Idris: Fuel Subsidy Removal, Forex Windows Unification Aimed at Rescuing Nigeria’s Economy

*Obaigbena says unsequenced implementation overwhelmed markets

Chinedu Eze

The Minister of Information and National Orientation, Mohammed Idris, yesterday argued that the removal of petrol subsidy as well as merging of the foreign exchange windows were meant to rescue Nigeria’s economy from failing.
However, the Chairman of THISDAY and Arise TV Media Group, Prince Nduka Obaigbena, maintained that by announcing the two reforms at the same time, the economy was overwhelmed because at the time the subsidy was removed, Nigeria needed a stable exchange rate to modulate the economy.

The minister and Obaigbena spoke during Idris’ visit to the Arise TV office in Ikoyi, Lagos.
Idris stressed that Tinubu had to take the decision to save Nigeria’s economy, which was almost moribund when the president took over, admitting that the last 14 months of this government had been challenging.

He explained that the removal of subsidy resuscitated the economy and boosted government’s revenue which almost doubled few months after the introduction of the policy and also crashed the volume of fuel product consumed in the country.
The minister remarked that the past administration did not include subsidy in the 2023 budget because it lacked the courage to take such a decisive action, stressing that by removing the underpayments, Tinubu ensured its non-provision in subsequent budgets.
He maintained that by the end of last year, government had already saved about N1.45 trillion from the removal of subsidy and the decision reduced the demand for petroleum by about 50 per cent.

According to him, this meant that either people reduced their consumption of the product or it was being diverted elsewhere before the subsidy was removed.
Idris disclosed that a border town, about 48 kilometres to Katsina had about 50 fuel stations at the outskirts, where it was confirmed that those fuel stations were a gateway to smuggling the products to neighbouring countries.

But when the subsidy was stopped, Idris pointed out that neighbouring countries stopped buying from the border towns because the price was more or less the same, stressing that they started buying again when the naira depreciated and made the cost of the product cheaper in Nigeria.
On the unification of the FX windows, the minister said that before the introduction of the policy, those who had access to the Central Bank of Nigeria (CBN) were obtaining and selling it, making the Naira a commodity of trade instead of a means of exchange.

“Our currency became a product of speculation and this was not acceptable to the economy,” Idris said.
He also said that the removal of subsidy made money available to the federal government, which was shared by the other tiers of government and urged Nigerians to ask what the states are doing with the more money they are getting from the federation account.
The minister said that the Tinubu administration had also embarked on massive investment in agriculture, disclosing that government invested in irrigation farming in Jigawa, Kebbi, Niger, Kwara and other states and expressed the hope that in the near future food prices would come down when the farms yields start coming out, which would help stem hunger in the land.

Idris said that the administration was also encouraging the private sector investment in agriculture, disclosing that the biggest tomato farm in West Africa is located in Kebbi and cultivated by a private company, GB Foods Nigeria.
He also spoke on Tinubu’s focus on youth development, disclosing that the federal government  introduced the policy to enable youths to go to school and in addition to that introduced education loans, which could be accessed by youths who meet the criteria.

