Nigeria is currently undergoing a severe economic crisis under the leadership of President Bola Tinubu, who assumed office on May 29, 2023. This crisis is characterised by a significant depreciation of the national currency, the naira, against the US dollar and other foreign currencies, with a decline of over 50 per cent as news broke on Thursday that it traded at N950 to $1.
Consequently, inflation, which surged by 22.79 per cent in June from 22.41 per cent in the previous month, will more than double by the time August figures are in. June’s jump was the highest inflation rate since September 2005 and the sixth consecutive month of increase in 2023. The main drivers of inflation were the rising costs of food and non-alcoholic beverages, housing, water, electricity, gas and other fuels, especially since the absence of cushioning policies to absorb the shocks of the fuel subsidy removal.
All of these have resulted in considerable hardship for ordinary citizens. Unfortunately, the Federal Government’s focus has been diverted by the military coup in neighbouring Niger, causing it to neglect urgent economic matters at home. This undue attention to the Niger situation has hindered its ability to address the escalating economic issues that have emerged within just three months of its term and created an unnecessary recipe for disaster in the country.
It is a fact that the economic woes plaguing Nigeria have been exacerbated by the dramatic depreciation of its currency. In a short span of time since President Tinubu took office in May, the naira has plummeted to record lows in the parallel market. This reflects the severity of the economic turmoil the country is facing.
While external factors, such as the strengthening US dollar, disruptions in supply chains, speculators’ activities and volatility in oil markets, have contributed to the currency’s depreciation and inflation, the lack of serious attention to domestic problems, coupled with an obvious absence of a team to implement prudent macroeconomic management and little to no robust policy signals from the new administration, have exacerbated these challenges. The acute unavailability of effective strategies to mitigate these external shocks has left Nigeria’s economy reeling from their devastating impact.
The adverse effects of currency depreciation and high inflation are rippling through all segments of society, eroding the purchasing power of ordinary Nigerians and amplifying economic inequality. The urgent need for comprehensive measures to stabilise the currency, control inflation and restore confidence in the economy is apparent. However, the administration’s attention diverted to the political situation in neighbouring Niger has hindered its ability to effectively address these pressing economic issues at home.
The early months of President Bola Tinubu’s tenure have ushered in a disconcerting state of policy paralysis and economic uncertainty in Nigeria. With critical economic roles left vacant, the nation finds itself adrift without a clear compass. Notably, the key position of Finance Minister remain unoccupied, casting a shadow over crucial decision-making processes within the sector.
Amid this vacuum, the Central Bank of Nigeria (CBN) operates without a substantive governor since the suspension of Godwin Emefiele. In fact, the CBN appears to have three people making key decisions today: Acting Governor, Special Adviser to the President on Economic Matters and Special Investigator]. This is bad for the economy.
These distortions fuel the prevailing sense of economic instability. This policy paralysis and leadership vacuum have left Nigeria’s economic future uncertain, and the administration’s failure to fill key positions hampers its ability to translate promises of a “Renewed Hope” into tangible economic relief for the populace.
Urgent economic priorities within Nigeria therefore continue to languish leaving the citizens in peril. The lack of policy direction and functional economic leadership highlights missed opportunities during this crucial period when perfectly executing bold reforms could help alleviate the nation’s economic distress. While diplomatic efforts of neighbourliness are important, they must not overshadow the pressing need for immediate, effective measures to salvage Nigeria’s economy.
Yet, this tumultuous landscape at home is further complicated by the administration’s preoccupation with the coup unfolding in neighboring Niger. President Bola Tinubu, in his capacity as chair of the Economic Community of West African States (ECOWAS), has been thrust into a demanding role as he navigates the regional response to the crisis. Emergency summits convened in July and August underline the gravity of the situation, drawing significant attention and resources away from Nigeria’s own economic predicament.
While President Tinubu’s involvement in addressing the coup is expected, given his leadership role within ECOWAS, and while I do not support coups of any kind on the continent and beyond, I strongly hold that the excessive focus on Niger comes at a considerable cost to Nigeria’s domestic economic stability. The acute economic challenges within Nigeria, characterised by currency depreciation, rampant inflation, and policy paralysis, demand urgent attention and strategic action. However, the administration’s energies diverted towards the neighbouring political turmoil risk leaving the nation’s own economic woes unaddressed, fostering a growing sense of disillusionment among ordinary Nigerians.
Amidst the distraction of the Niger coup, which was not only bloodless but appears to have been sanctioned by the majority of the country’s populace, the economic well-being of Nigerian citizens hangs in the balance. With double-digit inflation eroding purchasing power and currency devaluation driving up costs, the time for definitive actions to stem the slide into extreme immiseration is now. The administration must strike a delicate balance between regional responsibilities and addressing pressing domestic concerns, recognising that a failure to act decisively on the economic front could have far-reaching consequences for the nation’s stability and the well-being of its people.
I am disappointed and disturbed that despite the confirmation of at least 45 appointees as ministers by the Senate, there are no immediate plans yet for their orientation to talk more of swearing in. It appears that President Tinubu does not understand that we need help urgently. By failing to capitalise on this opportune period, the administration risks further deepening the economic distress faced by ordinary Nigerians and exacerbating the challenges that have already manifested. To restore faith and “Renewed Hope,” swift and decisive actions are imperative to set the nation on a course towards economic stability and growth.
As economic turmoil worsens three months into the new administration, Nigerians cannot afford to wait for the Niger political situation to resolve before solving the economic crisis at home. The distraction of Niger must be relegated to the back burners so that the President can face his primary responsibility of the welfare of each and every Nigerian.
As Nigeria faces some of its most daunting economic challenges in years, the Tinubu administration’s diversion of focus toward Niger’s coup amounts to a dereliction of duty. With inflation spiraling, people struggling to buy food and fuel, and the naira plunging in value, the Nigerian leader must make quick economic recovery its top priority. Any diplomatic initiatives abroad should not come at the cost of immediate action needed to rescue Nigeria’s economy. Tough but urgent reforms, especially on fiscal policy, currency management, and reducing subsidy costs, cannot await stabilisation of Niger’s political situation. Nigerian lives and livelihoods hang in the balance. It is only right that Nigeria’s survival is accorded the importance of truly deserves. One cannot be putting out flames in the neighbour’s garden when one’s very own house is on fire.
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