Decreasing purchasing power and declining sales are being witnessed in markets across Nigeria due to the increasing costs of basic necessities like food. Frustrated Nigerian consumers, limited by stagnant wages, are now only purchasing what they can afford, even if it means buying less. These challenges were anticipated by President Bola Tinubu when he assumed office in May 2023, warning of the hardships that lay ahead for the Nigerian people. Despite his promises of short term hardship, President Tinubu’s first year in office has brought prolonged hardship to Nigerians as inflation skyrockets to 31.7 percent, a level not seen in two decades.
The current situation is a direct consequence of the Microeconomic reforms made by the current administration. Upon assuming office, President Tinubu eliminated the fuel subsidy, which had long been helping to offset the rising costs of petrol and other common consumer oils for ordinary Nigerians. Tinubu, as the current president, has taken significant steps to revamp the economy, such as opening up the foreign exchange market and implementing a substantial 300% increase in electricity tariffs for consumers in Band A, who have consistent access to electricity for over 20 hours daily.
Tariff hike, subsidies removal has had detrimental effects.
According to Dr. Titus Okunrounmu, who previously led the research department at the Central Bank of Nigeria, the tariff hike, along with the elimination of fuel subsidies, has had detrimental effects. Nigerian Labour Congress President, Joe Ajaero, criticized the country’s economy and urged for the reinstatement of fuel subsidies and a reversal of policies to improve quality of life. President Tinubu’s actions were criticized by Mr. Ajaero, who stated that the policies implemented can be seen as temporary solutions that do not address the root causes of poverty, leaving Nigerians trapped in a cycle of economic hardship.
A key component of the economic management structure is the development of the Presidential Economic Coordination Council (PECC), which is chaired by the president. Additionally, for urgent economic issues, Finance Minister Wale Edun leads the Economic Management Team Emergency Task Force (EET) tasked with devising and implementing a six-month emergency economic plan within a 14-day timeframe. The government is emphasizing that the removal of subsidies will allow for more funding to be allocated towards improving infrastructure and quality of life, regardless of the ongoing criticism.
Funds into the federation cover has risen due to the policies.
Former president of the Chartered Institute of Bankers Association of Nigeria, Okechukwu Unegbu, criticized the International Monetary Fund (IMF) for the implementation of the policies, which he said do not align with the needs of the country. Meanwhile, these policies have resulted in a significant increase in the funds distributed to the federation cover, benefiting all levels of government on a monthly basis. The President has introduced several initiatives to support states during this difficult time, providing them with financial assistance to ease the burden. An estimated ₦5 billion ($3.2 million) has been distributed gradually for social welfare programs.
In an effort to alleviate economic struggles and increase efficiency in Nigeria, President Tinubu has implemented a comprehensive restructuring of the country’s economic governance. This includes the introduction of a multifaceted system aimed at enhancing coordination, planning, and execution. Additionally, four Executive Orders have been signed to combat restrictive fiscal policies and excessive taxation that hinder business growth. Moreover, a total of 75 enterprises have received funding totalling ₦75 billion ($60 million) to enhance their productivity levels. An infusion of ₦125 billion ($100.8 million) has been allocated for the development of Micro, Small, and Medium Enterprises (MSMEs).
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Moreover, the government has made a significant investment in agricultural support by obtaining 225,000 metric tonnes of fertilizer, seedlings, and other resources for farmers dedicated to promoting food security. Additionally, the government has introduced a lasting initiative including a consumer credit scheme, student loans, and social welfare programmes. Nigerian Finance and Entrepreneurship expert Prof. Yusha’u Ango recommended dispersing one billion naira to 75 Enterprises across all geo-political zones for maximum impact. Even with all this in place, the people are still anticipating how much longer the hardship will endure.
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