Former Vice President Atiku Abubakar has launched a blistering attack on President Bola Tinubu’s administration, warning that the president is running out of time to save Nigeria from doom.
Declaring Nigeria is not working, Atiku asserted that the current Nigerian leader is worsening the woes left behind by his predecessor, Muhammadu Buhari.
Buhari, who was president from 2015 to 2023, left behind what has been described as a ruined nation.
Speaking on the occasion of May 29, which heralds democracy day, a day Nigeria returned to democracy and transit from one administration to another quadrennially, Atiku said all Tinubu’s promises have failed to materialise.
According to him, Tinubu raised the hopes of Nigerians on May 29 with his pledge to “remodel our economy to bring about growth and development through job creation, food security and an end of extreme poverty.”
Since then, he said the president has also spoken about growing the economy at double-digit rates to US$1 trillion in six years, ending misery, and bringing immediate relief to Nigeria’s cost-of-living crisis.
Nigerians who listened to the president he said must have breathed a sigh of relief after their experience with ex-President Buhari’s 8 years of economic misadventure
He reminisced that Tinubu laid out no plans for the ‘remodelling’ of the economy but soon embarked on a cocktail of policies to achieve it.
One of the policies he said was the removal of fuel subsidy on May 29, 2023, and a month later, the implementation of a new foreign exchange policy by the Central Bank of Nigeria which unified the multiple official FX windows into a single official market.
The administration initiated more policies from the tightening of monetary policy to reduce Naira liquidity, a hike in monetary policy rates, the introduction of cost-reflective electricity tariff, to a cybersecurity tax, the last of which was immediately suspended.
Atiku however said, “Predictably, 12 months on, Tinubu’s pledge of growing the economy and ending misery remains unfulfilled. His actions or inactions have significantly worsened Nigeria’s macroeconomic stability.
“Nigeria remains a struggling economy and is more fragile today than it was a year ago. Indeed, all the economic ills – joblessness, poverty, and misery – which defined the Buhari-led administration have only exacerbated.
“Africa’s leading economy has slipped to the 4th position lagging behind Algeria, Egypt, and South Africa. Citizens’ hopes have been dashed (and not renewed contrary to the propaganda of the administration) as Nigeria’s economic woes have multiplied,” he said.
Atiku said the route to the sorry state in the country emanated from Tinubu’s inability to discern the downside risks of unleashing reforms without sequencing and without any ideas on how to implement them, and without any regards to their potential and real devastating consequences.
“Implementing policies without proper planning and a clear destination is nothing other than trial-and-error economics,” he said.
He emphasised that his “concerns have not diminished.”
Focusing on four areas to underscore those downside risks associated with the Tinubu’s reform measures and their dire consequences on Nigeria’s medium to long-term growth and development, Atiku said, the policies do not create prosperity.
“Instead, they pauperize the poor and bankrupt the rich. They spare no one. Nigerian citizens, the majority of whom are poor, are going through the worst cost-of-living crisis since the infamous structural adjustment programme of the 1980s.
“The annual inflation rate at 33.69% is the highest in nearly 3 decades.
“Food prices are unbearably higher than what ordinary citizens can afford as food inflation soared to 40.53% in April, the highest in more than 15 years.
“Nigerian citizens have to pay 114% more for a bag of rice, 107% more for a bag of flour, and 150% more in transport fares relative to May 2023.
“Today, in some locations, motorists are paying 305% more for a litre of fuel. Yet, on a minimum wage of the equivalent of US$23 per month, Nigerian workers are among the lowest wage earners in the world.
“Tinubu had the ‘courage’ to remove subsidy on PMS and impose additional taxes on his people but lacks the compassion to raise the minimum wage or implement a social investment programme that would reduce the levels of vulnerability, and deprivation of workers and their families,” Atiku stated.
On the business environment to attract investment and nudge local businesses towards growth, Atiku said the president has ended up creating a “hostile environment for businesses, big or small.”
In his justification, Atiku opined that the private sector is overwhelmed by the president’s dismal policies and overburdened by his failure to address the policy fallouts.
The manufacturing sector, which holds the key to higher incomes, jobs, and economic growth, he said has been bogged down by rising input prices, higher energy and borrowing costs, and exchange rate complexities.
According to him, since 2023, the average price of diesel has doubled to N1,600 per litre. Electricity tariff has recently been increased by 250% from N68/Kwh to N206/Kwh. In Q1 of 2024, energy prices were up by 70%, costing manufacturers N290 billion, Atiku added.
He lamented that since May 2023, corporate Nigeria has lost more than a dozen enterprises to other countries. Unilever, GlaxoSmithKline (GSK), Procter & Gamble (P&G), Sanofi-Aventi Nigeria, Bolt Food, Equinor, among others had exited Nigeria citing reasons including foreign exchange complexities, security concerns, and high operational costs.
According to the Nigeria Employers’ Consultative Association (NECA), nearly 20,000 jobs may have been lost due to the departure of 15 multinational companies from Nigeria.
Those enterprises that remain are struggling to survive, Atiku said, adding that a significant rise – to nearly 30% – in unsold goods in the warehouses of manufacturers of fast-moving consumer goods, occasioned by the rising cost of living and declining purchasing power of the citizens does not bode well for the country.
He added that a declining manufacturing sector cannot be an option following reports that manufacturers reported in Q1 a 10% drop in capacity utilisation, a 10% drop in production, a 5% drop in investment, and more than 7% drop in sales and most recently Dangote lamenting that nearly 97% of manufacturing concerns in Nigeria will be unable to pay dividends in 2024.
He said this is depressing in an economy with high rates of unemployment.
He carpeted the President’s foreign exchange policies, saying it had not had any positive impact on Nigeria’s foreign trade balance, contrary to policy expectations.
