At an exclusive dinner recently in a highbrow hotel in Lagos to mark the birthday of a successful grass to class entrepreneur, the talk drifted from the economy to sports and politics and back to the economy. The Nigeria economy under President Bola Tinubu (Tinubunomics) was top on the chat menu.
The motely crowd was a select assembly of senior bankers, two or three media executives, a former governor, and other associates and friends of the celebrant. Meal was scrumptious. Guests were gaiety. Ambience stunningly dainty. An occasion befitting royalty and success.
They say, talk is cheap. But not this night. Not among these men and women versed in both street and book economics; persons forged over the years in the furnace of micro and macro-economics, banking, stock market, trade, entrepreneurship and investment behaviour. They were especially chatty. This writer was seated ensconced among persons who could smell money, big money, from afar. Persons versed in the art of the deal (apologies to Donald Trump and Tony Schwartz).
The talk centred more on Tinubunomics. What was, what is and what could have been; and even on what would be. The summation of the discourses was that Tinubu has done what was best in the circumstance. Some were emphatic that only a Tinubu could take the actions he has taken since May 2023. The consensus was that the removal of fuel subsidy and floating the naira were inevitable, and could have happened ages ago even under President Olusegun Obasanjo era, especially after that successful negotiation by the Obasanjo government for debt reprieve for Nigeria.
The point of divergence, however, was that floating the naira happened too close to removal of subsidy. Given the volatility of the nation’s economy to interjections of such magnitude including basic increase in workers’ wages, the government could have delayed floating the naira by at least six months. And such floating could have been graduated over a period of time; not in one fell swoop, to avoid soar-away inflation.
But all were in agreement that Tinubu did what was right at this time. Tinubunomics is the most realistic fiscal management of any era in this 4th Republic. From Obasanjo to Buhari, the naira had been made to look good when it was actually sick. Naira was simply garbed in borrowed robe. One of the top bankers was ruthlessly blunt in his analysis. He reminded the diners that the real value of the naira as far back as the Goodluck Jonathan era was N1000/N1,200 to the dollar. At that time, the naira was artificially trading at between N180/N200 to the dollar. Many other diners concurred. They blamed past governments for allowing the rot in the monetary system to linger for long without taking any bold step to stop the decay. They commended Tinubu for the courage and sincerity to tame the beast of artificial naira value.
Listening to the chatty diners reminded me of the thesis of a friend and former banker, now a businessman, who used to say “your naira is living on borrowed time.” In 2016, a year into Muhammadu Buhari’s Presidency, he said the real value of the naira was over N1000 to the dollar. While I used to think the figure was as exaggerative as it was outlandish, the chain of events that hallmarked the Buhari government brought home the reality of a dead naira in dire need of revival. This deadness of the naira and by extension, the economy, had been corroborated by both my banker friend of many decades and the fiscally-smart minds at the dinner. Much more, it has been confirmed by both President Tinubu and Vice President Kashim Shettima whom at various times echoed the line, “we inherited a dead economy.”
It was not until news of the ‘Ways and Means’ under Buhari broke that the deadness of the economy hit home. Yes, Section 38 of the 2007 CBN Act allows the government to borrow or spend 5% of the previous year’s actual revenue and pay back before borrowing from the next year’s revenue, subject to requisite approvals. But under Buhari, it was abused with a willing and grossly compromised Central Bank of Nigeria. What was fixed by law at 5% turned into excessive borrowing without repayment. The result was a staggering N23 trillion debt owed the CBN by the federal government. And much of this money came from printing naira notes.
The red flag was raised in April 2021 by then governor of Edo state, Godwin Obaseki. He said, most courageously, that Nigeria printed N60 billion to augment federal allocation that was shared the previous month. He was emphatic when he said Nigeria was broke. He accused the federal government of not telling Nigerians the true state of the economy. He projected that in the coming years, the federal government would have no money to share to states if drastic actions were not taken. He was attacked by the same Buhari government. He was called a liar and alarmist. But Obaseki was right. All that was being covered by the Buhari government has been exposed. Nigeria had been printing banknotes like Idi Amin of Uganda of those days to meet up with domestic fiscal demands. That’s a sure sign of a dead economy, all because of the financial prodigality of past governments.
This is the context that makes Tinubu’s economic engineering worth the patience and the pain. By abolishing the fraud dressed as fuel subsidy; by arresting the crime-infested variation in forex, each rate for different classes of Nigerians; by insisting that Nigerians should patronise Made-in-Nigeria goods and services including consumables, Tinubu has demonstrated courage at the risk of his political life. This is beyond politics. It’s about national existentialism. Reform is a painful passage to pleasure.
The challenge is for Tinubu to live what he preaches, ensure that MDAs, his appointees and those in the corridor of power at all levels conform to this veritable local content policy and the concomitant frugal lifestyle that is expected of Nigerians at these times.
The recent signing of a Memorandum of Understanding between the Universal Basic Education Commission (UBEC) and Digital Learning Network of the United States to provide 47 million laptops and tablets for students and teachers across Nigeria is clearly against the principle of Tinubunomics. Such MoU should be with an indigenous ICT firm with proven capacity. And there are a couple of them. Partnering with any foreign body is a conduit to burn scarce forex. At the end of the day, this American ‘organisation’ will move their ‘profit’ back to America. The Federal government must live what it preaches by patronising indigenous firms. This is the sensible way to build a one trillion-dollar economy.
