Tinubu: Looking Beyond the Initial Adulation

Waziri Adio

President Bola Tinubu has taken some consequential actions in less than three weeks in office. Some of his actions and pronouncements have infused governance with a greater sense of urgency, energy and direction. The markets and some segments of the critical press have taken due notice, and some are gushing over him. Not a few of his ardent critics are turning. And increasingly, some members of the populace that will bear the brunt of some his swift reforms appear to be cheering him on, salivating even for the next thing that will be decreed ‘gone’ or the next person that will be, with immediate effect, ‘suspended, then arrested.’  

The consensus, even if grudgingly conceded in some quarters, is that the president has bolted out of the starting line.
A big chunk of governance is signalling. Mr. Tinubu appears to have understood and mastered this well. This flair, combined with his accessibility and political network, has surprisingly bought him some needed space and goodwill. The projection by some analysts, myself inclusive, that Tinubu was unlikely to benefit from a honeymoon period has turned out unfounded. But whether rightly projected or not, no honeymoon lasts forever. Initial surprise and excitement will fade, especially as short-term gains may not outweigh lingering and additional pains. Tinubu needs to anticipate this phase and stay ahead of the curve.
To start with, his bold and necessary steps so far should be acknowledged. He called out time on the ruinous, ineffective and inefficient petrol subsidy right from his swearing in at Eagle Square on May 29th. Yes, the Petroleum Industry Act 2021 mandates the deregulation of the downstream sector of the petroleum industry. But the same government that passed the landmark law sought an 18-month moratorium on deregulation. And true, the 2023 budget has provision for only six months of petrol subsidy.

So, technically, petrol subsidy was already on its way out due to a combination of the dictates of the law and lack of budgetary provisions. But someone had to officially certify its end. It takes some nerve for Tinubu to opt to do this on Day One. He dared where others dithered, casting away what has become a millstone around Nigeria’s neck. And it takes some dexterity to have handled the expected pushbacks without major political and economic disruptions. At least for now.
The move to unify the foreign exchange rates, which Tinubu also signalled in his inaugural speech, falls in the same category. The multiple exchange rates created opportunities for arbitrage and corruption, dampened investors’ confidence in the Nigerian economy, and restricted investment and forex flows into the country. On Wednesday, the Central Bank of Nigeria (CBN) directed that forex trading would henceforth take place at the Investors and Exporters (I&E) window on a “willing seller, willing buyer basis.” Basically, this means the Nigerian Naira will exchange for other major currencies at a price to be determined by the market, not at the artificially capped one which was available to only a few people.

Removing petrol subsidy and unifying the exchange rates had long been advocated by economists, public finance experts and multilateral institutions. Both reforms were needed to increase fiscal headspace for the government and to steer badly needed investment towards the country. But previous governments either developed cold feet or folded under pressure. Tinubu has taken on both under three weeks in office. This is commendable.

He has been applauded by critics, analysts, renowned investment banks and international financial institutions. A foreign news agency asks rhetorically, excitedly even, if Tinubu is ‘Baba go-fast,’ a play on the ‘Baba-go-slow’ tag hanged on two of his predecessors. Even when the removal of the two subsidies may fall into the category of stroke-of-the-pen reforms, Tinubu has earned all the plaudits coming his way. As Barack Obama once said: “if it was easy, it would have already been done.”

As Tinubu enjoys the praises, he needs to speed up action on how to cushion the attendant pains of the reforms and impose greater clarity on these policies.
To be sure, removing the two subsidies will negatively impact prices, even if in the short run, and the poor will bear a disproportionate part of the burden. KPMG has projected a 6% rise in inflation in June on account of petrol subsidy removal alone. This was without factoring the additional impact of the potential increase in the price of crude oil in the international market and the fall in the value of the Naira. This combo may end up producing multiple assaults on the standards of living of those with fixed incomes especially those in the lowest income-bands who spend almost all of their earnings on food and transportation.

