Presidential address by Tinubu on subsidy removal was not Pro-poor, Lacks Basic Economic Principles— FENRAD
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Foundation for Environmental Rights, Advocacy and Development, FENRAD, a pro-democracy and environmental rights advocacy group working on diverse social development sectors, having obtained and analyzed the video clip and text of the presidential address on subsidy removal delivered and broadcast live on national television on Monday, July 31, 2023, considers as inapposite and anti-poor certain propositions and positions captured in the 41-paragraph piece.
First, it is sufficiently clear that the president addressed the nation in a unilateral tone, using the pronoun ‘I,’ and not ‘we.’ To us as a Foundation, the meaning is that, as had been suggested in some quarters, the current subsidy-free regime is a one-man decision lacking in proper consultation, even though former President Muhammadu Buhari set the policy in motion by not making provision for fuel subsidy beyond June of 2023 in the 2023 Appropriation Act. This is sad when situated within the context of a democracy, which is government by consent of the majority – a government that says ‘we,’ against one that says ‘I.’ Worst is that such premature policy proclamation from the president came at a time when he was yet to name his aides, form an economic team, constitute his cabinet or even meet with the governors to map out his economic direction. By hastily removing petrol subsidy without first putting in place immediate intervention mechanisms and stimulus packages to incentivize production, the president put the cart before the horse. The sufferers today are the breathless poor whose cause, ironically, the president claims to be championing or fighting.
The most alarming thing about the presidential address was that it failed to outline any immediate intervention that alleviates the suffering of the people. For one, we had expected that having gone through this route before as a nation, it is imperative President Tinubu who hitherto criticized the same subsidy removal under former President Goodluck Jonathan in 2012 put palliative support in place before the May-29 declaration. Subsidy is an investment, so any government that removes the fund must reinvest it in critical sectors to create buffer around the economy. It should be recalled that the Jonathan government came up with Subsidy Reinvestment Programme, SURE-P. Tinubu’s palliative support, his speech said, will arrive by March of next year (2024). The question then becomes, ‘How many Nigerians and Nigerian businesses will become poor or go under in the intervening months before March of next year?
Already, a recent release from the World Bank has it that 64 million Nigerians are food insecure, so where will all this leave these ones in the next seven months the palliative will finally drop, assuming the palliatives actually reach the poor? President Tinubu’s address clearly failed to address what his immediate and short-term plans towards steadying the economy are in these hard times. To us, the meaning is this: President Tinubu may end up impoverishing more Nigerians like Buhari before him.
To buttress this point about impoverishing more Nigerians, we are aware that when President Buhari assumed office in 2015, 76 million Nigerians were said to be poor. After wasting six months without a cabinet to enforce executive supervision over the ministries, Nigeria, like a compass less ship, slumped into an unheard-of recession such that by 2018, Brookings Institution reported that 88 million Nigerians had become poor, making Nigeria ‘world poverty capital,’ as reported by Poverty Clock. The meaning is that between 2015 to 2018 alone additional 12 million Nigerians became poor under Buhari’s watch. Then, following the COVID-19 pandemic with its attendant lockdown, the EndSARS Protests and other global events, the economy contracted further due to a sharp fall in global oil price. Nigeria’s budgets suffered deficit and were unable to meet the benchmarks, as a result of this macroeconomic instability. Buhari, having promised to ‘lift 100 million Nigerians out of poverty,’ began his social intervention programmes, SIPs, conditional cash transfer, CCT and other social safety net programmes. With a phony national social register compiled by and domiciled with the ministry of humanitarian affairs, disaster management and social development, coordinated and supervised by none other than Hadiya Umar Farouq, Buhari wasted trillions of Naira on ‘trader moni,’ ‘farmer moni,’ ‘schoolchildren feeding’ and the like, but could not actually reach Nigeria’s poor. By 2022, National Bureau of Statistics, NBS, this time a local institution, different from the World Bank, Brookings Institution and Poverty Clock, said 133 million Nigerians were facing ‘multidimensional poverty.’ If we subtract 76 million (being the number of poor Nigerians in 2015 when Buhari assumed office) from 133 million (the 2022 poverty figure when he was leaving office), the meaning is that Buhari created more 57 million poor Nigerians, over half the number (hundred million) he had promised to lift out of poverty after 8 years in office. Irony is that Tinubu was relying on the so-called social register compiled under Buhari to distribute the now-relaxed ₦8,000 palliative fund to 12 million vulnerable households. Even the transfers to nano industries and small-holder farmers that will receive grains and wheat from the nation’s strategic reserve, left us wondering how the president intends to get to the real farmers, unlike Buhari’s Anchors Borrowers programme of the CBN that culminated in the loss of ₦500,000,000,000 (five hundred billion Naira)!
Simple analysis is that Tinubu does not really understand the trajectory of the Nigerian economy. Especially the trends of the last three years. In 2020, the pandemic ground all economic activities to a standstill. Then, there were the EndSARS Protests, all which rocked the nation’s economy. Few years to the 2023 general elections, Emefiele’s cashless policy hit Nigerians harder, such that consumption shrank as purchasing power decline became massive. This was the situation of things when Tinubu came on board, and we hold that any government that followed this economic trajectory would not rush first to remove subsidy without putting in place framework that helps the economy already on its knees. This is a direct opposite of Tinubu’s vow to ‘hit the ground running’ if elected. It is a huge embarrassment that Tinubu’s vice president, speaking to Nigerian community in Russia, urged that another 12 months be given to the Tinubu-led government to get things right. We wish to state that 12 months, which is one year, is a quarter of the four-year tenure of President Tinubu. How long Nigerians to be in economic wilderness and how many businesses are will collapse before the twelve months elapse?
Another irony was that from paragraph three through 10, Tinubu claims that a certain cabal which he called ‘elite of the elite’ (see Paragraph 10) was maintaining a grip on the economy, sustaining a regime famous for inequitable distribution of oil wealth. It is such a worry that Tinubu did not say who this cabal is or are, leaving one to think we now have a state within a state, even when President Tinubu is the Commander-in-chief.
Current economic realities, especially the policies introduced by President Tinubu, support our argument that the present administration does not know where the economy is coming from. The uniform exchange rate (single market); subsidy removal; energy price hike; unity college and federal university tuition upward review; review of interest rates by CBN’s Monetary Policy Committee, MPC by 25 points, though likely to normalize the economy in the long-run, were ill-timed, and anti-poor to that extent. Why are these hard choices coming in the face of rising inflation and current food insecurity?
Finally, we are of the view that President Tinubu, through his subsidy removal without national mass transit scheme, demobilized labor. Labour mobility is vital and key to productivity and growth of any nation or economy. Labour migrates when service providers or workers (laborers) can move, with ease, from one local government, state or even country to another. Today, with workers unable to mobilize themselves, Nigeria’s private and public sectors may not be able to mobilize the nation’s productive forces. We are of the view that it is in the interest of this government to go back to negotiation table with the Unions and their affiliates, to achieve a win-win outcome. This is not the time to deploy underhanded tactics like using the national industrial court’s order to try to bully the organized labor.
We urge President Tinubu to go back to the drawing board, come up with immediate stop-gap intervention mechanisms, rather than to keep Nigerians waiting until next March. Else, like former President Buhari before him, President Tinubu will create another millions of poor Nigerians before March of next year.
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Signed:
Comrade Nelson Nnanna Nwafor
Executive Director
Foundation for Environmental Rights, Advocacy & Development (FENRAD Nigeria
