YEAR ON, TINUBU CONCEDES CHALLENGES, BRACES FOR TRANSFORMATION

It’s not been an easy take-off. But the President has taken responsibility and remained focused, writes

 Lewis Chukwuma

Former French president, Giscard D’Estaing who was born in World War 1 and fought in WW2 counselled statesmen and world leaders: “There can be no response to history without effort.” The Frenchman’s counsel was inspired by the human crises that defined his era.

In his presidential inauguration speech on May 29, 2023, Asiwaju Bola Ahmed Tinubu promised to make an imperative effort to respond to Nigeria’s peculiar history. While a one-year timeline is too short to gauge a sustainable governance impact, it could serve as an important indicator of where a leader is headed.

As it were, an existential year’s trip around the sun bearing the destiny of an entire nation hungry for change, on a leader’s shoulder, is an important milestone and a good reason to revel.

But President Tinubu has signalled there would be no mundane revelry but deep reflections and more bracing governance duty to undertake to give more teeth and traction to his “Renewed Hope Agenda.” In his words, “The hallmark of leadership is making difficult decisions when they need to be made.”

A leader defined by his sheer kinetic energy and who revels in pushing new frontiers, President Tinubu is very much aware that today, Nigeria, Africa and the world stand on the brink of substantial disruptions – and of considerable opportunity – as new business and political models challenge traditional playbooks.

These scenarios have unquestionably guided much of the enunciation of his comprehensive eight-point agenda and reflected on his accomplishments in the past year. For critical context, Mr President’s eight-Point Renewed Hope Agenda includes: Reforming the Economy for Inclusive Growth; Strengthening National Security; Boosting Agriculture for Food Security; Unlocking Energy and Natural Resources; Enhancing Infrastructure and Transportation; Focusing on Education, Health, and Social Investment; Accelerating Diversification through Industrialisation, Digitisation, Creative Arts, Manufacturing, and Innovation; and Improving Governance for Effective Service Delivery.

While a single analytical review cannot logically exhaust President Tinubu’s governance impact in the past year, a sectoral dissection will do justice to that – hence the deliberate focus on the reformation of the economy will kick-start this series.

Uncommon economic turmoil, widespread poverty, rising unemployment, and public disillusionment were rife as President Tinubu assumed office. It was indeed one of the nation’s most challenging times. But confronted by this challenging economic situation, the new administration boldly hit the ground running. It incepted critical reforms to pull back the economy from the precipice.

Powered by a deep vision, the President quickly saw through the hurdles as deep-rooted structural deficiencies and systemic challenges that plagued the economy and needed unavoidable resolution. Surprisingly, there was significant resistance to change by some citizens.

But the President would have none of that. He immediately withdrew the unsustainable, infamous fuel subsidy, which sucked away approximately $10 billion annually, or 2% of Nigeria’s GDP. This bold policy move facilitated the redirection of critical funds towards sectors like education, security, healthcare and infrastructure which straightaway impact the well-being and prosperity of Nigerians.

Not surprisingly, this nifty policy has already led to a 50% reduction in petrol importation and upscaled monthly receipts for states and local governments from the Federal Accounts Allocation Committee (FAAC).

Still tweaking the economy, President Tinubu also halted the foreign exchange subsidy, unifying the FOREX rate market to reflect the actual value of the Naira. Modifications in the Bureau De Change (BDC) operations and the lifting of FOREX restrictions on certain imports boosted investor confidence. These moves helped the Central Bank of Nigeria settle a $7 billion backlog in foreign exchange, making the Nigerian Stock Exchange the top-performing bourse globally and the Naira one of the top-performing currencies as of April 2024.

Turning to the power sector which also directly impacts the economy, Mr President initiated reforms aimed at sustaining electricity subsidies for 85% of Nigerian consumers, cutting back on subsidies for affluent individuals, businesses, and industrial clusters. The establishment of a Presidential Fiscal Policy and Tax Reform Committee seeks to reform the tax system and reduce the tax burden on Nigerians.

Still, on power which is a critical enabler of the economy, Mr President initiated a quiet transformation which promises to change the disastrous electricity situation in the country. Not many know today that power generation is gradually increasing. For example, 5000MW of power was achieved in May, for the first time in three years.

Precisely on May 3, 2024, Nigeria generated, transmitted, and distributed 5,003.45MW of electricity power and this is expected to further rise to 6000MW by the end of 2024. This insight was provided by no less than the Minister of Power, Adebayo Adelabu.

To achieve some crucial headway in the power sector, the President undertook three important actions, especially to resolve issues in the electricity supply value chain and set the sector on the path to recovery and optimal performance. First, in June 2023, he signed the 2023 Electricity Act into law, marking a significant milestone in the sector.

The new law targets the enhancement of the regulation and management of the electricity value chain with the active participation of the sub-national governments. This has resulted in the process of devolution of regulatory powers to three states – Enugu, Ekiti, and Ondo – to set up their electricity markets.

Secondly, the President approved payment of legacy debts owed to gas companies to allow efficient gas supply for the sector going forward and payment mechanisms to address generation companies’ debts. According to Adelabu, this will ensure necessary maintenance and evacuation capacity optimization.

Lastly, there has also been a series of infrastructure upgrades in the last year. The ongoing Siemens Power Project under the Presidential Power Initiative was one of the programmes that ensured the improvement of power assets in Nigeria. In December 2023, President Tinubu and German Chancellor Olaf Scholz witnessed the signing of an accelerated performance agreement aimed at expediting the implementation of the PPI to improve electricity supply in Nigeria.

The Minister of Power also revealed that the federal administration had also put in place the required framework to achieve an injection of 3.5 million meters into the power sector – 1.5 million meters through the World Bank Distribution Support Recovery Program and 2 million meters through the Presidential Metering Initiative.

It’s worth recalling that the Tinubu administration’s removal of fuel subsidy was accompanied by comprehensive intervention programmes to cushion the transitional turbulence of the policy.

These include: A wage award of N35,000 monthly for civil servants for six months – currently being reviewed with labour partnership; Setting up a tripartite committee to work out a new minimum wage for workers; Establishing an Infrastructure Support Fund for states; Launching a N100 billion CNG bus rollout programme; Commencing a monthly Conditional Cash Transfer of N25,000 to 15 million vulnerable households for three months; and Providing N50 billion in Conditional Grants to one million nano-businesses and a N75 billion fund to support manufacturing enterprises.

Others include – Launching the National Philanthropy Office (NPO) to mobilise $200 million in private investments; and establishing a N5 billion single-digit interest fund in partnership with Sterling Bank through the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

Offshore, Mr. President has also actively pursued foreign direct investment, enhanced international partnerships, and showcased Nigeria’s vast opportunities. These efforts have already garnered interest in investing over $30 billion in key sectors of the nation’s economy.

Chukwuma is an Enugu-based investment banker