In less than two months, precisely May 29, Bola Tinubu will be inaugurated as the President of the Federal Republic of Nigeria.
The incoming administration will be inheriting a lot of challenges that defied solutions under President Muhammadu Buhari’s tenure.
Nigeria has been riddled with lots of economic challenges ranging from high rates of loans, inflation, unemployment, poverty, among others.
A report by the United Nations, UN, had claimed that Nigeria’s economy under Buhari is worse than 10 years ago.
The UN, in its 2023 World Economic Situation and Prospects report published on its website, said high inflation and power supply issues are impacting growth in Nigeria.
In its flagship report titled ‘Global Economic prospect,’ the UN said: “The pandemic has reversed at least a decade of gains in per capita income in some countries— in almost a third of the region’s economies, including Angola, Nigeria, and South Africa, per capita incomes are forecast to be lower in 2022 than a decade ago.”
Some economic issues Tinubu’s administration would have to tackle upon resumption of office.
Prior to the 2023 presidential election, the Central Bank of Nigeria, CBN, had announced the redesign of some denominations of the naira. The apex bank redesigned the N200, N500, and N1000 notes, a situation that brought about so much hardship in Nigeria.
The policy almost brought Nigeria’s economy to a standstill as citizens found it difficult to have access to their money, thereby, making it hard to perform transactions.
During his campaign, Tinubu had accused some elements in the corridors of power of using the naira redesign and fuel scarcity to frustrate his presidential ambition. Despite the release of cash, the effect of the policy lingers in the country. It is left to be seen how the incoming Tinubu government would tackle it.
Despite Nigeria’s debt profile currently standing at 44.25 trillion, the Federal Government last week hinted that it had secured an $800 million loan from the World Bank to be used as palliatives for post-fuel subsidy removal in June 2023.
Apart from the World Bank loan, the Debt Management Office said as at March 31, 2020, the Total Borrowing by Nigeria from China was $3.121 billion, this amount represents 3.94% of Nigeria’s Total Public Debt of USD79.303 billion as at March 31, 2020. Similarly, in terms of external sources of funds, loans from China accounted for 11.28% of the External Debt Stock of USD27.67 billion at the same date.
The worrisome growing loan facility, which is almost becoming unserviceable, is one major issue that would stare the next government in the face.
One of the uphill tasks Tinubu would face upon resumption of office is that of insecurity across the country. While Boko Haram and bandits are ravaging the Northern part of the country, unknown gunmen are rocking havoc in the Southeast. The activities of these gunmen had widely affected Nigeria’s economy under Buhari, hence Tinubu’s administration would have a lot to tackle.
KPMG has stated that the Nigerian unemployment rate had increased to 37.7per cent in 2022 and will further rise to 40.6per cent, due to the continuing inflow of job seekers into the job market.
The multinational consulting firm, in a newly released report tagged ‘KPMG Global Economy Outlook report, H1 2023,’ said unemployment will continue to be a challenge due to the slower-than-required economic growth and the inability of the economy to absorb the 4-5 million new entrants into the Nigerian job market every year.
“Unemployment is expected to continue to be a major challenge in 2023 due to the limited investment by the private sector, low industrialization and slower than required economic growth and consequently the inability of the economy to absorb the 4-5 million new entrants into the Nigerian job market every year.
“Although the National Bureau of Statistics recorded an increase in the national unemployment rate from 23.1per cent in 2018 to 33.3per cent in 2020. We estimate that this rate has increased to 37.7per cent in 2022 and will rise further to 40.6 per cent in 2023,” it said.
Prior to 2015, Nigeria’s inflation rate remained at a single digit– even as analysts opined at the time that it was high. For instance, in the whole of 2014, the nation’s inflation rate moved between 7.7 per cent, which was the lowest, to the highest point of 8.5 per cent, official data shows.
When Buhari took over power, the inflation rate averaged 9 per cent. Since then, the nation has seen a surge in inflation rate. Data released by the National Bureau of Statistics, NBS, had shown that under Buhari, Nigeria’s inflation rate hit a 16-year high amid an increase in prices and poor purchasing power, a situation Tinubu would confront upon assumption of office.
A few months to the end of Buhari’s tenure, plans have been concluded for the removal of petrol subsidy in Nigeria.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, had hinted at the removal of subsidy before May 29.
In the last few years, Nigeria spent over N3.27 trillion in subsidising petrol, equaling an average of N272 billion monthly.
Commenting on the issues, the Lead Director of the Centre for Social Justice, CSJ, and a Financial expert, Eze Onyekpere, said Tinubu and his men would determine if Nigeria’s economy would improve in the next four years.
Onyekpere said the economy could improve under Tinubu’s administration if all relevant stakeholders are carried along.
Onyekpere said that: “The economic issues bedevilling the nation, have they changed? They are still there. We have low revenue, unemployment, inflation rate is hitting the rooftop, it’s actually all the things we have been discussing in the past seven years, and they would need his attention.
“At least, we must have the revenue to run the government by paying salaries, building infrastructure, maintaining law and order, and servicing security.
“We also have the fuel subsidy crisis, but how do you remove it without cushioning the effect on the economy? So, we have to talk to the organised labour and other stakeholders to determine the roadmap and what he needs to do.
“The issue of whether the economy will improve or deteriorate is based on Tinubu and his party men. First, Nigeria is more divided today than before the election; even though he has been declared the winner, his team members are still in the fighting mood.
“If they understand that they are going to form a government and need to carry everybody along, and they do so by dousing the tension, then there would be a chance of progress.
“If all we do everyday is to yell at each other on social media, then there is no way we can build that consensus for us to make progress.
“If you see Nigerians going on social media to call their president a drug baron, and there are all kinds of kidnappings going on; if you are a foreign investor coming to Nigeria, wouldn’t you hold your money and watch what is happening with the threats of ethnic violence. All these won’t encourage anybody to come into the country and invest.
“So, the first thing for economic improvement is the sense of unity and purpose, some form of national unity. The kind of belligerence being spoken of today is clear that people have gone into their trench, and they are not coming out.”