At the backdrop of the first anniversary of President Bola Tinubu’s administration, public and private sector executives have expressed divergent views over the quality and impacts of the various economic reforms embarked upon by the administration in the past year.
They spoke at the 2024 edition of the Vanguard Economic Discourse held in Lagos yesterday.
The executives include the Vice President of Nigeria, Senator Kashim Shettima, the Governor of the Central Bank of Nigeria, CBN, Mr Olayemi Cardoso, the President of the Nigeria Association of Chambers of Commerce, Industry, Mines and Agriculture, NACCIMA, Mr. Dele Oye, the President of the Nigerian Labour Congress, Comrade Joe Ajaero, the President of the Association of Bureau De Change Operators of Nigeria, ABCON, Aminu Gwadebe, and the Managing Director of Financial Derivatives Company, Mr. Bismarck Rewane. The sessions were chaired by Nigeria’s eminent economics, Dr. Ayo Teriba, under a general theme of the Discourse, “Reforms in an Era of Global Economic Uncertainties, Whither Nigeria”.
Opening the discussions, Shettima who was represented by Tope Fasua, Special Adviser on Economic Affairs in the office of the Vice President, indicated that all the reform measures including removal of petroleum subsidy, foreign exchange liberation, electricity tariff increments amongst others were positive adjustments made to restructure the economy, adding that Nigeria will begin to witness positive change soon.
He also urged that the citizens should endure the temporal pains and allow government reforms policies to generate the needed growth and development of the economy.
He expressed optimism that very soon the economy will experience significant growth once the country overcomes the ongoing reforms and sacrifices occasioned by hard decisions taken by President Bola Tinubu’s administration.
He stated: “Positive changes will soon be evident across all economic indicators, including inflation, per capita income, Gross Domestic Product (GDP) numbers, poverty reduction, food security, and all aspects close to the hearts of our people.”
He further said, “It must be noted that the approach of the Bola Tinubu administration has been to take the ways and means situation head on, setting very tight time limits towards resolving them, classifying the loans properly as part of national debt, and ensuring that any new debts are properly structured. It has been a herculean task. I urge you to think about this effort, given that we have taken a path of strict discipline, total transparency, and accountability.
“Perhaps this, among other efforts, is responsible for the recent upgrades in our sovereign ratings by the world’s best rating agencies. We are on a mission to somewhere greater.
“The government of President Bola Ahmed Tinubu is tackling many of the economic issues in a decisive manner. We are certain that in a short while, every Nigerian will see clearly emerging, a new, fully energized nation, ready to face the world and to take an elevated space in the pantheon of nations.
“Everybody’s contribution to this new vista that we seek, is highly welcome. And we must banish unproductive cynicism. We urge every Nigerian – old and young alike – to view their nation positively, to notice some of positively profound changes happening around them, and to make themselves available for these new opportunities.
“If there is a single word I can search for, to describe the administration of President Bola Ahmed Tinubu, it has to be ‘decisiveness’. One of the greatest attributes of leadership is visioning.
“Another is decisiveness in doing what may not be popular but is necessary. And as we all line up behind a great leader who embeds a great vision for our nation, we committed to the success of key reforms, chiefly around the removal of petroleum subsidies and finding a workable value for the Naira”.
Other factors are driving inflation – CBN
Also speaking, CBN Governor represented by Dr. Blaise Ijebor, the CBN’s Director Risk Management Department, indicated that the apex bank reform measures are effective, adding that factors beyond the mandate of the CBN may be driving inflation.
He said that other unaddressed structural economic issues have resulted in the continuous pressure on inflation rate.
He explained that the Monetary Policy was only a part of the many parts of inflation.
He highlighted the multiple foreign exchange rate regime as one problem the bank is trying to address to tame inflation rate and assured that the various monetary policy reforms will yield good results soonest.
He stated: “When you have inflation the inflation has many causes or many parts. One part of inflation is a monetary policy or monetary economy. You need to tame that down. But other economic issues need to be addressed and I think the government is also trying to address them.
“You know, there are structural issues, we have issues with insecurity in some food-producing areas. All of these contribute to inflation, and that makes it very difficult to just use monetary policy alone to tame inflation.
“There are many other things. You talked about the FX. One of the things we’re doing in that space is to make it more transparent and more market-driven.
“Over the years, one of the big problems we had and that is why inflation was intractable was because what happens is that we give the preferred sectors lower rates and you go straight to the black market and sell it and then they go and buy goods and they still sell it to you at the black market rate.
