TINUBUNOMICS: LUXURY IN PENURY
TINUBUNOMICS: LUXURY IN PENURY
Notable world leaders always
come with concrete economic reforms and policies which form the fulcrum of
their governments.
The policies aim at solving
particular problems they met on getting to power. Some have been successful
while some have ranged from partial successes to colossal failures.
Two readily come to mind:
Thatcherism and Reaganomics.
Margaret Thatcher was Prime
Minister of the United Kingdom from 1979 to 1990.
Her economic reforms policy was
nicknamed Thatcherism.
Thatcherism tried to promote
low inflation, the small state and free markets through tight control of the
money supply, privatization and constraints on the labour movement.
Thatcher's political and
economic philosophy emphasized reduced state intervention as well as free
markets and "entrepreneurialism". She vowed to end excessive
government interference in the economy and attempted to do this through
privatizing nationally owned enterprises.
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While the policy was credited with reviving Britain's economy, Thatcher also was blamed for spurring a doubling of the relative poverty rate. Britain's childhood-poverty rate in 1997 was the highest in Europe.
Ronald Reagan was the President
of the United States of America from 20 January 1981 to 20 January 1989. Reaganomics
refers to the economic policies instituted by the former President.
President Reagan instituted
tax cuts, decreased social spending, increased military spending, and
implemented market deregulation. Reaganomics was influenced by the trickle-down
theory and supply-side economics.
Under President Reagan's
administration, marginal tax rates decreased, tax revenues increased, inflation
decreased, and the unemployment rate fell.
Some of the negative effects
include the Rich becoming richer through lower tax liabilities.
The trickle-down effect was
not seen, the affluent did not utilize tax savings to create more jobs.
Poverty also increased in
the US and the policies did not improve the economic condition of the middle
class.
The state of the Nigerian
Economy by 29 May, 2023 when Bola Ahmed Tinubu took over as the President of
Africa’s most populous nation was very precarious. While Local and Foreign
debts were soaring, Gross Domestic Product was at an all-time low.
While campaigning, the
President had promised economic reforms that would kick-start recovery of the
battered economy.
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Nigerians were hopeful. They
looked forward to what was touted as the “Lagos Model”.
Immediately after taking
over power from Muhammadu Buhari, Tinubu eliminated the fuel subsidy regime, a
decision that instantly triggered a 200 per cent increase in the pump price of
petrol, a strategic commodity that influences pricing and cost in other sectors
of the economy.
Fuel price immediately rose from
N187 to N255 per litre obtainable in Lagos and Abuja, respectively, to a new
price of N488 per litre in Lagos to N560 in Abuja. The prices were higher in
some other states across the country.
By Tuesday, July 18, the
administration effected another round of fuel price increases. A litre of
petrol now sells for N570-N620 in Lagos and up to N700 in Abuja. The price is
higher in some states across the country.
The resulting astronomical
spike in transportation costs is a crippling result of the fuel subsidy
removal. Fares have gone well over 100 per cent on many routes across the
country, with multiplier effects on passenger commuting, goods movement, and
prices of foodstuffs.
This has further worsened,
for most Nigerians, the poverty level and quality of living generally. More
commuters have taken to the roads trekking long distances as they cannot afford
the new high fares.
The sharp increase in fuel
prices has greatly affected prices of foodstuffs. Distributors and dealers of
food items complain of high transportation costs following an increase in
petrol price.
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Another key policy pronouncement
of the administration is the foreign exchange rates unification, by which
forces of demand and supply determine the rates, with direct consequences,
especially on prices of imported goods.
Tinubu’s government rolled
out a currency reform to stop the naira’s rate from being fixed by the
country’s central bank and pegged to the U.S. dollar, giving way to rates
determined by supply and demand, a policy known as “floating.
Tinubu’s move to kill both birds with one
stone constitutes his attempt to rebuild the country’s economy, a key campaign
promise. The effects of these decisions could, in theory, help Nigeria on a
macroeconomic level by reducing its national debt albeit at the price of
harming regular Nigerians.
The devaluation saw the
local currency, which was exchanged at N430 to the dollar at the official
window before Tinubu assumed office and as at the end of the second quarter
when the Debt Management Office (DMO) last published the national debt profile,
shoot to almost N1000.
Nigerians do not see market
forces as favouring the local economy now or any time in the future.
The reality is that
Nigerians are suffering greatly because the cost of living has risen beyond
their means.
Implementing policies has
been a problem for this new government. Announcing these policies when it had
not been thought through is not giving any hope. The poor are now bearing the
brunt.
Ordinary Nigerians battling
inflation, unemployment, and the waves of Russia-Ukraine war, which reduced
grain imports and increased the price of bread, are yet to see the impact of
this trickle-down reasoning. Indeed, 63 percent of Nigerians already live in
multidimensional poverty, and experts say more people may slide down the
economic ladder if the government does not reverse course.
The government as an
afterthought initiated a palliative regime intended to cushion the effects of
the economic hardships on Nigerians.
Nigerians were implored to
endure and brace up for some difficult time ahead. It was time for austerity.
To finance the palliative
regime, the government went borrowing. Various types and volumes of loans were
syndicated.
Only a broke man would go a-borrowing
to feed his family. One would expect such a man to be very prudent and not
engage in frivolities and wasteful spending.
While Nigerians continue to
wallow in penury occasioned by the new regime’s policies the government went on
a spending binge.
Last week, members of the
House of Representatives began sharing a 2022 model of Toyota Landcruiser Prado
Sport Utility Vehicles (SUV) to its members. The cost of the “operational
vehicles” purchased for 469 members of the National Assembly is above the
package prescribed for the lawmakers by the Revenue Mobilisation Allocation and
Fiscal Commission (RMAFC). The unit price of the SUVs is put at between N130
million and N160 million. About N70 billion down the drain.
Still unbothered about the
plight of Nigerians living in penury, the government proposed a supplementary
budget to the National Assembly. Tinubu’s government needed more money.
A 2.17 trillion
supplementary budget was sent by President Tinubu to the National Assembly for
approval.
Not for essentials, emergencies
or necessities, but for things that amount to sheer luxury.
President Bola Tinubu wanted
·
N5 billion for the purchase of a Presidential Yacht
·
N5.5 billion for the Education Loan Fund
·
N5.1 billion for the rehabilitation of 100 schools in 100
days programme in the Federal Capital Territory.
·
N28 billion for the purchase of luxury cars for himself,
the first lady, as well as the renovation of the president’s residence among
other spending for the state house
·
N12.5 billion on the Presidential Air Fleet
·
N4 billion for the renovation of the residential quarters
of the president
·
N2.5 billion for the renovation of the Vice President’s
residence
·
N2.9 billion on Sport Utility Vehicles (SUV) for the
Presidential Villa
·
N2.9 billion to replace operational vehicles for the
presidency
·
N1.5 billion on vehicles for the Office of First Lady
This is extravagant spending
by the Nigerian government despite its continuous plea to Nigerians to endure
the current hardship caused by the removal of petrol subsidy, which has led to
a hike in the price of commodity goods by more than 300 per cent.
The main policy fulcrum of TINUBUNOMICS seems to be LUXURY
in PENURY.
The government has chosen
luxury and ostentation while condemning the citizens to Poverty and Penury.
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