Politics
It is ironical to boast that the federal government has planted the seeds of national transformation, growth and all-round development in the first 100 days in office in the midst of tougher challenges of insecurity, exchange rate volatility, skyrocketing inflation, energy disruption, over bloated fiscal debt, dwindling foreign reserves, business collapses and daily divestments. Perhaps it is a classic case of ‘he who wears the shoes knows where it pinches’.
By Goddy Ikeh
DESPITE the harsh economic challenges caused by poor governance issues such as abrupt removal of petrol subsidy without adequate plans for palliatives and intervention programmes, the Minister of Information and National Orientation, Mohammed Idris, says that notwithstanding the obvious challenges daily faced by Nigerians, President Bola Tinubu has planted the seeds of national transformation, growth and all-round development in his 100 days in office.
In his statement to mark the 100 days of President Tinubu in office on Tuesday, September 5, 2023, the minister appealed to Nigerians and the labour unions, in particular, to continue to support the government and show more understanding.
The minister stated that since the assumption of office, Tinubu’s administration has been making steady progress and engendering national rejuvenation. Spotlighting some of the policies and programmes to address the challenges Nigerians have been going through, Idris disclosed that Tinubu took a courageous decision to remove the fuel subsidy to avert a national economic catastrophe of epic proportions.
Describing the scrapped fuel subsidy as “a Sword of Damocles that hung over Nigeria for decades, stunted growth and set the country a-borrowing”, the minister said: “President Tinubu took a bold and courageous decision to remove the fuel subsidy to avert a national economic catastrophe of epic proportions.”
“In addition to subsidy removal, President Tinubu took further steps to unify the multiple foreign exchange markets.
“While these two vital steps to save the country from hitting the rocks brought momentary discomfort to Nigerians, President Tinubu has never failed in his appeal to Nigerians to see the current inconveniences as a price we must all pay to save our country from disappearing,” he said.
According to the minister, the government rolled out intervention programmes to help cushion the unintended negative impacts of the reforms to ameliorate the pains of Nigerians. He stated that the interventions included working out a minimum wage and salary increase, supporting states and local governments to enable them to cater for the most vulnerable and providing fertilisers to farmers.
The minister added that the government also provided grains to people and rolled out over 11,000 CNG buses for affordable public transportation.
“While striving to reduce the impact of the high cost of living on the citizens, President Tinubu has focused on redirecting our economy and removing the impediments to productivity and competitiveness.
“With these, the real sector will grow and create millions of decent jobs that are essential for long-term economic growth,” he said.
The minister added that in the last 100 days, the government set up a Tax and Fiscal Reforms Committee that is fully at work to deepen the ongoing reforms and reposition the national economy for long-term sustainability. According to him, the committee would simplify the nation’s complicated tax system, eliminate multiple taxes, streamline regulations that negate the ease of doing business, and close the over 20 trillion annual tax gap.
The minister assured that the administration will promote efficiency in revenue collection and expand the tax net by ensuring that those not paying are made to pay while those not paying the correct amount are made to pay their fair share. On the political scene, Idris said that in 100 days, the administration had worked to promote political stability to engender peace, progress and development.
“The administration has stabilised the polity and reduced tensions associated with ethnic and religious agitations by better managing our diversity.
“To strengthen the bond of national unity and social harmony, President Tinubu ensured balance in all the appointments into key government positions, including that of service chiefs from diverse parts of the country. While promoting peace and political stability within the country by carrying along every segment of our country, the President also prioritises adequate information about government activities and policy direction,” he said.
Although many Nigerians will rather not concern themselves with whatever the new administration is doing externally since to them it is more like a distraction from the unintended consequences of the policies of government, but the minister sees Tinubu’s emergence as the Chairman of the ECOWAS Authority of Heads of State and Government within his 100 days in office as a remarkable achievement.
However, the minister’s assertions are at variance with the opinion of some economic analysts who blamed the bold policy moves of the federal government for the economic turmoil, which disrupted the manufacturing value chain, escalated cost of manufacturing operations and resulted in reduction in manufacturing patronage in the first 100 days of the administration. In addition, they said that petrol prices went up from N254 per litre in May 29 to N571 per litre in September 2023. While the exchange rate of the Naira against the dollar went up from about N772 in May to N920 in September this year.
