Since Bola Tinubu’s inauguration as President on May 29, 2023, when he declared the removal of subsidy on Premium Motor Spirit, also known as petrol, the country’s inflation widened and the poor economic situation left by the immediate past president, Muhammadu Buhari, worsened.

The president’s pronouncement in May 2023, swiftly gave rise to the over 300 per cent hike in the price of fuel from between N170/litre and N190/litre, to N700/litre. However, as of May 29, 2024, petrol is now sold for as high as N1,000 in some parts of the country.

This has translated to the spike in the cost of transportation, skyrocketing prices of foodstuffs and services, and other things thereby causing a reduction in the purchasing power of Nigerians.

According to exchangerates.org.uk, when Mr Tinubu assumed office on May 29, a dollar exchanged for N460.72, while the Nigeria Bureau of Statistics, in its Consumer Price Index and Inflation Report for the same month, put the inflation rate at 22.41 per cent.

The next month, Mr Tinubu unified the currency exchange rate and floated the naira, and by June 29, the dollar sold for N754.36, according to exchangerates.org.uk, while the NBS in its June 2023 Consumer Price Index and Inflation Report, said the inflation rate for that month rose to 22.79 per cent, which was 0.38 per cent points higher than the preceding month.

However, as of May 15, 2024, the NBS in its April 2024 CPI and Inflation Report, put the country’s headline inflation rate at 33.69 per cent, which was the highest since March 1996, and a 50.33 per cent rise in the country’s headline inflation, compared with when Mr Tinubu assumed office in May last year.

According to the Central Bank of Nigeria, as of May 22, 2024, a dollar was sold for N1,468.183, as against when it exchanged for N460.720, in May last year. This figure represents a 218.67 per cent increase in the naira to dollar rate.

On September 26, 2023, the naira crashed to N1,000 to a dollar for the first time ever in the country’s history, despite efforts to steady the forex exchange. The naira continued to break its own record in subsequent months, and by February 2024, it exchanged for N1,825 to a dollar, the highest naira crash to the dollar the country has ever recorded.

The depreciation of the naira is said to be as a result of strong demand by the end-users amid a decrease in dollar sales within the official foreign exchange market.

The CBN governor, Olayemi Cardoso, at the Monetary Policy Committee meeting in Abuja last Tuesday, blamed the naira’s decline and instability on the “seasonal demand” of the global foreign exchange market.

“Members further observed the recent volatility in the foreign exchange market attributing this to seasonal demand, a reflection of the interplay between demand and supply freely functioning market system,” Mr Cardoso said.

Despite these poor numbers however, global ratings agency, Fitch, in a statement earlier in the month, revised Nigeria’s economic outlook from stable to positive, at “B-” within the junk territory.

According to indicators by the foreign credit rating institutions, the Tinubu administration has performed creditably, insisting that the president’s reforms “have reduced distortions stemming from previous unconventional monetary and exchange rate policies.”

Economic experts’ views

Speaking to Peoples Gazette on his assessment of Tinubu’s first anniversary as President, a chartered stockbroker, Arize Nwobu, said “the indices are all looking South. None is looking up. We’re facing a serious economic headwind. All the parameters: exchange rate, interest rate and others, are all not looking good.”

“Tinubu doesn’t realise that after politics and taking over power, everything you take care of next is the economy because that’s the life blood of the people. Tinubu focused more on the political dynamics, he didn’t really prepare himself for the economic dynamics.

He added, “There’s an outstanding surplus of money supply in the system through ways and means and underground money (money outside the banking system) already causing inflation, the President now removed fuel subsidy because they didn’t measure the pulse of the economy. The people he appointed later on didn’t advise him prior. You should know that as you’re struggling for power, begin to prepare your economic plan because that’s what affects people in the country.’’

Asking what the Tinubu administration has been doing with fuel subsidy accruals, Mr Nwobu, advised the government to focus on “anything that can push the supply side of the economy because we don’t have a demand to pull inflation but cost push inflation.”

“If you increase supply and take care of other major things that are concerned with supply, you’ll begin to make the balance. These other things include power supply, which has been a problem here since; add that to insecurity which has affected food production. These two monsters are outside the control of the CBN who is using monetary policy tool.’’ 

