Presidency to New York Times: Tinubu didn’t create current economic problems
The presidency has declared that the present economic crisis being experienced by Nigerians was caused by the previous administration and not the present government.
Bayo Onanuga, Special Adviser to President Bola Ahmed Tinubu on Information and Strategy, reacted yesterday in a statement to a piece on the Nigerian economy titled ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’ published by the New York Times.
He said the article was not only predetermined but a “reductionist, derogatory, and denigrating way foreign media establishments reported African countries for several decades.”
In trying to put the report in perspective, the presidency said, “President Tinubu did not create the economic problems Nigeria faces today. He inherited them. As a respected economist in our country once put it, Tinubu inherited a dead economy,” adding that, “The economy was bleeding and needed quick surgery to avoid being plunged into the abyss, as happened in Zimbabwe and Venezuela.”
Onanuga noted that the above scenario was the background to the policy direction taken by the government in May/ June 2023, “the abrogation of the fuel subsidy regime and the unification of the multiple exchange rates.”
The presidential aide said: “For decades, Nigeria had maintained a fuel subsidy regime that gulped $84.39 billion between 2005 and 2022 from the public treasury in a country with huge infrastructural deficits and in high need of better social services for its citizens.
“The state oil firm, NNPC, the sole importer, had amassed trillions of naira in debts for absorbing the unsustainable subsidy payments in its books. By the time President Tinubu took over the leadership of the country, there was no provision made for fuel subsidy payments in the national budget beyond June 2023. 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 presidency disclosed that the previous administration had resorted to massive borrowing to cover such costs. “Like oil, the exchange rate was also being subsidised 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 importdependent 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,” it said.
It added that President Tinubu had to deal with the “cancer of public finance on the first day by rolling back the subsidy regime and the generosity that spread to neighbouring countries. Then, his administration floated the naira.
“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.
“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 longterm 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 presidency also stated that inflationary rate is slowing down, as shown in the figures released by the National
Bureau of Statistics for April, adding that, “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.
“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.”