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  • Business - Economy
  • Updated: May 29, 2024

After one year under Tinubu, Nigeria’s economy dwindles

After one year under Tinubu, Nigeria’s economy dwindles

It's one year already since President Tinubu was sworn in as the President of Nigeria.

When Bola Ahmed Tinubu was declared the winner of the Presidential election, hopes were high that the dying economy would be revamped, business opportunities would be created alas well as conducive business environments. 

However, the current situation appears to be in contrast with the expectations of many. Majority of Nigerians have literally lived from hand to mouth, struggling from one terrible misery to another, and relief is not forthcoming.

On May 29, 2023, during President Tinubu's inauguration, he declared the removal of fuel subsidy, which seemed like the beginning of woe for Nigerians as the price of fuel jumped from N187 to as high as between N600 to N1000. This resulted in the increase of prices of food and other tangible items. Transportation through the road and the air also skyrocketed.

Presently, Nigeria’s inflation rate has increased to 33.2 per cent, according to the latest data from the National Bureau of Statistics, which basically means staple foods items such as Rice, Beans, Tomatoes, etc., have increased beyond the purchasing power of an average Nigerian.

This also shows that Nigeria’s inflation has continued in the jump situation since the commencement of President Bola Ahmed Tinubu’s administration in May last year.

Recall that the country’s inflation rose in April to 33.69 per cent from 22.41 per cent in May last year

In January 2024, headline inflation was 29.9 per cent, 31.70 per cent in February, and 33.20 per cent in March.

To combat growing inflation, the Central Bank of Nigeria's Monetary Policy Committee hiked interest rates by 150 basis points, to 26.25 per cent from 24.75 per cent in March.

Speaking on the development, Dr Titus Okunrounmu, former Director of Research at the Central Bank of Nigeria has said that the continuous increase of the Monetary Policy Rate by the bank’s Monetary Policy Committee will not help the economy to grow.

Moreover, the domestic currency has also slumped totally as the naira is now traded for N1,520/$.

However, Bureau De Change operators who spoke on the reason for the depreciation of naira disclosed that hoarding of the dollar is the major factor fuelling naira depreciation.

While raising an alarm due to the depreciation in the value of the naira, they stated that some Nigerians are keeping their savings in the United States dollar.

The National President of the Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, shared that there is a need for the forex market to be liquid.

He said, "For now, it’s a difficult situation which is also creating panic in the market because the value of the naira is eroding and because of that, a lot of people prefer to keep their savings in dollars.

Meanwhile, the Central Bank of Nigeria, in a bid to intervene and enhance financial accessibility, therfore, mandated all existing BDCs to re-apply for licenses.

The CBN also moved the mandatory caution deposit, which the industry players had kicked against.

According to the new guidelines, “A Tier 1 BDC: a. May operate in any State of the Federation and the Federal Capital Territory, b. May establish branches and appoint franchisees in any state and FCT, subject to the written approval of the CBN. c. Shall maintain a minimum distance of one kilometre between its branches, its branch and a franchisee, and between its franchisees. d. Shall exercise oversight on its franchisees. All franchisees shall adopt their franchisor’s name, logo, branding, technology platform and regulatory rendition requirements. 2 Classified as Confidential: e. Shall comply with the franchising standards prescribed in this guidelines."

Also, the BDCs (existing or new) would also be required to meet the capital requirements for their license category within six months.

However, Aminu Gwadebe, the President of the Association of Bureau de Change Operators of Nigeria, kicked against the new guideline saying, “The requirement is huge. It is not in line with global practices. Capitalisation in the UK is 50,000 pounds; in Kenya, it is $50,000 and so on. I don’t think it reflects global practice. A BDC is not a deposit taker; it is only buying and selling.

“Also, I’m afraid, we would not go the way of Algeria when they came with such policies and at the end of the day, every other player runs to the open market operations and at the end of the day, Algeria had to look for that open market to even determine their local currency exchange rate. We should be careful so that we will not throw away our experience, capacity and investment,” he warned.

According to the ABCON president, the deadline given to BDCs is short.

“When you are giving other sectors, one year, or two years, why the rush with the sub-sector? The deadline is quite short. It is not feasible and then we should also guide against what we are trying to avoid. The CBN in its mind is checkmating money laundering and we may meet money laundering in the future,” he argued.

The government also added to the already heavy burden of Nigerians by increasing the price of electricity tariff by almost 300 percent.

The Central Bank of Nigeria, as a way of deepening the country’s forex reserve introduced the Cybersecurity levy. Even though, the public outcry that followed the policy led to its suspension.

Presently, scarcity of fuel throughout the country bites harder, the average Nigerian is stuck at the receiving end with bitter complaints of how the scarcity of fuel is affecting both their economic and social lives.

Although, the Senate Leader, Opeyemi Bamidele, assured Nigerians that the fuel crisis experienced in the country will soon be a thing of the past, but there is still no relief forthcoming.

However, supporters of President Tinubu have claimed that the government is doing well, as it completes one year in office.

For instance, the Minister of the Federal Capital Territory, FCT, Mr Nyesom Wike said, Mr President’s “Renewed Hope” agenda is no longer a story; it’s a reality. It is a promise made and a promise fulfilled.

“I think Mr President has done very well in terms of reassuring Nigerians that he is committed to deliver the dividend of democracy.

"So, we are very happy.

“From what we have seen on the ground, there is really hope for Nigerians."

Nevertheless, Nigerians remain optimistic, hoping for the best.

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