“So all they’re doing is making supernatural or super abnormal profits with no benefits to the general public. What ends up happening is that the general public is being punished twice”.
Biggest driver of inflation is forex reform – NACCIMA boss
Amidst the seeming defense of government reform measures by the office of the Vice President and the CBN governor, the NACCIMA President, Dele Oye, said that government support for local businesses is crucial to the nation’s economic growth, even as he averred that the current foreign exchange policies of the CBN are the drivers of hyperinflation in the country.
He said that everywhere in the world the government stands to support its own people and their businesses.
His words: “Every country defends her currency. You can see what America is doing to China to slow them down, so that America can continue to prevail. You can see the way they protect their industries. Countries must defend their own. But in Nigeria, there is nothing for the Nigerian businessman”.
On the cause of the galloping inflation in the country, Oye said, “there is hyperinflation because of forex policies and reforms. There has been significant rise in unsold goods, and these are manufactured goods.
“The private sector is not the problem of inflation, we all know that. If you check, none of us has any money anymore. They have collected it through tax.
“The truth is, the biggest driver of inflation is the value of our currency. So we must make sure we stabilise our currency, which is the beginning and end of our problem”.
Tight monetary policy without reserves is futile – Teriba
The chairman of the 2024 Vanguard Economic Discourse, Dr. Ayo Teriba, who is also the Chief Executive of Economic Associates, strongly maintained that tightening monetary policy without strong foreign reserve can be futile.
He said that the CBN has refused to tell Nigerians what they are doing to ensure that Nigeria builds up its reserves that will support a trillion dollar economy.
His words: “My only concern is the persistence of the volatility of the exchange rate; they are tightening, they are doing administrative interventions, but the big question is that we can all see that the reason exchange rate is volatile is because of the supply and policy inadequacy.
“The central bank, in particular the government, said loudly and clearly to banks that they should prepare to build their capital base to levels that will make them able to play in the trillion dollar economy. What I don’t hear anybody from the central bank say, is what they are doing to ensure that Nigeria also builds up reserves that will support the trillion dollar economy?
“It is a conversation that we have to move to the front burner and not coming to tighten monetary policy. Tightening monetary policy without reserve can be futile. Let us speak more about what is being done to ensure $40 billion in reserves is not adequate, even for a $30-50 billion GDP, much less for a trillion dollar GDP”.
FG’s reforms are increasing poverty level – NLC President
The Nigeria Labour Congress, NLC, yesterday at the Vanguard Economic Discourse, said that the policies being implemented by the Federal Government are driving more Nigerians into poverty.
According to the NLC President, Joe Ajaero, the government has not embarked on any reform that will lead to improvement of the economy since assumption of office a year ago.
He noted that policies like the floating of the naira, subsidy removal, expansion of the tax base among others, have no direct benefit to the economy or Nigerians. He explained that instead the policies have eroded the economic benefit accrued to Nigerians before the introduction of these policies.
He stated further: “The purpose of any government is for the good of the people, whether workers or whoever. So, you cannot be talking of reserve, saving money, economic policies, while people are suffering and more people going into poverty.
“One of the eight-point agenda of Mr. President is to eradicate poverty but how many people have descended into poverty between May 29th last year till date? Much more people. So the policies we are having are leading more people into clear cases of poverty.
“I have not seen any conscious reform effort by the operators of the Nigerian state today to deal with the economic problems facing the country and I say this without mincing words. The answer is no. Increase in electricity tariff, is that a reform? The answer is no because I want to understand the reforms that are taking place in Nigeria, is the floatation of the currency a reform? No, let us understand what we mean by reforms.
“Is expanding the tax nets a reform? And all these are bringing lots of burdens on the workers. If you check, workers are the main people that pay actual tax. They don’t even have options because it’s deducted from their salary and it’s remitted.
“From the moment when the Premium Motor Spirit, PMS, price was increased from N185 to about N700, from that very moment, all other issues in the country became affected.
“And we pleaded with the government then to reverse the increase in the price of fuel because the cost of food, education, housing were going up at the same percentage or more; and there is no place that house rent, transportation and food have not increased.
“We are talking about over 30 per cent of inflation, food inflation is about 40% plus. And when this issue of PMS increase was brought up, we challenged them. When we said reverse, they said no. Ajaero go and negotiate wages”.
