Tinubu’s Big Headaches

Akanni Alaka writes on the challenges that President-elect Bola Ahmed Tinubu will inherit upon the assumption of office on 29 May and some of the suggestions by experts on how he should tackle them.

Nigeria’s President-elect, Bola Tinubu has been busy since he returned to the country after what his spokespersons described as a four-week vacation. Tinubu’s media aides have since last Monday been busy sending out pictures of his daily engagements which mostly involved receiving and meeting with members of his party, the All Progressives Congress, APC,  governors, members of the National Assembly, traditional rulers, and businessmen among others. The President-elect’s meeting with members of APC is understandable given the ongoing battle over the leadership of the 10th National Assembly. I am running a few minutes late; my previous meeting is running over.

But beyond this, it is doubtful if the meetings in which the visitors always came out grinning from ear to ear to take pictures with Tinubu included discussion of issues bothering Nigerians. Yet, the challenges are mounting by the day for the incoming president with analysts warning that he will be taking over a country challenged on all fronts when sworn into office on 29 May. Thus, analysts have said the takeoff point for the Tinubu administration if it wants to take on the multiple challenges should be the appointment of competent members into his cabinet.

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While there has been jostling and speculations on who will get what position in the media, the contention is that Tinubu must put politics and other sentimental or emotional considerations aside to choose a team that can help him to tackle the problems he will inherit on 29 May.

Former Senate President, Senator Ameh Ebute, in a statement last week said Tinubu should put competence and integrity above other considerations in the appointment of persons into his coming administration. Ebute noted that said Nigeria could only make progress when people with proven integrity, competence and track records of performance were appointed into the government.

“The president-elect is known as a results-oriented and patriotic politician, I believe he will reciprocate the gesture Nigerians have shown him by putting square pegs in square holes. I am also sure Tinubu will not derail from the composition of fertile minds as his consummate team.

The Subsidy Challenge

No doubt, chief among the challenges that analysts have said will immediately confront Tinubu upon assumption of office is what to do with the fuel subsidy. Zainab Ahmed, minister of finance, budget and national planning, said last week that the Buhari administration had decided to allow the incoming government of Tinubu to decide on how it would manage the process of removal of petrol subsidy. But the minister said the subsidy must go by the end of June as already indicated in the 2023-2025 Medium-Term Plan.

Tinubu had also during the campaign insisted that he would remove the fuel subsidy, without minding whose ox was gored.

However, the major opposition to his plans would certainly be the Labour unions that have insisted that government must rehabilitate the local refineries before it would accept the proposed removal of fuel subsidy.

Yet, economists and local as well as international financial institutions among others have insisted that one of the ways to salvage the Nigerian economy and get more funds for investment in socio-economic and infrastructural development is to end the wastage on petrol subsidy exacerbated over the years by corruption in the system.

Speaking at a joint National Association of Nigerian Students (NANS)/Civil Society Organisations (CSOs) sensitisation workshop on Nigerian National Petroleum Company Limited (NNPCL) operations in Abuja last month,  Lawal Musa, senior business adviser to the Group CEO of NNPCL, in a presentation entitled ‘Petroleum Industry Act (PIA) and the Nigerian Economy’, said the Federal Government spent as much as N4.8 trillion annually on fuel subsidy.

This, he noted, is at the expense of the well-being of Nigerians as the funds could provide 7,500km of a road network at N400 million per kilometre and 37 well-equipped 120-bed tertiary health centres at N32 billion per hospital, 500,000 new houses among others annually for the country. He added that the Nigerian government can save N12 trillion in four years for Nigerians, while emphasizing that the cost of fuel subsidy outweighed the direct benefits, particularly to the masses.

“Nigeria is the largest producer of crude oil in Africa, possessing 28 per cent of Africa’s reserve, with petroleum contributing significantly to the country’s economy. The benefits derived have over the years have been eroded due to the amount paid on subsidy, a regime has been fuelling the vicious circle of poverty in the country,” Musa added while noting that at the moment petrol price in Nigeria is the lowest among most West African countries with the product costing $2.7 per litre globally, which amounted to about N570 per litre.

