June 17, (THEWILL)- 5The Presidency has taken The New York Times to task for its criticism of the Nigerian economy as facing the worst performance in a long time under President Bola Tinubu’s one-year old administration.
Special Adviser to the President on Information and Strategy, Bayo Onanuga, on Sunday described the report credited to Ruth Maclean and Ismail Auwal as misplaced, insensitive and biased.
According to the Presidency, the feature story with the title, ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’, published on June 11, reflected “the typical predetermined, reductionist, derogatory and denigrating way foreign media establishments reported African countries for several decades.”
THEWILL recalls that the New York Times article said in part that Nigeria is facing its worst economic crisis in decades, with skyrocketing inflation, a national currency in free-fall and millions of people struggling to buy food. Only two years ago, Africa’s biggest economy, Nigeria, was projected to drop to fourth place this year.
The pain is widespread. Unions strike to protest salaries of around $20 a month. People die in stampedes, desperate for free sacks of rice. Hospitals are overrun with women wracked by spasms from calcium deficiencies.
The crisis is largely believed to be rooted in two major changes implemented by a president elected 15 months ago: the partial removal of fuel subsidies and the floating of the currency, which together have caused major price rises.
A nation of entrepreneurs, Nigeria’s more than 200 million citizens are skilled at managing in tough circumstances, without the services states usually provide. They generate their own electricity and source their own water. They take up arms and defend their communities when the armed forces cannot. They negotiate with kidnappers when family members are abducted. But right now, their resourcefulness is being stretched to the limit.
THEWILL checks show that as Onanuga acknowledged, things are not all rosy even though the government is making efforts to provide solutions.
As an example, Nigeria’s inflation slightly rose to 33.95 percent in May, representing 0.26 percent increase when compared to the April 2024 headline inflation rate of 33.69 percent, according to the National Bureau of Statistics (NBS) last weekend
It said in its report, “Looking at the movement, the May 2024 headline inflation rate showed an increase of 0.26% points when compared to the April 2024 headline inflation rate.
“On a year-on-year basis, the headline inflation rate was 11.54% points higher compared to the rate recorded in May 2023, which was 22.41%.
“This shows that the headline inflation rate (year-on-year basis) increased in the month of May 2024 when compared to the same month in the preceding year (i.e., May 2023).
“On a month-on-month basis, the headline inflation rate in May 2024 was 2.14%, which was 0.15% lower than the rate recorded in April 2024 (2.29%).
“This means that in the month of May 2024, the rate of increase in the average price level is less than the rate of increase in the average price level in April 2024,” the Bureau said, adding that the percentage change in the average CPI for the twelve months ending May 2024 over the average of the CPI for the previous twelve-month period was 29.06%, showing a 7.86% increase compared to 21.20% recorded in May 2023.
However, the Tinubu administration has blamed the preceding President Muhammadu Buhari’s government for the current economic woes in the country.
Minister of Finance and Coordinating Minister of Economy, Wale Edun, said recently that the N22.7 trillion printed by the Central Bank of Nigeria, CBN, through Ways and Means overdraft for the federal government between 2015 and 2023 under Buhari, put the country into hyperinflation wrecking it currently.
The Minister who said this during a meeting with the Senate Committee on Finance in March 2024.
“We talk about inflation. Where did it come from.? It came from eight years of just printing money not matched by productivity in output. And what happened for eight years, the weak were left to their own devices. It is the privileged few that took everything.” Months earlier in November last year during a Defence Intelligence Annual Conference held in Abuja, National Security Adviser, Nuhu Ribadu painted a picture of an economy that was literally on life support.
“Yes, we are facing budgetary constraints. It is okay for you to tell me.” He told his audience, adding that, “It is important for you to know that we inherited a difficult situation, literally a bankrupt country, no money, to a point where we can say all the money we are getting now, we are paying back what we have taken. It is serious.”
Perhaps unsatisfied with the pace at which his administration is tackling the situation, President Tinubu is said to be considering reshuffling his cabinet in the days ahead, to offload non-performing ministers whom he made to sign performance bonds at the start of the administration last year.
Onanuga however said because of the ‘misleading’ slant of the New York Times report, the government needed to clear up some misconceptions conveyed by the reporters as regards the economic policies of the President Bola Tinubu administration that came into power at the end of May 2023.
