and full of negativity because it failed to highlight either the good things happening in the same economy or the helpful measures being carried out by the central and state governments.
Onanuga continued, claiming that Tinubu was not the cause of Nigeria’s current economic woes.
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The presidential aide said that Tinubu inherited them.
“As a respected economist in our country once put it, Tinubu inherited a dead economy. The economy was bleeding and needed quick surgery to avoid being plunged into the abyss, as happened in Zimbabwe and Venezuela,” he noted.
According to Onanuga, this served as the context for the government’s May/June 2023 policy decisions, which included eliminating the gasoline subsidy programme and unifying the various exchange rates.
The presidential adviser said that Nigeria had long-standing fuel subsidy policies that syphoned $84.39 billion from the national coffers between 2005 and 2022—a substantial amount given the nation’s severe infrastructure deficiencies and dire need for improved social services for its populace.
In addition, Onanuga claimed that the only importer, the state-owned oil company NNPCL, had accrued trillions of Naira in debt as a result of taking on the unsustainable subsidy payments on its books.
According to him, the national budget did not include any funding for fuel subsidy payments past June 2023 when Tinubu became office.
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“The budget itself had a striking feature: it planned to spend 97 percent of revenue servicing debt, with little left for recurrent or capital expenditure. The previous government had resorted to massive borrowing to cover such costs. Like oil, the exchange rate was also being subsidized by the government, with an estimated $1.5 billion spent monthly by the CBN to ‘defend’ the currency against the unquenchable demand for the dollar by the country’s import-dependent economy.
“By keeping the rate low, arbitrage grew as a gulf existed between the official rate and the rate being used by over 5000 BDCs that were previously licensed by the Central Bank. What was more, the country was failing to fulfil its remittance obligations to airlines and other foreign businesses, such that FDIs and investment in the oil sector dried up, and notably Emirate Airlines cut off the Nigerian route,” he said.
Onanuga claimed that on his first day in office, Tinubu reversed the subsidy system and the generosity that had extended to surrounding countries in an effort to combat the cancer of public finances. The naira was then floated by his administration.
He said, “After some months of the storm, with the naira sliding as low as N1,900 to the US dollar, some stability is being restored, though there remain some challenges. The exchange rate is now below N1500 to the dollar, and there are prospects that the naira could regain its muscle and appreciate to between N1000 and N1200 before the end of the year.
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“The economy recorded a trade surplus of N6.52 trillion in Q1, as against a deficit of N1.4 trillion in Q4 of 2023. Portfolio investors have streamed in as long-term investors. When Diageo wanted to sell its stake in Guinness Nigeria, it had the Singaporean conglomerate, Tolaram, ready for the uptake. With the World Bank extending a $2.25 billion loan and other loans by the AfDB and Afreximbank coming in, Nigeria has become bankable again. This is all because the reforms being implemented have restored some confidence.
“The inflationary rate is slowing down, as shown in the figures released by the National Bureau of Statistics for April. Food inflation remains the biggest challenge, and the government is working very hard to rein it in with increased agricultural production.
“The Tinubu administration and the 36 states are working assiduously to produce food in abundance to reduce the cost. Some state governments, such as Lagos and Akwa Ibom, have set up retail shops to sell raw food items to residents at a lower price than the market price.
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“The Tinubu government, in November last year, in consonance with its food emergency declaration, invested heavily in dry-season farming, giving farmers incentives to produce wheat, maize, and rice. The CBN has donated N100 billion worth of fertiliser to farmers, and numerous incentives are being implemented. In the western part of Nigeria, the six governors have announced plans to invest massively in agriculture.
“With all the plans being executed, inflation, especially food inflation, will soon be tamed.
“Nigeria is not the only country in the world facing a rising cost of living crisis. The USA, too, is contending with a similar crisis, with families finding it hard to make ends meet. US Treasury Secretary Janet Yellen raised this concern recently. Europe is similarly in the throes of a cost-of-living crisis. As those countries are trying to confront the problem, the Tinubu administration is also working hard to overturn the economic problems in Nigeria.
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“Our country faced economic difficulties in the past, an experience that has been captured in folk songs. Just like we overcame then, we shall overcome our present difficulties very soon.”
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