For Safe Navigation of Subsidy LandmineHowever, there are also negative sides to the removal of subsidy. The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has said the Federal Government’s planned removal of the subsidy on Premium Motor Spirit (PMS) also known as petrol could shut down businesses especially the Small and Medium Scale (SME) ones.

This was the contention at the 2023 second quarterly press briefing of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA ) held last week. John Udeagbala, president of NACCIMA  said while the association is not against subsidy removal, it is concerned about the likely impact on the already over-stressed businesses of its members.

But Udeagbala added the pains of the removal of subsidy can be assuaged if the Tinubu administration can carry through the ongoing rehabilitation of the Federal Government-owned refineries to end importation.

“Aside from the production of basic fuel products, there are other heavier distillates and by-products of these refineries which are also critical inputs for industries such as LPFO, SRG, Carbon Black, etc. This, we believe, will help to generate further employment opportunities for our citizens, particularly the teeming youths,” he said.

Also speaking at the flag-off ceremony to commemorate the Institute of Directors (IoD) 40th anniversary last Friday in Lagos, former finance minister, Kalu Idika Kalu advised the incoming government to carry out the removal of petrol subsidy in phases after ensuring that the necessary macroeconomic parameters that would impact standards of living are tackled.

“Removal of subsidy must be done in a way that doesn’t disrupt general pricing and human activities; otherwise, the dynamic system cannot handle the price hiccups if it is just done suddenly. There are macroeconomics variables that must be corrected for the subsidy removal to scale through and the government has to touch all essential levels of the economy and not just shut subsidy support to consumers,” Kalu said.

“Discussion should move beyond palliatives to issues of resources allocation, improvement in domestic production and distribution so issues that impede to productivity have to be tackled before subsidy is removed,” he added.

Rescuing Nigerian Economy From Doldrums

Aligned with the subsidy is the revival of the economy and taming of the raging inflation as well as unemployment in the country. Analysts have said one of the ways of achieving this is the revival of the manufacturing sector. The revival of the productive sector, it has also been noted, is one of the ways to tackle the problem of unemployment in the country.

Also, analysts said one of the ways to arrest the decline in the value of the naira is to produce more of the goods needed by Nigerians at home to reduce importation.

Tinubu in his manifesto entitled “Renewed Hope” recognized this with the promise that he would introduce policies to ensure the manufacturing, creation, and invention of the goods and services needed by the country.  “Nigeria shall be known as a nation of creators, not just of consumers,” he promised.

He added that his areas of focus to revive the sector be on Import Substitution, a National Industrial Plan, Support for Domestic Manufacturing of Electricity Meters and Pharmaceutical manufacturing and Tech Manufacturing.

But highlighting the situation of the sector recently, Mr Segun Ajayi-Kadir, the director-general of the Manufacturers Association of Nigeria, MAN noted that Nigeria’s manufacturing capacity utilisation in 2022 declined to 54.9 per cent from 59 per cent recorded in the corresponding half of 2021.

The MAN DG blamed the setback in the sector on multiple factors, including the high cost of energy, the Russia- Ukraine war, the ill-thought-out naira redesign and other macroeconomic challenges.

He noted that the manufacturing production value output declined to N2.68 trillion in the second half of 2022 from N3.73 trillion recorded in the corresponding half of 2021; indicating N1.05 trillion or 28 per cent decline over the period: “Production in the sector was also negatively affected by limited purchases by households due to the naira redesign policy, the high inflationary pressure in the country, high cost of energy and many more. These challenges, in addition to the perennial issues, contribute enormously to the dip in the production of the sector in the period under review.”

Therefore, to revive the sector, the MAN DG advised the incoming government to initiate policies that would lead to improvement in foreign exchange availability for manufacturers. He also advised the incoming administration to support interventions that would make it easier for manufacturers to source for their raw materials and machine needs.

“Government must develop and implement a roadmap for improved power supply focusing on off-grid solutions and independent power projects by the private sector to ensure adequate supply of energy for production and also attract and expand investment.