However, some major stakeholders in the nation’s economy have cried out that millions of Nigerians are still groaning daily despite the planting of transformation seeds in 100 days by Tinubu. And like the Irish proverb says “No one knows where the shoe pinches, but he who wears it.” And so the stakeholders in the manufacturing sector have admitted that they are also groaning like millions of consumers over the pervading harsh economic environment in the country.
For instance, Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise, CPPE, who spoke on 100 days in office of Tinubu’s government, said: “Well, we will rate the administration high in terms of economic reforms, especially considering the fact that the administration has taken some bold steps around two major disruptions in the country which it inherited from its predecessor. I am talking about the forex and the oil and gas sector reforms. This is because there were disruptions in the forex market, which was very bad for the economy. There were also disruptions in the petroleum downstream sector, which was also very bad for the economy. And these two disruptions have been the biggest challenges the economy has faced in the last couple of years. So the corrective reforms that have been taken show that the administration has done well in that regard.
Yusuf, who was a former Director General of the LCCI, told Nigerian Tribune Online in an interview that the administration has not responded well enough to the consequences of those reforms.
“This is because the reforms, especially the fuel subsidy removal, expectedly have thrown up some damaging challenges. It has resulted in high inflation, and soaring cost of transportation which have both weakened the purchasing power of the people. So the response of the administration to these social outcomes has not been as fast and appropriate as we had expected it to be. Even as we speak now, the administration is still struggling with the issue of what should be the right palliatives for Nigerians in view of the economic hardship they are facing,” he said
For another major stakeholder in the Nigerian economy, the Lagos Chamber of Commerce and Industry, LCCI, the current challenges are enormous, as described by the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, after the inaugural meeting of the Federal Executive Council, and stated that the expectations of Nigerians are also enormous.
However, reacting to Tinubu’s Roadmap for the economy, the Chamber applauded his eight-point agenda of food security, ending poverty, economic growth, and job creation, improving access to capital, particularly consumer credit, inclusivity in all its dimensions, improving security, improving the playing field on which people and particularly companies operate, the rule of law, and fighting corruption.
While noting that Nigerians – corporations and individuals – are not particularly inclined to settle for poor results considering their sacrifices, the LCCI stated that if these highlighted policy thrusts of the administration are well articulated and implemented, they are certain to strongly impact the nation’s socio-economic landscape.
Specifically, the chamber noted that the administration’s target of creating 50 million jobs should go beyond a policy statement as implementation is critical to the economy. The most sustainable approach to job creation is to support production and create an enabling business environment for the private sector. A thriving private sector will continue to create jobs for the foreseeable future.
According to the statement by Chinyere Alomona, Director General, LCCI, on August 29, 2023, the Chamber anticipates that all the ministries will hereafter clearly articulate the priority areas and further divide them into strategic initiatives with clear timelines and responsibilities for performance monitoring and evaluation. In addition, it anticipates the development of critical metrics with special emphasis on impact, growth and job creation, poverty reduction and investment attraction. “We look forward to a comprehensive policy document by sector, which will demonstrate the government’s clarity of vision, courage, and creativity in achieving the admirable socio-economic agenda,” the statement said.
The Chamber also recommended the implementation of responsive fiscal and monetary policy measures in order to ensure/ promote macroeconomic stability with a particular focus on effectively managing inflation, addressing the challenge of high interest rates and foreign exchange shortages. The LCCI also anticipates that the government would focus its policy efforts on sectors with the potential of generating high employment.
In the same vein, another major stakeholder, the Manufacturers Association of Nigeria, MAN, has lamented that its members are also groaning in pains as all the major performance indicators in the manufacturing sector declined in the second quarter of 2023.
The association expressed this view in its MAN CEO’s Confidence Index, MCCI, report on the second quarter of 2023 that was released recently, in which it stated that slow recovery from the dire impact of the naira crunch nearly crippled manufacturing companies with about 30 per cent decrease in sales for consumer goods and cement respectively.
