One of President Tinubu’s first initiatives when he took the office in May this year was to instigated the removal of the fuel subsidy and floated the Naira. Both actions if effectively and strategically managed are economically rational to help improve Nigeria’s future. In the short term, this has proved a devastating blow for the country.
Fuel Crisis
Fuel costs have risen higher than the initial subsidy margin, with unscrupulous suppliers rationing supply to further push up prices. This has impacted heavily on all sectors of the economy across the country, with the poor bearing the brunt of the pain. Nigeria’s own National Bureau for Statistics Nov 22 report identified 62% (133M) of the population as living in poverty.
Nigeria’s burgeoning youthful demographic, many with degrees but unable to find proper employment, have made ends meet by working as taxi or keke drivers or risking solo start-ups in agriculture, tech, and entrepreneurship activities. Following the removal of fuel subsidies, increased fuel costs have impacted public transport in all its forms as well as hyperinflating the cost of fresh food due to higher distribution costs. The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) reported that over 2 million businesses collapsed between 2017 and 2021 and the current situation is likely to trigger a drastic increase in these numbers.
The President addressed the Nation on 31 July, offering a range of economic palliatives, including a review of minimum wage, large financial injections into the manufacturing and agricultural sectors, the purchase of 3,000 LNG-powered public transport buses, and cash handouts to 12 million households, all by March 2024.
Sadly, the FG’s record on minimum wage is not good. The previous national minimum wage of N30k was not met in many States. These difficulties resulted in multiple industrial actions. The Nigeria Labour Congress (NLC), alongside the Trade Union Congress (TUC), has taken to the streets to first protest the current economic hardship. The protest was initially planned to demand a reversal of the recent increase in fuel prices and electricity tariffs, as well as other economic measures that have been implemented by the government. This has evolved into the promise of full-on industrial strike action if demands are not met.
Also, there is little point in fertilizer, crop seed, and financial injection into the agricultural sector if the FG can’t guarantee a safe and peaceful bandit-free environment in which the farmers can operate.
There is no doubt that Nigeria’s economic ship is in the midst of a violent storm. The first ‘popped rivet’ occurred in Yola where 2 were killed and 110 arrested during the looting, which quickly spread from government food warehouses to private businesses in the market on Sunday 30th July. A State-wide curfew was imposed in response.
Niger
The Niger Republic coup has unfortunate timing, especially as the newly elected president of Nigeria President Bola Ahmed Tinubu has just been appointed as the chair of ECOWAS (Economic Community of West African States). Nigeria has a long, porous border with Niger and has maintained a healthy relationship with the bordering country most notably with the recent past administration.
The ECOWAS deadline to reinstate the Niger President passed yesterday, Sunday 6th August. The Nigerian Army’s 8th Division is reportedly conducting a ‘live firing competition’ in Sokoto State, near the Niger border. However, Nigeria can ill afford to spare troops for a costly intervention, given the state of insecurity across the country and especially in many northern and south-eastern states. However, given Nigeria’s multiple domestic woes, the opportunity to adjust the national focus to an external challenge might be seen as opportune.
Conclusion
The coming months will be very challenging for the new President and Federal Government, unless the FG policies and palliatives are both swift and outwardly obvious, there is a clear risk of widespread and evolving civil protest and social upheaval.