“The country must also resuscitate domestic refining and commission the CHIYODA Group, the Japanese company that built the national refineries to rehabilitate them to resume domestic refining.

NACCIMA also cautioned the incoming Tinubu administration not to take the advice of the outgoing administration that it should increase Value Added Tax (VAT) charges from 7.5 per cent to 10 per cent. “We are concerned by this situation and therefore call on the incoming government to reconsider any thoughts on a further tax increase, especially VAT,” he said. It is barely two years since the VAT rate was increased from five per cent to 7.5 per cent and therefore such advice is ill-timed,” said the NACCIMA boss.

Debt Burden/Infrastructure Challenge

As he will be taking over government on 29 May, Tinubu will also be inhering a huge debt burden, the large percentage of which was acquired by the Buhari administration in the about eight years it has been in office.

The Debt Management Office (DMO) puts Nigeria’s total public debt stock at N46.25 trillion or $103.11 billion as of December 2022. “In terms of composition, total Domestic Debt Stock was N27.55 trillion (USD 61.42 billion) while Total External Debt Stock was N18.70 trillion (USD 41.69 billion),” DMO said. It attributed the increase in the debt stock to new borrowings by the Federal Government and states to fund budget deficits and execute projects.

DMO also said the issuance of promissory notes by the FG to settle some liabilities also contributed to the growth in the debt stock. While the DMO has consistently insisted that there is no cause for alarm over the high debt stock, analysts have continued to raise alarm over the ability of the country to repay the debts.

Already, Nigeria is using over 80 per cent of its revenue to repay the debts with fears that the country may default in repayment. In addition, the dedication of a humongous amount of revenue to debt payment means that the government will have little or nothing left for investment in critical infrastructure.

While noting that Nigeria needs about $800 billion cumulatively in 10 years to fix its infrastructural challenges, some analysts have advised the Tinubu administration to explore the Private Public, Partnership, PPP option for funding. “Nigeria needs $80 billion every year over the next 10 years to finance its infrastructure gap. And to address this, the government must partner with the private sector to provide funding for key infrastructure projects,”  former acting Managing Director/CEO of Bank of Industry (BoI), Waheed Olagunju said at a recent national workshop of the Association of Business Editors in Nigeria (ABEN), with the theme: “Infrastructure Financing as Pathway to Sustainable Economic Development.

To further tackle Nigeria’s revenue problems, analysts advised the incoming Tinubu government to initiate policies that will encourage more investment in the gas and oil industry. The advice came on the back of data indicating progressively increasing revenue for the country from gas.
They also expected the new president to deploy the same magic he used to increase revenue accruing to Lagos when he was governor to tackle Nigeria’s revenue problem.

Food Security/Insecurity

Then, there is also the problem of food security and affordability for Nigerians which the president-elect is expected to confront when he assumes office. The rising cost of food, according to the data released by the National Bureau of Statistics, NBS is one of the drivers of the ballooning inflation rate in Nigeria.

The Buhari administration had in the past eight years implemented programmes and initiatives like the National Livestock Transformation Plan targeted at promoting the development of livestock farming, the Anchor Borrowers’ Programme, through which loans are provided to smallholder farmers and the Green Alternative Programme introduced to promote agribusiness.

However, analysts said the Tinubu administration must tackle problems of insecurity as manifested in herders-farmers clashes, large-scale kidnapping and banditry that have and are still driving many farmers out of their villages to increase the quantity of food items being produced in the country and subsequently, the price.

Ironically, President Buhari had during the Nigerian Army Trooping and Presentation of Colours Parade 2023 last Thursday boasted that his administration had made remarkable progress in the fight against insurgents, militants, oil bunkerers, kidnappers and other criminal elements in the country.

He said his administration achieved those through the remarkable transformation of the military in the areas of fighting power, training, operations, manpower, remunerations and medical services, in addition to maintenance efficiency, accommodation and expansion of forces.

However, the fact is that the Tinubu administration will also inherit insecurity across the country with Boko Haram, ISWAP and their brother bandits continuing to ravage the Northern part of the country.
In the South, kidnappers, bandits and cult gangs have also continued to make the lives of the people difficult.

