“Nigerians Await Relief as Federal Government Policies Approach 100-Day Mark”
Since President Bola Tinubu’s inauguration on May 29, the economy has undeniably experienced profound impacts, largely stemming from the President’s significant policy pronouncements.
On the day of his inauguration, May 29, President Bola Tinubu famously declared, “Subsidy is Gone.”
This proclamation followed the previous administration’s decision to allocate subsidy funds only from January to June 2023.
The country had been severely bleeding financially due to the subsidy system, with the Nigerian National Petroleum Corporation (NNPCL) failing to remit any funds to the government for almost two years.
Mele Kyari, the Group CEO of NNPCL, stated that the subsidy situation had pushed the corporation and the country to the brink of bankruptcy.
Since the removal of the petrol subsidy, there have been two price increases, first from N195 to N540 and now to around N617, depending on one’s location in the country.
While the removal of the subsidy seemed logical, it has brought pain and suffering to many Nigerians, eroding their purchasing power due to the resultant inflationary pressures.
Liberalisation of exchange rate management
Another pivotal economic development was the liberalisation of exchange rate management. This decision followed President Tinubu’s assertion that the nation’s monetary policy required reforms, including the harmonisation of exchange rates.
According to him, this would enhance efficiency in forex management and eliminate opportunities for arbitrage, where some individuals obtained forex at official prices and sold it in the parallel market at substantial profits.
Folasodun Shonubi, the acting Governor of the Central Bank of Nigeria (CBN), explained that the current forex market volatility was a result of pent-up demand and expressed optimism that addressing this demand would lead to an improvement in the local currency’s value.
Since the policy’s introduction, the official exchange rate to the dollar has somewhat stabilised at about 765 naira. However, the parallel market continues to experience unabated fluctuations, with the naira reaching a record low of 950 naira at one point.
Notably, the removal of the subsidy has significantly bolstered government revenue. At the Federation Account Allocation Committee meeting for June, gross statutory revenue reached N1.1 trillion, surpassing the previous month by N451 billion.
Overall, the government has saved over N1.8 trillion since the subsidy was discontinued.
This development provided momentum for President Bola Tinubu’s announcement at the first Federal Executive Council (FEC) meeting, where he outlined the government’s commitment to breaking the cycle of excessive borrowing.
Furthermore, the Federal Government announced a N5 billion palliative package for each of the 36 states and the Federal Capital Territory (FCT). Mr. Olawale Edun, the new Minister of Finance and Coordinating Minister of the Economy, clarified that the package consisted of both a loan and a grant.
In the past three months, the National Bureau of Statistics (NBS) released the latest unemployment figures, indicating a reduction from 33 percent in 2021 to 4.1 percent in the first quarter of this year.
The data has sparked controversy, with economists describing it as unrealistic.
However, the NBS explained in the survey that they adopted a new methodology, considering a person employed if they had worked for at least one hour in a week.
As the days unfold under the new government, there is optimism that the series of initiated reforms will ultimately yield the anticipated growth, provide clearer direction, and offer relief to those who have faced economic hardships.
Writing by Biodun Dare; Editing by Saadatu Albashir and Daniel Adejo