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• Current hardship necessary for building inclusive economy, says Tinubu
• Kicks against economy that rewards ‘tiny elite’, impoverishes majority
• ‘New minimum wage is coming’ • 75 enterprises to get N1 billion single-digit loans
• 1,300 nano businesses to get N50,000 grant each
• 100,000 businesses, start-ups to benefit from N75b MSME funds
• FG to invest N100b on 3000 gas-power buses for mass transit
President Bola Tinubu, yesterday, insisted the current economic hardship is a necessary price Nigerians must pay to achieve a “balanced” and fair economy.
The President, in a national broadcast, told Nigerians that he understood the “hardship” they face but wished “there were other ways” to achieve an inclusive economy.
“Our economy is going through a tough patch and you are being hurt by it. The cost of fuel has gone up. Food and other prices have followed it. Households and businesses struggle. Things seem anxious and uncertain. I understand the hardship you face. I wish there were other ways.
“But there is not. If there were, I would have taken that route as I came here to help not hurt the people and nation that I love,” Tinubu said in a prepared speech delivered at 7pm. He recalled the imbalance caused by fuel subsidy payment and the “preferential” exchange rate system that ended up making “the elite of the elite” richer and the majority of Nigerians poorer.
“This group had amassed so much wealth and power that they became a serious threat to the fairness of our economy and the integrity of our democratic governance. To be blunt, Nigeria could never become the society it was intended to be as long as such small, powerful yet unelected groups hold enormous influence over our political economy and the institutions that govern it.
“The whims of the few should never hold dominant sway over the hopes and aspirations of the many. If we are to be a democracy, the people and not the power of money must be sovereign.
“The preceding administration saw this looming danger as well. Indeed, it made no provision in the 2023 Appropriations for subsidy after June this year.
Removal of this once helpful device that had transformed into a millstone around the country’s neck had become inevitable,” he noted.
Tinubu also pointed out the previous multiple exchange rate regime as one of the flawed systems that impoverished the country and handed the economy over to a selected few. The system, he said, “doled” out the resources that should have been used to create jobs to a “tiny elite” in the country on favourable terms.
The speech was rife with ‘elite’, ‘preferential’, ‘favorable’ and several other words that connote the historically unfair path the economy has taken in decades.
The speech also resonated with his previous “I feel your pains” and “let the poor breathe” memes, which have been described by millions of tweeps who have questioned the sincerity of the President.
In the past two weeks since the prices of fuel went up by over 15 per cent, millions of netizens have sarcastically demanded the comeback of ex-President Muhamadu Buhari. Though satirical, the calls explain the depth of suffering and the height of agony Nigerians have witnessed since Tinubu assumed power.
The broadcast came exactly two months after he assumed office – a period in the country that has seen a significant rise in the cost of living and a spike in the already high misery index – an economic indicator juxtaposing unemployment and inflation rate.
Last month, the inflation reached a new multi-decade high of 22.8 per cent. As high as it was. The National Bureau of Statistics (NBS) warned that the fuel price increase and the attendant adjustment in other prices would be fully captured in the July consumer price index (CPI).
A former Director-General of NBS and leading statistician, Yemi Kale, had told Nigerians that the inflation rate would hit 30 per cent following the fuel subsidy removal.
The inflation outlook has been worsened by the sharp post-foreign exchange liberalisation depreciation of naira. Since June 14 when the Central Bank of Nigeria pulled the plug on the FX market, naira has lost nearly half of its value to the dollar.
The local currency traded at an average of N463 to a dollar before the convergence. In the past week, it traded below N750/$, closing at 756.94/$ at the investors’ and Exporters’ yesterday.
At the weekend, the Economists Intelligence Unit, a global research group, said the currency would close at N815/$ next year and that the monetary authority could be forced to revert to tighter control as the currency continues to lose value against its peers.
A falling naira is like a falling knife on Nigerians, considering the heavy reliance of the country on importation. An economist, Dr. Chiwuike Uba, said the exchange rate pass-through effect contributes up to 70 per cent to the country’s elevated inflation rate.
But the President said the country would rise from the current pains better and the people more prosperous in the speech entitled, “After darkness comes the glorious dawn”.