During his campaign for the presidency, Tinubu had promised to consolidate investments in security agencies and successes being recorded in tackling insecurity by the Buhari administration. Speaking at an interactive session for the presidential candidates in Kaduna organised by a joint committee of Arewa groups, the then APC presidential candidate promised to mobilise all assets within the reach of Nigeria to secure the country.

“We will deal decisively with all elements threatening our peace, security and unity. I guarantee you we will end kidnapping and banditry not only through increasing our policing capacity but also through another soft approach that would promote inclusion and boost the economy of our local communities. Under my leadership, every inch of our national territory will be secured and defended,” he said.

The former Lagos State governor said he would achieve that by repositioning the armed forces, law enforcement, and intelligence agencies in tandem with the 21st-century requirement as well as sourcing and deploying modern tools that would help the country to adequately tackle the threats of terrorism, kidnapping, separatism, banditry, cybercrimes and economic sabotage.

He also said he would work with other stakeholders to bring the much-talked-about state police to fruition. He also promised to secure Nigeria’s borders to curtail inflows of illegal arms building local and national peace and reconciliation mechanisms for non-kinetic and long-lasting solutions.

Those who spoke to The Nigerian Xpress last week said the success or otherwise of the Tinubu administration would be determined by his ability to unite Nigerians. They spoke against the belief that Nigerians had never been divided as they have been under the administration of President Muhammadu Buhari.

Healing Nigeria/Nigerians

Aside from the highly contentious 2015 presidential election, analysts traced the root of the division to the statement by Buhari in the US when he promised to favour the parts of the country where he was overwhelmingly voted for in terms of appointments and projects. “I hope you have a copy of the election results.

The constituents, for example, who gave me 97% [of the vote] cannot in all honesty be treated on some issues with constituencies that gave me 5%. I think these are political realities,” the President said in what many believed was a reference to South-east Nigeria where his main opponent in the election, Goodluck Jonathan won well over 90 per cent of the votes.

While the presidency has tried to explain the President’s 97/3 per cent statement, Buhari’s appointment since 2015, some analysts insisted, had followed the pattern.

They pointed out, for instance, that Buhari has failed to appoint anyone of South-east origin as head of any of the armed forces or even the police since 2015 in addition to shutting the region out of the other critical positions.

However, the campaign for the 2023 presidential election in which Peter Obi from the South-east was a leading candidate against Tinubu of APC in which religion and ethnicity were heavily deployed had also exacerbated the division. Tinubu’s choice of a fellow Muslim had also angered Christians from the South and Northern parts of the country to oppose the APC ticket.

Though Peter Obi came third in the election won by Tinubu, supporters of the Labour Party’s presidential candidate believed that he was cheated out of victory. Obi, as well as Atiku who came second in the election, according to results declared by INEC had challenged the victory of Tinubu. However, the President-elect will be sworn into office on 29 May with the dispute over the election outcome not yet decided.

Analysts said while waiting for the judgment, Tinubu can help to strengthen the unity of the country in many ways. One of the ways is by ensuring fairness and equity in his appointments.

“He must demonstrate that he will not continue from the lopsidedness in favour of a part of the country we have had to contend with under the Buhari administration in the past eight years right from his first day in office,” Abuja-based civil society activist, John Okechukwu told this newspaper.

Another practical demonstration will be a clear support for the emergence of a Christian preferably from the South-east as the president of the Senate to give the region a sense of belonging.

“The Senate Presidency should go to the South-east for equity and justice,”  activist and former senator, Shehu Sani said in a recent interview. Also, a northern-based group, Arewa Young Professionals in Politics said the position of the Senate president should be zoned to the Southeastern part of the country in the interest of equity, and fairness.

In a recent statement, the Convener of the group, Yusuf Amoke said ensuring that the leadership of the National Assembly projects the nation’s religious diversity will not only foster a sense of belonging for every region and religion but will also prevent any divisive tension that could undermine the effectiveness of the Tinubu administration.