Blaming “corruption across all strata” for Nigeria’s economic predicament, the economic expert said, “A lot of people, government officials and all what not, have lost morals. These are the key things why the increase in MPR is not curbing inflation. As they keep increasing the MPR, they’re tightening money supply in the economy. 

He also warned that it might get to a point where the economy falls into a recession if care is not taken, because money has become expensive. “Businesses can’t access loans at that scandalous rate for production, and they are already suffering from cost push inflation, and the interest rate is still escalating,’’ he stated.

He noted that the CBN’s adoption of a unified exchange rate was inadequate because of the circumstances of the economy, condemning the government’s new borrowings in addition to those Buhari borrowed. 

“We need more creativity, structured finance, that we can garnish with good features to attract foreign investors to partake in, then you’ll have money to do what you want to do,” he stated.

He expressed worry over government’s lack of prudent management of accrued funds saying, “An over-bloated government zeros up whatever that’s been done, that’s why we’re stagnating. 

“There’s always a trade off between the dynamics of inflation and that of economic growth. When there’s inflation, the CBN should suspend anything about growth, because you can’t be fighting inflation and you’re trying to spur growth, they can’t go together. You have to tame inflation, before you come out with policies that can spur growth. But I can’t categorically pass a verdict against the President,” he said.

Also weighing in on the president’s performance in his first year, a financial analyst, Ahmadu Umaru, told The Gazette that the inflation figures were obvious and clear even to the blind. 

“There’s no way you’ll meet an exchange rate at N465 to a dollar, systematically took it to about N1,600; inflation which was barely around 20 per cent, you took it to about 34 per cent, and anybody will think you have done well economically,” Mr Umaru opined.

Urging the President who still has three more years to turn things around by rolling up his sleeves, Mr Umaru advised him to let his economic team “strategise on how to tackle this inflation that has become the biggest enemy of people’s pockets, and also find a way to stem the downward slide of the naira.”

Admitting that the decisions the President took were inevitable, as there was no way fuel subsidy should have continued, Mr Umaru rued the failure of the government to articulate how the fuel subsidy would be executed, and mitigate the corresponding impact.

“These inflation numbers are a cost push. Energy cost has skyrocketed and the cost of exchange rate has skyrocketed, so there’s no way you can manage inflation. The CBN keeps playing tricks with numbers. The Monetary Policy Rate has been on a consistent rise. Nothing seems to be abating because the cause of the inflation is as a result of the removal of subsidy and the devaluation of the naira,” he added.

He also stated that the market determination of the value of the naira had not worked, so it was about time the government stepped in and brought in some kind of control and sanity into the exchange market regime.

He also advised the FG to “defend the naira based on the fact that our inflow has increased significantly. So, the government starts setting its own prices lower. The government can say going forward, customs duties should be paid at N1,000, they can resume BDCs who should sell at N1,000. Those who need BTA, school fees to be paid abroad, can come and access. Once they can provide some kind of liquidity in these windows, that will reduce the pressure on the black market, and that will be a heavy blow on the speculators.

“If you remove petrol, AGO, aviation fuel from that bracket, we’ll have enough. So I really don’t know what they’re conserving the dollar for. Get the naira to appreciate to about N950 to a dollar, then you’ll see the inflation numbers coming down because we are like a quasi-import dependent country,” he added.  

He advised Mr Tinubu to jettison the policies of the last one year and tinker with the ones that can address the exchange rate volatility and inflation, so that the people would have respite.

He stated, “The policies of the past have backfired. They are just policy issues. You can’t leave this to be determined by the market. The market can never be fair. It’s high time he extricated himself from the dictates of IMF and the World Bank. Those ones will always be looking at the market forces but he has a social contract with Nigerians. Nobody brought him in to add to our pain.’’

Expressing hope for Tinubu’s second year in office, the financial expert said, “But for one year, if you look at it, you’re likely to say Buhari was a lot better. Then, there was stability and people could plan. So for this one year, I just want to excuse him, perhaps he was overwhelmed by the challenges he met but he has ample opportunity to turn things around.”