Former vice president Atiku Abubakar has again lamented the economic ruins that the president Bola Tinubu-led federal government has plunged Nigeria into......See Full Story>>.....See Full Story>>
Atiku particularly expressed his disgust at how the current government has managed the removal of subsidy on petroleum and the reforms in the country’s foreign exchange market.
Recall that Tinubu hastily declared an end to the subsidy regime era upon his inauguration and also floated the country’s currency – the naira.
However, the two policies have engendered galloping inflation, which has led to widespread hardship and unprecedented cost of living crisis, with many critics faulting their haphazard implementation.
Atiku, who is one of the critics, has, however, chronicled how he would have handled the policies if he had been elected as the country’s president (he lost to Tinubu in the 2023 presidential election).
In a lengthy post on his X handle on Sunday, the presidential candidate of the Peoples Democratic Party (PDP) in last year’s poll disclosed that fighting corruption would have be a core part of his policies on the fuel subsidy regime.
He noted the NNPCL, which he said is benefitting immensely from the highly corrupt and unsustainable ways of doing things, has shown that it is impervious to changes and reforms.
“First, tackling corruption. Fighting corruption should have commenced with the repositioning of the NNPCL, which is a huge beneficiary of the status quo. Its commitment to reform and capacity to implement and enforce reforms is suspect,” he said.
“The subsidy regime has provided an avenue for rent-seeking, and the NNPCL and its guardians will be threatened by reforms.”
On the foreign exchange reforms, the former vice president said a floating exchange rate was an “overkill”.
Atiku, instead, said he would “have encouraged our Central Bank to adopt a gradualist approach to FX management. A managed-floating system would have been a preferred option”.
READ ATIKU’S FULL STATEMENT BELOW:
•Adopted alternative approaches to conflict resolution such as diplomacy, intelligence, improved border control, deploying traditional institutions, and good neighbourliness.
We would have launched an Economic Stimulus Fund (ESF), with an initial investment capacity of approximately US$10 billion to support MSMEs across all economic sectors.
How would this have been funded?
Details are in my Policy Document.
Alongside the ESF, we would have launched a uniquely designed skills-to-job programme that targets all categories of youth, including graduates, early school leavers as well as the massive numbers of uneducated youth who are currently not in education, employment, or training.
To underscore our commitment to the development of infrastructure, an Infrastructure Development Unit (IDU) directly under the President’s watch would have come into operation. The IDU will have a coordinating function and a specific mandate of working with the MDAs to fast track the implementation of the infrastructure reform agenda within the framework provided herein. The IDU will hit the ground running in putting the building blocks for our private sector driven Infrastructure Development Fund (IDF) of approximately US$25 billion.
To engender fiscal efficiency and promote accountability and transparency in public financial management, we would have committed to a review of the current fiscal support to ailing State-Owned enterprises. We would’ve also begun a process review of government procurement processes to ensure value-for-money and eliminate all leakages.
We would have initiated a review of the current utilization of all borrowed funds and ensured that they were deployed more judiciously.
SUBSIDY REMOVAL
Yes, I have always advocated for the removal of subsidy on PMS because its administration has been mildly put, opaque with so much scope for arbitrariness and corruption. Mind boggling rent profit from oil subsidy accrued to the cabals in public institutions and the private sector.
I would have prioritized the following:
First, tackling corruption. Fighting corruption should have commenced with the repositioning of the NNPCL, which is a huge beneficiary of the status quo. Its commitment to reform and capacity to implement and enforce reforms is suspect. The subsidy regime has provided an avenue for rent seeking, and the NNPCL and its guardians will be threatened by reforms.
Second, paying particular attention to Nigeria’s poor refining infrastructure. We are by far the most inefficient OPEC member country in terms of both the percentage of installed refining capacity that works and the percentage of crude refined. We would’ve commenced the privatization of all state-owned refineries and ensure that Nigeria starts to refine at least 50% of its current crude oil output. Nigeria should aspire to export 50% of that capacity to ECOWAS member states.
Third, adopt a gradualist approach in the implementation of the subsidy reforms. Subsidies would not have been removed suddenly and completely. It is instructive that when I was Vice President, we adopted a gradualist approach and had completed phases 1 and 2 of the reform before our tenure ended. The incoming administration in 2007 abandoned the reforms, unfortunately. The majority of the countries that review or rationalize subsidy payments adopt a gradualist approach by phasing price increases or shifting from universal to targeted approach (Malaysia, 2022 and Indonesia, 2022 -2023). In many EU economies, complete withdrawal often takes 5 years to effect. The gradualist approach allows for adjustments, adaptation and minimizes disruptions and vulnerability.
Fourth, implement a robust social protection programme that will support the poor in navigating the cost-of-living challenges arising largely from reform implementation. We would’ve invested the savings from subsidy withdrawal to strengthen the productive base of the economy through infrastructure maintenance and development; to improve outcomes in education and healthcare delivery; to improve rural infrastructure and support livelihood expansion in agriculture; and develop the skills and entrepreneurial capacity of our youth in order to enhance their access to better economic opportunities.
ON FOREIGN EXCHANGE REFORMS
I also made a commitment to reform the operation of the foreign exchange market. Specifically, there was a commitment to eliminate multiple exchange rate windows. The system only served to enrich opportunists, rent-seekers, middlemen, arbitrageurs, and fraudsters.
What would I have done?
A fixed exchange rate system was out of the question because it would not be in line with our philosophy of running an open, private sector friendly economy. On the other hand, given Nigeria’s underlying economic conditions, adopting a floating exchange rate system would be an overkill. We would have encouraged our Central Bank to adopt a gradualist approach to FX management. A managed-floating system would have been a preferred option. -AA