The report stated that, “manufacturers are extremely groaning in pain due to these issues that are frustrating their contribution to the economy,” and caused a decline in the Aggregate Index Score (AIS) of the MCCI to 52.7 points in the second quarter of 2023 from 54.1 points it recorded in the first quarter of 2023.
It further stated that the operating environment impacted most negatively on the activities of the motor vehicles and miscellaneous assembly, which deteriorated further below the benchmark of 50 points from 48.6 to 46.7 points.
It added that, “these operators were adversely affected by the exorbitant new premium rate for motor insurance and the abrupt subsidy removal which significantly worsened sales performance and increased the consumer’s preference for fairly used vehicles as a result of low purchasing power.”
On the major indicators that altered negatively in the Q2’23, the MCCI stated: “Production and distribution costs escalated by 17.3 per cent in the quarter under review.
“Capacity utilization nosedived further by 5.6 per cent in the quarter under review from a contraction of 5.0 per cent witnessed in the preceding quarter.
“Volume of production contracted by 6.1 per cent in the quarter under review from a contraction of 13 per cent recorded in the previous quarter.
“Manufacturing investment dipped further by 5.6 per cent in the second quarter of 2023 from 3.0 per cent contraction recorded in preceding quarter.
“Manufacturing employment reduced further by 5.7 per cent in the second quarter of 2023 from 3.0 per cent contraction recorded in preceding quarter.
“Sales volume plummeted by 6.3 per cent in the second quarter of 2023 against the 13 per cent contraction witnessed in the preceding quarter;
“Cost of shipment rose by 14.3 per cent in the second quarter of 2023 though witnessed a slowdown from the 20 per cent increase recorded in the first quarter of 2023.”
It, therefore, concluded that, “a critical evaluation of the analysis above provides an inference that major performance indicators of the manufacturing sector all recorded unfavorable changes.”
It attributed the deterioration the manufacturing sector experienced to the harsh business-operating environment evidenced by poor macroeconomic indices.
“The underperformance was largely driven by the slow recovery from the cash crunch, high cost of energy, high transportation cost and partially by the abrupt removal of subsidy that took effect towards the end of the second quarter of 2023.
“The economic turmoil disrupted the manufacturing value chain, escalated cost of manufacturing operations and resulted in reduction in manufacturing patronage,” the report stated.
The MCCI added that, “sequel to the naira redesign and the new cash withdrawal limits by the Central Bank of Nigeria (CBN), the scarcity of both old and new naira notes across all banking halls and electronic payment channels in the country met severe hardship on manufacturers.
“The prolonged crisis nearly crippled manufacturing companies with about a 20 per cent and 30 per cent decrease in sales for consumer goods and cement respectively.
“The crisis impacted negatively on the manufacturers by directly limiting their working capital, thus halting their daily business operations. In addition, the naira scarcity crushed the consumer patronage of manufacturing firms and resultantly escalated their volume of inventories, especially for retail goods.
“By exposing the highly cash-based distributive trade sector to great risk, the economic crisis had severe consequences on the manufacturing value chain and cost of logistics.”
In addition, the report noted that manufacturing activities in the second quarter of 2023 was adversely affected by escalation in the Consumer Price Index (CPI), continuous erosion in naira value and difficulty in accessing foreign exchange, as well as high cost of energy, exorbitant taxes, high lending rates, persistent, insecurity, domino effects of the lingering Russian-Ukrainian war, slow recovery from the cash crisis.
The report warned that Nigeria’s transition to a cashless economy required no urgency or policy aggressiveness considering that a lot of progress had already been made.
It stated that, “a comparative analysis of the country’s cashless status has shown that while the ratio of cash to GDP in Europe, United States of America and South Africa are respectively about 10 per cent, 6.0 per cent and 3.5 per cent while Nigeria’s ratio is impressively below 1.5 per cent.
“Therefore, achieving a full cashless economy should not be the pressing issue when there are tougher challenges of insecurity, exchange rate volatility, skyrocketing inflation, energy disruption, over bloated fiscal debt, dwindling foreign reserves, business collapses and daily divestments.”
A.
-September. 10, 2023 @ 19:26 GMT |
Tags: Goddy Ikeh LCCI Mohammed Idris Muda Yusuf
