How the World Sees His First 30 Days in Office

Emmanuel Addeh in Abuja

Not many gave him a chance, but if President Bola Tinubu’s recent decisions are anything to go by, especially the political will to take major actions that could redirect the country,  Nigeria could be in for a pleasant surprise.

Beyond the four corners of the country, Tinubu also appears to be gaining positive reviews internationally, at least in the first 30 days of his administration.

Presented below are some reflections of what major global news media houses and world economic organisations say about Tinubu’s first one month as Nigerian leader.

Reuters Analysis: Baba Go-fast? Nigeria’s Tinubu Stuns Wary Investors with Quick Reforms

 Nigeria’s new president, in office for less than a month, is pushing to put Africa’s largest economy on a reform track that investors have eyed for decades, fuelling excitement that money could flow to a nation that many had deemed uninvestible.

President Bola Tinubu’s bold actions, including removing restrictions on the naira currency that allowed it to hit a record 790 to the dollar and subsidy removals that tripled petrol prices, could take stress off the battered finances of Africa’s largest economy.

But investors, burned by previous reforms that ultimately proved hollow, say it will take time to build trust and listed myriad questions over the final shape of the economy.

“The reaction is one of, ‘finally’,” said Tunde Ajileye, a partner at Lagos-based SBM Intelligence. “If this stays, then it would mean that (Tinubu) had been able to remove the two subsidies that have crippled Nigeria fiscally and monetarily for the last decade.”

Tinubu is from the same party as predecessor Muhammadu Buhari. The latter took six months to appoint cabinet members and was dubbed “Baba Go-slow”, combining a term used across Africa meaning father and Nigerian slang for Lagos’s ubiquitous traffic jams, due to his pottering pace.

By contrast, Tinubu lifted fuel price caps days after taking office on May 29, suspended controversial Central Bank chief Godwin Emefiele some 10 days later and on Wednesday removed FX restrictions.

The tangle of multiple exchange rates for everything from international school fees to food imports created foreign currency shortages and hobbled investment due to issues getting money out.

“Just the fact that you have seen quite a bit of movement in a relatively short space of time has gotten a lot of people in the market excited,” said Goldman Sachs economist Andrew Matheny.

Nigeria’s international dollar bonds and the country’s stock market have been boosted by the speedy reforms.

Tinubu also this week appointed banker Olawale Edun as a key monetary policy advisor. London-based investors said Edun has briefed in recent weeks on the government’s economic plans, and his appointment is likely to cheer many.

Investors, though, remained wary, citing years of damaging currency controls; Goldman Sachs pegged the backlog of FX demand at a staggering $12 billion.

“We are still to see whether this will allow the FX backlog to clear, where the new market rate will stabilise, whether this will catalyse inflows into the country and … that there will be no issues pulling money out of the country,” said John Mumo, a partner at Blakeney, an Africa-focused equities fund management firm.

Joe Delvaux, a portfolio manager at Europe’s largest asset manager Amundi, said it could take months or more to lure longer-term cash.

“Ultimately, you also have to keep in mind that the biggest provider of FX will still be the CBN,” Delvaux said. “We need to see that the system works,” he added.

Perennial corruption that has hobbled Nigeria for decades also looms; Tinubu suspended the head of the anti-graft agency this week for alleged abuse of office. Nigeria is ranked 150 out of 180 in Transparency International’s 2022 corruption perceptions index – and has been on a downward trend since 2016.

Investors also worry about low tax receipts and falling oil output – structural reforms that will take far longer to sort.

Some are also hoping to see a more orthodox interest rate policy. Inflation hit a near 20-year high of 22.41% in May and a weakening naira will amplify price pressures. Meanwhile interest rates, which Tinubu has said he would like to see fall, were hiked by 50 bps last month to 18.5%.

“Investors will need to see positive real rates and evidence that they will be able to repatriate their earnings before local currency debt is back in play,” said Patrick Curran, senior economist at Tellimer.

Bloomberg: Africa’s Giant Raises Hopes of Fresh Start

Nigeria’s new president, Bola Tinubu, has delighted investors with decisions he’s taken in just two weeks in office. The question now is whether he can stay the course.

So far he’s abolished a costly fuel subsidy, suspended the contentious central bank governor and signalled that an exchange rate policy overhaul is imminent. The stock market has soared to a 15-year high on optimism he has the mettle to implement the difficult political decisions needed to turn Africa’s largest economy around.

That Nigeria needs a reboot is beyond doubt. Half of adults are under- or unemployed and oil production — the lifeblood of the economy — is at lows last seen in the 1980s. The government spent the vast bulk of revenue it collected last year on servicing its debt and the figure could top 100 per cent this year.

The scrapping of subsidies on gasoline, which consume billions of dollars each year, will go some way toward stabilising public finances. And the removal of Godwin Emefiele as the central bank governor is the likely precursor to the end of a multiple exchange rate regime that’s underpinned a thriving black market.

But the hard part lies ahead. Government institutions are dysfunctional, corruption is endemic and insecurity remains a perennial problem. Armed bandits and Islamist militants have free rein across large swathes of territory.

Even a bigger task will be to create jobs and tackle poverty in a nation where about 40 per cent of the population of more than 200 million live in poverty.

Question marks also remain over the 71-year-old Tinubu’s commitment to clean governance. He’s been dogged for decades by corruption allegations that’s he’s denied but never completely dispelled.

The early days of the Tinubu administration have been a case of so far, so good. But Nigeria has had many false dawns before — there is a still a long way to go.

World Bank, IMF,  Back Economic Reforms

Not to be left out, the World Bank and the International Monetary Fund (IMF) have also lauded Tinubu’s decision to carry out what they described as ‘bold reforms.’

“The recently undertaken PMS subsidy an FX reforms are historic, NGN3.9 trillion in savings in 2023 alone, stops Nigeria from going over a fiscal cliff and sets the stage for a new, upward Investment, growth, and development trajectory,” Alex Sienaert, chief economist at World Bank Nigeria, said in Abuja at the launch of the Nigeria Development Update for June 2023.

The report added: “Headline inflation is expected to rise from 18.8 per cent in 2022 to 25 percent in 2023; however by Q1 of 2024, the subsidy removal will start to have a disinflationary effect, meaning that it will alleviate inflationary pressures despite higher petrol prices.”

However, the bank stated that if there are no buffers to cushion the impact of the reforms, over 7.1 million Nigerians will be further thrown into the poverty net on the back of the ongoing changes.

On his part,  Shubham Chaudhuri, Country Director for World Bank for Nigeria, said the bold reforms require some form of buffers to cushion the impact of its consequences over the next few months to ensure that the trust of Nigerians is rebuilt.

“There’s also need to restore the confidence of investors, which will be challenging; World Bank is here to provide whatever support in terms of ideas, potential solutions, and additional concessional financing,” he said.

For Ari Aisen, Resident Representative of the IMF in Nigeria,  the reforms were long overdue.

“It is natural that these policies have some side effects; we have seen inflation already high and it is likely to increase further, and in our view it will be difficult to tailor macroeconomic policies to reduce inflation and achieve durable macro stability.

“The central bank has a key role in stabilising the economy and it will require much tighter monetary position and stance than we currently see,” he said.