Economists and investment analysts have hailed President Bola Ahmed Tinubu for discontinuation of fuel subsidy and planned unification of the exchange rates.
Reacting to the plan, Uche Uwaleke, Professor of Capital Market and President, Capital Market Academics of Nigeria, expressed support for the removal of fuel subsidy and unification of the exchange rate by Tinubu, saying that fuel subsidy comes at a huge cost to the economy.
He maintained that fuel subsidies have proven to be unsustainable over time“I support the removal of the fuel subsidy due to its huge cost on the economy. Fuel subsidies have proven to be unsustainable.
“I equally support the unification of exchange rates because doing so will discourage round tripping, bring more transparency to the foreign exchange (forex) market which supports foreign investments.
“However, in order to minimize negative impact on the livelihoods, issues of fuel subsidy and exchange rates unification which he mentioned in the speech should be handled with care. Stakeholder engagement is required,” he said.
He, therefore, called for an immediate constitution of an “Economic policies’ coordinating committee” made up of Economic and Finance experts to craft policies that would jump start the economy from the doldrum Buhari’s administration left it.
Also commending the plans, Mr. David Adonri, Vice Chairman, Highcap Securities, said the plan if carried out, would repair the damages caused to the economy by the twin problem.
He, however, queried Tinubu’s failure to address the rising debt burden, saying that a continuation of the borrowing spree would be detrimental to real economic growth.
He said: “President Bola Ahmed Tinubu’s inaugural speech addressed three critical pressure points on the Nigerian economy. These are insecurity that has crippled the rural economy, discontinuation of fuel subsidy and unification of the exchange rate.
“His remedial plans against these challenges can repair their damages to the economy. However, he failed to address the crippling debt burden which has fueled inflation and caused a rise in interest rate.
“His GDP growth target of minimum of 6% per annum could be a mirage if he concentrates on secondary infrastructure development at the expense of primary infrastructure like was done under President Muhammadu Buhari.
“If he continues with President Buhari’s excessive borrowing spree, increase in GDP will just remain an inflationary growth or motion without movement,” he said