The minister spoke about Technical Support Fund targeted to support Nigerian youths who have graduated and are yet to secure jobs, stating that the fund was to enable them go into business and become self-employed.
Idris reiterated that the president was not against the protest but that the intelligence gathered before the protest indicated that it would be hijacked by those who have a different agenda and that was why government made moves to stop the protest.
He assured that by the time the policies and actions taken by government will start bearing fruits, most of the challenges, which Nigerians are complaining about would have been solved.
He also spoke about the government’s investment in the health sector and its removal of tariffs on pharmaceutical products in order to bring down their prices.
Idris added that government had embarked on road projects, including Lagos-Abuja highways; the Sokoto-Badagry highway, which would have about 63 dams, saying that the dams would generate power as well as create jobs.
Also speaking, the Chairman of THISDAY and Arise TV Media Group,  Obaigbena spoke about the current situation in the country, stating that the Tinubu administration weakened the economy when he announced two major reforms at the same time.
He traced the history of reforms in Nigeria and recalled similar resistance to reforms introduced by past governments, from the Shehu Shagari administration to that of the Muhammadu Buhari, Ibrahim Babangida, Chief Olusegun Obasanjo and Shehu Yar’adua.
“I am a student of Nigerian history. What is happening now has not happened before. This is how you also communicate it. After the 12-10 debacle, Shagari faced crisis. Before oil prices ballooned and the government went to party.  And then Buhari came.
“I remember the days of counter-trade; shortages everywhere. We were going to Brazil and bringing sugar or whatever. So there was a crisis. IBB (Ibrahim Babangida) came to solve it. He brought SAP (Structural Adjustment Programme) and there were SAP riots. I remember the very first day the naira was devalued, Olu Falae was the finance minister.
“There was a second tier exchange market.  And naira fell from 80 kobo to a dollar to N3.32. That is how the journey started. And like somebody said, if you look at the covers of all our papers, This Week, Newswatch, The News, Bayo (Onanuga) was fiery in holding the government to account. And then he ran into exile. He was jailed in Minna or somewhere for fighting for freedom.
“Having said that, then Obasanjo came, the first two to three years of Obasanjo were a disaster. When he came, he thought he would see Nigeria Airways, Nigeria National Shipping Line, and he tried to come with that command and control government. But he failed.
“And by the third year, he found his rhythm with reforms. And he brought a winning team. So his second term was great for Nigeria. Except that he did not want to go. So we have faced all of these,” Obaigbena said.
He also recalled the genesis of insecurity in Nigeria, especially in the North East of Nigeria and its impact on the media and Nigeria’s economy.
Obaigbena said that the announcement of the two major reforms at the same time by Tinubu was what spiralled the economy out of control.
“So, Tinubu came, he announced two major reforms at the same time. At Arise TV, we believe and agree that subsidy must be removed. We believe and agree that there should be a market-driven exchange rate, but not at the same time.
“The strategic error was removing the subsidy and exchange rate at the same time. We needed a stable exchange rate to modulate the subsidy. Because the subsidy responds to market forces. So, have you even sequenced it?
“Have you now told all these IMF (International Monetary Fund) and WHO (World Health Organisation), who say they support your reform that we have removed subsidy. We have cut waste?
“Now we need the ammunition to have exchange rate management. But we did the exchange rate without ammunition. Without the dollar reserves. With oil plunging. That is why we are where we are. But it is a beginning,” he said.
He stated that the Tinubu administration should be given more time, commending the action taken so far by the administration on local governments, saying that insecurity in Nigeria was festering because of the failure of local governments
“Governors, especially in the North, collect their fat money, they don’t even go to their states but travel abroad to Dubai. The failure of local government, the failure of economic activity at the local level, is one of the things that has led to the insecurity. So, restoring local governments is a key point. But it will take time to rebuild,” Obaigbena said.
He urged the government to communicate by example, noting that those in government are alienated from the austere economic situation in the country.
“You are communicating over here. But the communication you are not doing is communication by example. Look at the National Assembly. The way they live, the way they conduct themselves does not show that we are in trouble.
“ At least you have no cabinet here, but there are people who come without riders. So let our communication mechanism also be by action. Action of government actors to show that things are bad.
“Then we have very poor people. We are supposed to have a social register. I don’t know what has happened to it. All these student loans, that is okay, but the key issue is how are we taking care of the poorest of the poor. Put them on social register. Give them stipends against what is happening.
“And I must say this. I will say it now. As a Nigerian, I am very concerned about the poverty in the north. You can see the riots and the rioters. No education and all that stuff. And yet, the north has governed this country more than anybody else.
“So, there is no nexus between political power-hold and helping your people. So we also have to focus on the north. Like Obafemi Awolowo said, illiteracy, hunger and cold are the biggest things. You have to face them squarely, ruthlessly. So if we want social cohesion, we have to do something about poverty in the north,” he maintained.