In particular, he said the free-float and the resulting devaluation of the Naira has not resulted in an appreciable improvement in Nigeria’s trade balance.
“Devaluation has not enhanced the competitiveness of local producers and has had no positive impact on exports of goods, primary or manufactured, ” Atiku argued.
He said, in Q4 of 2023, while imports surged 163.1%, exports rose at a slower 99.6%, indicating a huge foreign trade deficit.
Similarly, he said, in Q1 of 2024, Nigeria recorded a trade deficit of $7.5 billion, with exports value of $12.7 billion and import value of US$14 billion.
“Overall, the trade deficit as a percentage of GDP increased by 0.83% from 0.05% in May 2023 to 0.88% in May 2024,” Atiku said.
On attracting foreign businesses, he said President Tinubu’s policies have “failed to attract foreign investments into the country despite all the posturing and media hype by the President’s men.
“Exchange rate unification and free float of the Naira have not led to higher capital inflows (whether Foreign Direct Investment or Foreign Portfolio Investments), again contrary to policy expectations.
“Indeed, FDI inflows declined by 26.8%, from US5.33 billion in May 2023 to US$3.9 billion in May 2024. It is not difficult to understand why: FDI is about TRUST.
“It is about the investing world trusting the leadership of a country to act and deliver on promises made. Investors come when the right policies are designed and delivered timely and efficiently by public institutions.”
Atiku pointed out that, despite deploying various monetary policy tools, inflationary pressure persists, and so does exchange rate volatility, a policy he described as “misguided” which, as a consequence, led to the Naira’s value plummeting against the dollar and “has since become the worst performing currency in the world.”
He added that it is clear President Tinubu “has an exaggerated understanding of the efficacy of his policies and was not ready for the potential fallouts.
“Tinubu and his team are not exactly sure of where the reform process is and what the next steps are. Has Nigeria reinstated fuel subsidy? Is the Naira on a free or managed float?
“These trial-and-error policies raise questions about the readiness of the administration and their capacity to restore the economy to a path of sustainable growth.
“Time is running out for the government, and Tinubu must act fast to save the economy,” he said.
Atiku further listed six things Tinubu must do. Full text of the things below:
First, pause and reflect. It is important that the government understands what reforms must be undertaken and in what sequence. A framework is needed with clearly stated reform objectives and strategies.
Second, undertake a comprehensive review of the 2024 budget within the new reform framework. The 2024 FGN Budget, the exact size of which remains a mystery, is not designed to address the structural defects of the Nigerian economy or the cost-of-living crisis. It will neither create prosperity nor promote opportunities for our young people to lead a productive life.
The review must prioritise fiscal measures to deal with an unprecedented rise in commodity prices. Higher commodity prices have created more misery for the poor in our towns and villages and have pushed millions of people below the poverty line. One of such measures for immediate implementation will be to ease the existing restrictions on selected food imports.
Third, undertake a comprehensive review of the Social Investment Programme (SIP) to mitigate some of the impact of these policies on the most vulnerable households. The SIP must go beyond Conditional Cash Transfers to include programmes that prioritise support to MSEs across all the economic sectors, as they offer the greatest opportunities for achieving inclusive growth. In addition, a holistic programme to support medium and large-scale enterprises to navigate the stormy seas in the aftermath of the withdrawal of subsidy on PMS is also needed.
Fourth, Tinubu must be cautioned against any attempt to further pauperize the poor by introducing new taxes or increasing tax rates. We are aware of the behind-the-scenes attempts to increase VAT rate from 7.5% to 10%, re-introduce excise on telecommunication, and increase excise rates on a range of goods. It needs to be restated that we cannot tax our way out of this situation. Instead, Tinubu must see the need for expenditure rationalisation and restraint – by having the budget more in sync with Nigeria’s fiscal reality, by improving efficiency in revenue utilisation, improving procurement processes and trimming the size of government – and therefore reducing the cost of governance.
Fifth, provide clarity on the fuel subsidy regime, including the fiscal commitments and benefits from the fuel subsidy reform and the impact of this on the Federation Accounts. It is curious that since April 2024, fuel queues had mounted at many filling stations across Nigeria, and the infamous ‘black market’ has sprouted in several states. How much PMS is being imported and distributed, and at what cost? What is the implicit subsidy?
Sixth, tackle security headlong. President Tinubu, as a matter of priority, needs to rejig the nation’s security architecture as what is currently in place is not serving the needs of the people. The state of pervasive insecurity continues to adversely impact agricultural production and the value it brings to the economy, especially in the Northern parts of the country. Insecurity resulting from terrorism, banditry, kidnapping, and cattle rustling has compelled many crop farmers and pastoralists to abandon their lands and relocate to the neighbouring countries of Niger, Chad, and Cameroun. This has drastically caused a reduction in the production of food and skyrocketed prices of foodstuffs. Food scarcity in Nigeria is so dire that a report by Cadre Harmonize warns that between June and August this year, about 31.5 million Nigerians may face severe food shortages and scarcity
I have always been a reform advocate. The Nigerian economy certainly requires a large dose of reform measures to accelerate its transformation after many years of lacklustre growth.
The difference is that I understand the appropriate reforms to undertake and what steps to take per time to mitigate their negative impact. In my Policy Document, I had anticipated that the withdrawal of subsidy and unification of exchange rates could, in the absence of fundamental interventions, impact negatively on micro and small enterprises in the informal sector and on the medium to large enterprises in the formal sector. I had also anticipated that such policies could elevate the levels of vulnerability and deprivation of poor families, including the youth and adults with no incomes. With this understanding, I had designed robust mitigation interventions that will be implemented alongside our reforms.
I was prepared for reform fallouts. Tinubu wasn’t. However, it is not too late for him to change course and do what is right for the good of our people and our nation. -AA