Corruption not Bureau de Changes is driving high exchange rate – Gwadebe
Speaking at the Discourse, ABCON President, Gwadebe, said the government has wrongly targeted Bureau De Changes over the misfortunes of the Naira in the foreign exchange market.
He stated: “One of the major things regulators should look at is stakeholder engagement. However, our experiences over time with stakeholders and security agencies is generalization of stigmatization.
“Most at time, the Bureau de Change are being addressed as the people that are causing volatility in the market. The exchange rate is bad not because of the demand for dollar, but because of the un-earned income that is pursuing naira.
“This is the fact that we always try and avoid where the regulators and the security agency, we put the blame on an ant while leaving the elephant in the house. The elephant in the house is corruption not Bureau de Changes”.
Price reforms without institutional reform will yield no result – Rewane
Contributing at the Panel session the Managing Director of Financial Derivatives Company, FDC, Mr. Bismarck Rewane said that price reforms as currently being pursued by the Bola Tinubu’s administration without corresponding institutional reforms will yield no economic benefit.
Speaking on the backdrop of the efforts by this administration to stabilise prices in the foreign exchange (forex) market, Rewane posited that institutional reforms would guarantee that the right people are placed in positions of authority to institute credible policy and price reforms.
He also cautioned the Nigerian Labour Congress, NLC, against benchmarking wage demand on dollar exchange rate, saying that doing that without taking cognisance of inflation in the United States of America would not work.
According to him, dollarisation of the minimum wage would hamstrung the private sector, which is a major employer of labour, and would eventually result in job losses.
Citing the decline in inflationary pressure in 2020 after the minimum wage was jerked up to N30,000 from N18,000 a year earlier, however, he said if well managed, increment in minimum wage might not result in higher inflation.
He said: “If you don’t do institutional reform, price reform will not get you anywhere because institutional reform is what prevents corruption. Institutional reform is what means that the right people are in the right places. To do policy reform and price reform without institutional reform is the risk to lobby. “You must reform the institutions, including the Central Bank and all these other things, which, if you don’t do that, you can take credit or not tomorrow if you are going away”.
Reforms: Govt should be worried over FX losses — Stockbrokers
Also speaking at the Discourse, The Chartered Institute of Stockbrokers, CIS, stated that the government should be worried that quoted companies that have significant foreign exchange components are posting losses or substantially reduced profits as a result of the forex reforms.
Oluropo Dada , President & Chairman of the Council of the Institute stated these, yesterday, at the 2024 Vanguard Economic Discourse with the theme “Reforms in an era of global uncertainties: Whither Nigeria”
He said: “The topic is a most appropriate one at this point, given the fact that a new government was elected in Nigeria last year and the Federal Government under President Bola Ahmed Tinubu, has instituted some far-reaching economic policy reforms to galvanise accelerated economic growth in the country.”
Speaking further, the CIS President, represented by Mr Adeyemi Aina, a Council Member of the Institute said : “It is our firm belief that the overall policy thrust of the government is in the right direction, even though there may be some pains at the initial stages, due to the extent of deterioration of the economic structures in the country generally.
“ Having said that, we would like to make a few comments on how to make the process of actualizing the Federal Government’s vision more effective.
We’ll like to stress the fact that there’s no free float of currency anywhere in the world. What we have in democratic countries is a managed float currency management system, because the reality is that it will be suicidal for any country to just expose its national currency totally to the vagaries of markets and sharks to prey on. “
Continuing, the CIS President said: “ So, the dictum in the advanced economies is Regulated-Deregulation. We should be worried that quoted companies that have significant foreign exchange components are posting losses or substantially reduced profits. These include companies like Nestle, MTN and others. The Institute expects the Dangote Refinery, Electricity Distribution Companies, and NNPC PLC to be listed on the securities exchanges in 2024. Companies like Toyota Nigeria should have a production line in Nigeria, which will herald in the manufacturing of car tyres, battery services parts and engine oil. The Federal Government should re-examine the increase of Band A electricity tariff, as it will definitely affect the cost of production and make locally produced items uncompetitive.
“ Finally, and in conclusion, we wish to reiterate the importance of substantially increasing the aggregate volume and rate of production in the economy. The sustainable way to strengthen our national currency, the Naira, is to produce what we consume domestically and reduce importation. The government and all stakeholders in the economy should therefore work towards achieving a significant increase in our local productivity.”
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