Prices of goods and services are north-bound already. The promised reliefs need to be as swift as the speed of Tinubu’s reforms. They also need to be significant, comprehensive and concrete. Otherwise, those singing “Baba go-fast” today will tomorrow, without missing a beat, be shouting “Baba, go away.” Even for those who come into office with huge political capital, public adulation can be that fickle. It is the ‘Hail Ceasar, Nail Ceasar’ thing.
Also, it is important not to mistake removing petrol subsidy in part or in full for full deregulation of the downstream sector. Government needs to snap out of being fixated on prices and volumes of petrol and start treating petrol like any other good whose prices can rise and fall based on market realities (Prices of kerosene, used mostly by the poor, and diesel, used for long-distance transportation of goods and food items, have long been deregulated). Government’s focus in the downstream sector should be on providing a regulatory framework for robust competition, quality control, and consumer protection.

In the same vein, the CBN needs to address the mixed messages in floating the Naira and insisting on a prohibition list. Competitive markets and restrictions do not go together. Besides, trade issues are better addressed through trade policies, not through monetary tools. Also, government needs effective communication on the rationale for and expected outcomes of both policies. There is a risk that overselling the expected outcomes may create a problem down the line.

Apart from these two critically acclaimed policies, President Tinubu has also signed three key laws—a constitutional amendment on harmonised retirement age for judges, and the laws on electricity and student loans. He has also approved the immediate suspension of the heads of the CBN and EFCC, and appointed ten key aides (the Secretary to the Government of the Federation, the Chief of Staff to the President, and eight special advisers). He has met with key stakeholders and led key negotiations, including with the leadership of the labour unions and health workers. His preferred candidates also emerged as principal officers of the National Assembly, a confirmation of his famed political muscle.

All considered, Tinubu appears to be settling in well. There are a few rough edges but he is yet to run into any major bump despite having taken some potentially explosive decisions. He created his own honeymoon period and has made very good use of the window. He chose to frontload some of the difficult decisions. This strategy has panned out well so far. However, he needs to note that while timing is important in governance, so is sequencing. There is a limit to how much heat the system can take at once, especially when there is no immediate relief or gains or they are abstract while the pains are immediate and vivid. It may be useful to note that humans are wired to remember pains more than pleasure. He will thus need to consider phasing the pains and delivering tangible quick wins.  
It is still early days, and there is so much more to be done, most of which will take more than just approving a memo or saying the right things or merely telegraphing political will. Tackling lingering insecurity is one of such urgent and tasking bits. Other harder parts of governance include growing the economy, facilitating the creation of millions of quality jobs annually, improving the quality of and access to education and health, expanding physical infrastructure, tackling oil theft, diversifying exports and sources of foreign exchange, multiplying government revenues, making government more effective and efficient etc. etc.

Most of these will require original thinking, right-headed policies/approaches, and diligent and consistent execution. He will lighten the tasks by surrounding himself with the best and the brightest who will in turn multiply options for him as well as take the heat off him. A leader is only as good as the quality of the people around him.

It is good that the president has started constituting him team. He should appoint other members of his core team with despatch so that he can delegate the heavy liftings to the experts in the different sectors and free up space for the big picture and overall coordination. It will be nice for his ministerial list to be ready by the time the Senate resumes from recess on July 4th. He should also consider going a step further by assigning portfolios to the names of his nominees. This will make the Senate confirmation hearings more robust and better focused than the perfunctory exercises that we witnessed in the past. This is assuming that the hearings would not be turned into the usual comedy of ‘bow-and-go’.

While a president will need to balance different considerations and interests, President Tinubu and Nigeria will be best served if he resists the temptation to use political appointments to reward only loyalists and those he is indebted to. For the key cabinet and other positions, he needs to go for competent and credible hands that are available to help him realise his vision and agenda. And apart from emplacing a coordinating mechanism, he needs to give specific assignments to his key appointees and have regular review sessions with them to hold them to account and to ensure that they remain on track.

Nigerians are justifiably impatient people. The present euphoria with removing this policy or that person will naturally wane. Before long, Nigerians will start asking: “Baba Remover/Suspender, what else are you offering us?” In anticipation, Tinubu thus needs to promptly engage the second gear of governance.