A professor of Development Economics at the Ekiti State University (EKSU), Ado-Ekiti, Professor Taiwo Owoeye, examines the economic performance of President Bola Tinubu in the last 100 days. IMOLEAYO OYEDEYI brings the excerpt.
As an economist, how would you rate the administration of President Bola Tinubu in the last 100 days?
I think he has done averagely well. The government might not have been able to score a high mark; I will give it between 50 and 60 per cent. This is because the two flagship policies: subsidy removal and exchange rate deregulation are the right policies. The subsidy removal is very important because we have been borrowing money to pay the scam subsidy. So, we need to stop that, so that we can conserve money for other purposes. The exchange rate deregulation is also important because the gap between the black market and the official rate has been very high. Although it is also becoming very wide now, it was becoming very high then and we need to find all means to stop that. But more importantly, we also need to ensure that people benefit from the disparities between the official and the black market rate. More importantly, we also need to increase the government revenue, which has somehow gone up since the removal of the subsidy. These are the advantages of the policies.
But on the flip side, those policies have increased the cost of living. The rate of inflation and the cost of transportation have been very high lately. But I think these are the prices we needed to pay for the reforms. Above all, I still feel the government has not done what it is supposed to do in reducing the negative effects of those policies. By now, the government should have concluded negotiations on salary increments with the labour unions.
Secondly, the palliative the government has been trying to dole out is pedestrian. It has not been handling the issue the right way. In my opinion, the government does not seem to have a clear policy direction on how to confront the negative effects of those two policies. But the two policies are the right initiatives. It is just worrisome that the government has not been able to find ways to reduce their negative effects on the people, who have been at the receiving end of the harsh economic realities that came with the two reforms.
The fact is that when you want to come up with policies like that, you also have to look at its negative effects and how you can help the people. When initiating such policies, the government needs to have an effective roadmap that will reduce the negative effects of the policies. But obviously, it did not have any roadmap before embarking on the economic reforms, which has negatively affected the people.
But going forward, what do you think the present administration can do, especially in view of the hardship the two reforms are causing Nigerians?
The first thing the government needs to do is to come up with a clear roadmap on how it can negotiate the minimum wage increment with the labour unions. Secondly, the government should devise the right palliatives and requisite channels that will get them directly to the people. The government should come up with policies that will help the ordinary man on the street. The policies may come in the form of improvement in the rate and state of our public transport system, and intervention for small-scale industries, so that people can have access to cheaper credit to run their businesses, among others. Enough of the cosmetic approach, the government needs to sit down and do something that will directly have a positive effect on the lives of the people.
Right now, the exchange rate is creating a real problem. The fact is the moment you deregulate the foreign exchange rate, the value of the Naira will start depreciating and those of foreign currencies will start appreciating, both in the black market and official rate. If you look at it now, you will see that the gap between the two is becoming very wide. So, there is a need for the government to find ways to increase our oil production so that the NNPC can generate more forex to support the Naira.
The real reason the naira keeps on falling is that there is illiquidity in the foreign exchange market. So the government needs to address this and ensure the market has a great supply of forex. Illiquidity simply means scarcity of forex, which means that the supply of forex is not meeting the demand and that is why the naira has been falling. It is chiefly because the NNPC has not been generating enough foreign exchange as it was generating before. Speaking of the low oil production, I think we could not meet our OPEC quota, which is 1.8 million barrels per day. Most times, we do between 1.2 and 1.3 million barrels. So we need to increase the oil production. As of today, the oil price has increased to about 90 dollars per barrel. But if we don’t meet our quota, we may not likely benefit from this.
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