By Erasmus Ikhide
EXACTLY one year ago, on May 29, 2023, President Bola Ahmed Tinubu made a fateful decision that would plunge Nigeria’s economy into absolute chaos. With the removal of fuel subsidies, the price of petroleum products skyrocketed, leaving citizens reeling in pains and untold agony. When Tinubu took office, fuel was sold at N197 per litre; today, the same product costs a staggering amount of N1000 per liter, with inflation soaring to unprecedented heights.
The consequences of this policy have been catastrophic. Prices of essential goods and services have more than quadrupled, eroding the purchasing power of Nigerians. It’s now clearer that when the President made the faux pas and social blunder in Kaduna State last year during his electioneering of “I will inflict wanton hardship on the masses by reducing their purchasing power” is after all, premeditated. Today, small businesses and industries have been forced to shut down, unable to cope with the increased cost of operations.
Unemployment has surged, exacerbating poverty and social unrest. The nation’s economic growth has stagnated, with investors wary of the unstable environment. Tinubu’s administration touted the removal of fuel subsidies as a bold step towards economic reform. However, the harsh reality has exposed the flaws in this approach. The government’s failure to implement adequate measures to cushion the impact on citizens has only worsened the situation.
Tinubu’s and APC’s administration in the last nine years with battered economy lies in shambles. The President’s lofty promises have turned into distant memories, replaced by harsh realities. Where are the refineries he vowed to fix within six months of taking office? What happened to the trillions of dollars generated from fuel subsidy removal?
When President Tinubu took office, he promised to revitalize Nigeria’s ailing four refineries, ending the nation’s reliance on imported fuel. He pledged to create jobs, stimulate economic growth, and alleviate poverty. However, a year later, the refineries remain dormant, and the economy is in free fall.
The removal of fuel subsidies, touted as a bold reform, has only led to skyrocketing prices, exacerbating the suffering of ordinary Nigerians. The minimum wage of N30,000 (less than $20) a month is a mere fraction of the cost of living, with a bag of rice costing N100,000 (over $60). The naira continues to depreciate, and inflation has soared to unprecedented heights. The once-thriving industries have ground to a halt, and the nation’s infrastructure remains in a state of disrepair.
The Central Bank of Nigeria’s (CBN) attempt to defend the naira has ended in catastrophic failure, with over N200 billion wasted in a futile effort to prop up the struggling currency. This massive expenditure, equivalent to billions of dollars, has not only failed to stem the naira’s decline but has also contributed significantly to the collapse of Nigeria’s economy.
In a misguided attempt to maintain an artificially high exchange rate, the CBN engaged in a series of costly interventions, selling dollars to prop up the naira. This strategy, aimed at boosting investor confidence and stabilizing the economy, has had the opposite effect. The naira has continued its downward spiral, and the economy has suffered devastating consequences.
The consequences of this ill-fated policy are far-reaching. Depletion of Foreign Reserves: The CBN’s interventions have led to a significant depletion of Nigeria’s foreign reserves, leaving the country vulnerable to economic shocks and reducing its ability to import essential goods and services. Inflation and Currency Devaluation: The naira’s continued decline has fueled inflation, eroding the purchasing power of Nigerians and reducing the value of their savings. The Currency’s Devaluation has also made imports more expensive, exacerbating the economic pain. Economic Contraction: The CBN’s failed defense of the naira has contributed to Nigeria’s economic contraction, with the country experiencing a significant decline in GDP growth and a rise.
To address this economic crisis, it’s essential to consider alternative policies that prioritize the needs of ordinary Nigerians. This includes investing in infrastructure, supporting local industries, and implementing measures to control inflation and stabilize the naira. The President must take responsibility for his failed promises and work towards a comprehensive economic reform that benefits all Nigerians.
As Nigeria marks one year since this ill-fated decision, we urge the government to take responsibility for the economic devastation and work towards alleviating the suffering of citizens. A comprehensive review of the policy and a commitment to people-centered economic policies are long overdue.
Ikhide contributed this piece via: ikhideluckyerasmus@gmail.com