He said one significant aspect of the report was that it painted the dire experiences of some Nigerians amid the inflationary spiral of the last year and blamed it all on the policies of the new administration.
For this reason he said the report based on several interviews, is “at best jaundiced, all gloom and doom, as it never mentioned the positive aspects in the same economy as well as the ameliorative policies being implemented by the central and state governments.”
Onanuga said that Tinubu did not create the economic problems Nigeria faces today. He inherited them.
He said, “As a respected economist in our country once put it, Tinubu inherited a dead economy. The economy was bleeding and needed quick surgery to avoid being plunged into the abyss, as happened in Zimbabwe and Venezuela,” he noted.
Onanuga said this was the background to the policy direction taken by the government in May/June 2023: the abrogation of the fuel subsidy regime and the unification of the multiple exchange rates.
According to the presidential aide, for decades, Nigeria had maintained a fuel subsidy regime that gulped $84.39 billion between 2005 and 2022 from the public treasury in a country with huge infrastructural deficits and in high need of better social services for its citizens.
Onanuga also alleged that the state oil firm, NNPCL, the sole importer, had amassed trillions of Naira in debts for absorbing the unsustainable subsidy payments in its books.
He said by the time Tinubu took over the leadership of the country, there was no provision made for fuel subsidy payments in the national budget beyond June 2023.
“The budget itself had a striking feature: it planned to spend 97 percent of revenue servicing debt, with little left for recurrent or capital expenditure. The previous government had resorted to massive borrowing to cover such costs. Like oil, the exchange rate was also being subsidized by the government, with an estimated $1.5 billion spent monthly by the CBN to ‘defend’ the currency against the unquenchable demand for the dollar by the country’s import-dependent economy.
“By keeping the rate low, arbitrage grew as a gulf existed between the official rate and the rate being used by over 5000 BDCs that were previously licensed by the Central Bank. What was more, the country was failing to fulfil its remittance obligations to airlines and other foreign businesses, such that FDIs and investment in the oil sector dried up, and Emirate Airlines cut off the Nigerian route,” he said.
Onanuga said to deal with the cancer of public finance, Tinubu on his first day rolled back the subsidy regime and the generosity that spread to neighbouring countries. Then, his administration floated the naira.
He said, “After some months of the storm, with the naira sliding as low as N1,900 to the US dollar, some stability is being restored, though there remain some challenges. The exchange rate is now below N1500 to the dollar, and there are prospects that the naira could regain its muscle and appreciate to between N1000 and N1200 before the end of the year.
“The economy recorded a trade surplus of N6.52 trillion in Q1, as against a deficit of N1.4 trillion in Q4 of 2023. Portfolio investors have streamed in as long-term investors. When Diageo wanted to sell its stake in Guinness Nigeria, it had the Singaporean conglomerate, Tolaram, ready for the uptake. With the World Bank extending a $2.25 billion loan and other loans by the AfDB and Afreximbank coming in, Nigeria has become bankable again. This is all because the reforms being implemented have restored some confidence.
“The inflationary rate is slowing down, as shown in the figures released by the National Bureau of Statistics for April. Food inflation remains the biggest challenge, and the government is working very hard to rein it in with increased agricultural production.
“The Tinubu administration and the 36 states are working assiduously to produce food in abundance to reduce the cost. Some state governments, such as Lagos and Akwa Ibom, have set up retail shops to sell raw food items to residents at a lower price than the market price.
“The Tinubu government, in November last year, in consonance with its food emergency declaration, invested heavily in dry-season farming, giving farmers incentives to produce wheat, maize, and rice. The CBN has donated N100 billion worth of fertiliser to farmers, and numerous incentives are being implemented. In the western part of Nigeria, the six governors have announced plans to invest massively in agriculture.
“With all the plans being executed, inflation, especially food inflation, will soon be tamed.
“Nigeria is not the only country in the world facing a rising cost of living crisis. The USA, too, is contending with a similar crisis, with families finding it hard to make ends meet. US Treasury Secretary Janet Yellen raised this concern recently. Europe is similarly in the throes of a cost-of-living crisis. As those countries are trying to confront the problem, the Tinubu administration is also working hard to overturn the economic problems in Nigeria.
“Our country faced economic difficulties in the past, an experience that has been captured in folk songs. Just like we overcame then, we shall overcome our present difficulties very soon.”
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