And he did not only share solidarity with Nigerians, who are passing through hell but consoled them. The broadcast, which coincided with the screening of his ministerial nominees, also highlighted some of the policy actions he has lined up to pull the economy from the woods.
The President said he could magically stop the current pains but that what he would “offer in the immediate is to reduce the burden our current economic situation has imposed on all of us, most especially on businesses, the working class and the most vulnerable”.
According to him, the Federal Government is working with states and local governments to implement interventions that would cushion the pains faced by the poorest of the poor.
“To strengthen the manufacturing sector, increase its capacity to expand and create good-paying jobs, we are going to spend N75 billion between July 2023 and March 2024. Our objective is to fund 75 enterprises with great potential to kick-start sustainable economic growth, accelerate structural transformation and improve productivity.
“Each of the 75 manufacturing enterprises will be able to access N1 billion credit at nine per cent per annum with a maximum of 60 months repayment for long-term loans and 12 months for working capital,” he said.
During his inaugural speech, the President promised an affordable credit regime to boost the performance of the private sector players and create jobs. He urged the CBN to begin the process of achieving affordable credit.
But the monetary policy rate (MPR) remains restrictive at 18.75 per cent after last week’s 25 basis points top-up. Experts said the starting point of achieving affordable credit is to begin to scale down on the anchor interest rate.
The administration, Tinubu said, recognised the importance of the informal sector as well as micro, small and medium-sized enterprises (MSME), whose funding access gap is estimated at $158.13 billion or 99.94 per cent according to information obtained from SME Finance Forum, drivers of growth. Hence, the government would energise this very important sector with N125 billion, the President said.
“Out of the sum, we will spend N50 billion on conditional grants to one million nano businesses between now and March 2024. Our target is to give N50,000 each to 1,300 nano business owners in each of the 774 local governments across the country.
“Ultimately, this programme will further drive financial inclusion by onboarding beneficiaries into the formal banking system. In like manner, we will fund 100,000 MSMEs and start-ups with N75 billion. Under this scheme, each enterprise promoter will be able to get between N500,000 to N1 million at nine per cent interest per annum and a repayment period of 36 months,” Tinubu stated.
The President said he has ordered the release of 200,000 metric tonnes of grains from strategic reserves to households across the country at moderate prices after a multi-stakeholders’ engagement while 225,000 metric tonnes of fertilizer, seedlings and other inputs would be provided to farmers who are committed to the country’s food security agenda.
“Our plan to support the cultivation of 500,000 hectares of farmland and all-year-round farming practice remains on course. To be specific, N200 billion out of the N500 billion approved by the National Assembly will be disbursed as follows: Our administration will invest N50 billion each to cultivate 150,000 hectares of rice and maize and N50 billion each will also be earmarked to cultivate 100,000 hectares of wheat and cassava.
“This expansive agricultural programme will be implemented targeting small-holder farmers and leveraging large-scale private sector players in the agriculture business with strong performance records. In this regard, the expertise of development finance institutions, commercial banks and microfinance banks will be tapped into to develop a viable and appropriate transaction structure for all stakeholders,” he noted.
Tinubu vowed to improve the welfare of all Nigerians, saying the aspiration was what keeps him awake throughout the nights. To cushion the impact of fuel price increase on mobility, he disclosed: “I approved Infrastructure Support Fund for the States. This new infrastructure fund will enable States to intervene and invest in critical areas and bring relief to many of the pain points as well as revamp our decaying healthcare and educational Infrastructure.
“Part of our programme is to roll out buses across the states and local governments for mass transit at a much more affordable rate. We have made provision to invest N100 billion between now and March 2024 to acquire 3000 units of 20-seater CNG (compressed natural gas)-fuelled buses.
“These buses will be shared with major transportation companies in the states, using the intensity of travel per capita. Participating transport companies will be able to access credit under this facility at nine per cent annum with a 60 months repayment period.”
The President declared that a “new minimum wage is coming” and that recommendations were being reviewed for approval. He said the country has saved over N1 trillion that would have been squandered on the unproductive fuel subsidy in the past two months.
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