The Bola Ahmed Tinubu administration within its first few days in office announced far-reaching reforms to reposition the economy on a footing of sustainability. The interesting aspect of these reforms in fuel subsidy removal and unification of the exchange rate is that they were points of convergence in the manifesto of the three leading presidential candidates during the campaigns. The implication is that Tinubu, Abubakar Atiku and Peter Obi all promised to take these steps if elected. This discourse reviews the feasibility of these reforms and how it should be managed to avoid unnecessary pain and hardship on the majority of the population.
The first point to note is that the mere announcement of reforms and getting plaudits from various quarters is not the reform per se. It may be a first but minor step. The major work lies ahead. The major impact of these reforms in terms of what everyone can feel is increase in prices of goods and services, increased hardship and misery especially for the poor who constitute the bulk of the population from the statistics provided by the National Bureau of Statistics. The president seems to understand this, to the extent that in his speeches, he has called on Nigerians to sacrifice, to tighten their belt and endure the hardship which the administration states may be on the short term.
In terms of sequencing, there is a controversy on whether the reforms should have been announced first before agreements and decisions on measures to ensure that the reforms succeed. Sequencing and timing are critical issues in any reform agenda because reforms must come at a time when they have good public support and understanding, and clear measures to harness their upsides whilst minimising their downsides. For these two reforms that ultimately increased the cost of living, the expectation was that planning for the alleviation of their hardship should have preceded their announcement. However, we are faced with the extant situation where the reforms have been announced and decisions on how to stem their downsides need to be made. These decisions need to be made as soon as possible, if not immediately.
The implication is that the president cannot attend to these palliative issues and ensure that the upsides are realised, alone. He needs the entire team of ministers and assistants who bring novel ideas and superintend over their implementation. The president on his own must have some clear ideas on what to do with the downsides of the reform. For instance, in the removal of fuel subsidy, all negotiations with the organised labour, private sector and various strata of society should be rounding off by now.
If palliative measures like public buses fuelled with cheaper energy sources are part of the decisions, local vehicle manufacturers and assemblers should have been contracted to start their production by now and they would be put into service in phases. This would not be one off demand but institutional measures and policies put in place to ensure that this continues. Such a policy measure should not be an opportunity to import buses and vehicles with the little available foreign exchange which puts further pressure on the value of the naira. It should be an opportunity for value addition and job creation in Nigeria. In the long term, trams being big coaches powered by electricity conveyed by overhead cables or any cheap fuel, and running on rails laid in public roads should be planned and deployed.
Furthermore, there is nothing in the books that prevents light city railways being deployed in major cities across the federation. It will not cost a fortune if the procurement process is not abused and overwhelmed with corruption. This can be done by state governments now the railways have been decentralised by the constitution amendment. Pray, the rails from Abuja airport to the central area that has been under construction for over eight years, what is still delaying the project?
Negotiations to increase the minimum wage should not take forever. It must be fast tracked so that workers get a reprieve from the hardship and increased prices. Implementing one-off personal income tax reliefs for low-income earners should be negotiated with the minimum wage increase. Cushioning the impact of subsidy removal must go beyond those palliatives meant for workers in the formal sector. There must be a package to touch those in the informal sector. Access to health care and cushioning the effects of the high out of pocket expenditure will be an option which may require re-engineering the Basic Health Care Provision Fund through reforms like increasing the minimum percentage allocation from one percent of the consolidated revenue fund of the Federal Government to two per cent of the Federation Account Revenue. It will also involve reworking the guidelines and implementation measures to ensure that not less than 90 per cent of the funds is dedicated to services and most important of all, guaranteeing transparency and accountability in the management and disbursement of the funds. Full implementation of the National Health Insurance Authority Act needs to be prioritised.
If we are to use the money from the World Bank to distribute cash to the poor, it is time to bring out the social register into the public domain. It is not enough to plan to reach 10 million families and 50 million persons in all, Nigerians need to know how we arrived at these people. Who are the beneficiaries and what qualifies them to be beneficiaries and whether they are equitably distributed across the federation considering that it was compiled by an administration notorious for discrimination and favouring groups above others? However, this discourse is against the idea of borrowing money from any source, no matter how concessional, to disburse to the poor as palliative. Such practice is against the spirit and letter of the Fiscal Responsibility Act. It is not sustainable and is a bait for further national emasculation in a debt trap.
We are informed that importation of refined petroleum consumes between 25 and 30 per cent of available foreign exchange. Beyond the commissioning of the Dangote refinery, it is imperative for the Federal Government to take steps to ensure that it starts production as earlier announced. The Federal Government should also facilitate the completion and commencement of production in other private refineries as well take the critical step of privatising existing public refineries. The privatisation will raise funds for the federation account. These steps will reduce the foreign exchange pressure on the naira, to stem the continued slide in the value of the naira and most likely earn some foreign exchange for the country. If the exchange unification policy witnesses the naira sliding to between N1000 and N1,500 to the dollar, it would be deemed a failure by the majority of Nigerians especially in the face of the fact that international experts have alleged that the naira is now undervalued.
In conclusion, these are a few steps as the list cannot be exhaustive in such a short discourse. There is the fierce urgency of now; these steps cannot wait. The longer they wait, the sharper the pain inflicted on the masses and it may reach a point where there will be a strong push back.