Nigerians going through worst cost-of-living crisis since SAP — Atiku

Former Vice President Atiku Abu­bakar on Tuesday took a swipe at President Bola Ahmed Tinubu’s one year in office.

Atiku said that President Tinu­bu’s policies do not create prosper­ity, but instead, pauperise the poor and bankrupt the rich, adding that Nigerian citizens, the majority of whom are poor, are going through the worst cost-of-living crisis since the infamous Structural Adjust­ment Programme (SAP) of the 1980s.

President Tinubu’s adminis­tration will today be one year and same date will mark Nigeria 25 years of unbroken democracy, reports Daily Independent.

Analysing President Tinubu’s one year in the office in a state­ment, Atiku said Tinubu didn’t lay out plans for the “remodeling” of the economy, but only embarked on a cocktail of trial-and-error economic policies.

Atiku said that Tinubu’s pledge of growing the economy and end­ing misery remains unfulfilled, adding that his actions or inac­tions have significantly worsened Nigeria’s macroeconomic stability.

Atiku said, “On May 29, 2023, President Bola Tinubu raised the hopes of Nigerians 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, Tinubu 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. On listening to this, Nigerians must have breathed a sigh of relief after their experience with ex-President Buhari’s 8 years of economic mis­adventure.

“Tinubu laid out no plans for the ‘remodeling’ of the economy but soon embarked on a cocktail of policies to achieve it. In May 2023, he eliminated PMS subsidies, and a month later, the CBN implement­ed a new foreign exchange policy that unified the multiple official FX windows into a single official market. More policies followed in rapid succession: the tightening of monetary policy to reduce naira liquidity, a hike in monetary policy rates, the introduction of cost-re­flective electricity tariff, and a cy­bersecurity tax.

“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.”

Questioning how Nigeria got to this level, Atiku said he had earlier expressed concerns about the downside risks of unleash­ing reforms without sequencing; without any ideas on how to im­plement them; and without any regards to their potential and real devastating consequences, adding, “Implementing policies without proper planning and a clear des­tination is nothing other than tri­al-and-error economics.

“My concerns have not dimin­ished. I will focus on just four ar­eas to underscore those downside risks associated with Tinubu’s reform measures and their dire consequences on Nigeria’s me­dium to long-term growth and development.

“First, President Tinubu’s policies do not create prosperity. Instead, they pauperise 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 three 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.

“Second, President Tinubu’s policies create a hostile environ­ment for businesses, big or small. The private sector is overwhelmed by Tinubu’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, has been bogged down by rising input prices, higher energy and borrow­ing costs, and exchange rate com­plexities. For example, 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. As reported by the Guardian (13 May 2024), in Q1 of 2024, ener­gy prices were up by 70%, costing manufacturers N290 billion.

“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. In an economy with high rates of unemployment, a declining manufacturing sector cannot be an option.

“Third, President Tinubu’s foreign exchange policies have not had any positive impact on Nigeria’s foreign trade balance, contrary to policy expectations. In particular, 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. In Q4 of 2023, for example, while imports surged 163.1%, exports rose at a slower 99.6%, indicat­ing a huge foreign trade deficit. Similarly, 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.

“Fourth, 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.”