President Bola Ahmed Tinubu’s presidency ushered in a turbulent beginning for Nigerians as he embarked on addressing a multitude of issues plaguing the nation’s economic and political landscape.
During his inauguration, he surprised many by declaring an abrupt end to the fuel subsidy, a move not originally scripted in his prepared speech. President Muhammadu Buhari’s administration had attempted to address this issue with initiatives like the provision of Compressed Natural Gas (CNG) and allocating 50 billion for measures such as salary increases for government workers and the provision of buses to alleviate the impact.
However, President Tinubu, in conjunction with the Nigeria National Petroleum Corporation Limited, removed the subsidy, leading to severe economic hardships. Transportation costs soared by over 200%, pushing Nigeria deeper into poverty, surpassing the previously reported 133% multidimensional poverty rate.
President Tinubu’s administration also introduced the controversial decision to float the Naira, a move criticized as counterproductive. Given Nigeria’s status as a rentier nation reliant on imported petroleum products purchased with foreign exchange, floating the Naira seemed economically illogical, as it increased the cost of importing fuel.
Furthermore, Nigeria’s GDP composition highlights a lack of focus on key sectors necessary for economic development. The service sector outperformed the industrial and agricultural sectors, indicating a lack of attention to these critical areas. In the second quarter of 2022, the GDP growth rate was 3.54%, but in the same period in 2023, it dropped to 2.51%. This decline was exacerbated by the flawed Naira policy.
The poor contributions of the agricultural and industrial sectors signaled a deteriorating economy. President Tinubu’s government must prioritize and support these sectors to ensure they can rival the 54% contribution of the service sector to the 2023 second-quarter gross domestic product
Dr Aliyu Ilias is a Political Economist and Public Affairs Analyst.He writes from Abuja