In reaction to a report by the New York Times criticizing the Nigerian economy’s current trajectory as the worst in a generation, the Presidency has responded.
Sunday saw the Special Adviser to the President on Information and Strategy, Bayo Onanuga, offering a rebuttal to the report authored by Ruth Maclean and Ismail Auwal.
The Presidency highlighted that the feature story titled ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’, published on June 11, was viewed as a typical, preconceived, belittling manner in which foreign media outlets have historically portrayed African nations.
Onanuga emphasized that due to the report’s perceived biased perspective, it was necessary for the government to address and correct certain misconceptions conveyed by the reporters regarding the economic policies under President Bola Tinubu’s administration, which commenced in late May 2023.
The President’s aide noted that the report portrayed a grim picture of certain Nigerians’ struggles amidst the inflationary pressures over the past year, unfairly attributing it solely to the new administration’s policies.
He argued that the report, based on various interviews, presented a skewed perspective, focusing solely on negatives without acknowledging the positive aspects of the economy or the remedial measures being undertaken by both central and state governments.
Highlighting that Tinubu did not cause the present economic challenges faced by Nigeria but rather inherited them, Onanuga stressed, “As a respected economist in our country once remarked, Tinubu inherited a stagnant economy. The economy was in crisis and required urgent intervention to prevent a catastrophic collapse, akin to what occurred in Zimbabwe and Venezuela.”
He elaborated that the prevailing circumstances informed the policy choices made by the government in May/June 2023, which included discontinuing the fuel subsidy system and standardizing the multiple exchange rates.
Onanuga underscored that Nigeria had sustained a fuel subsidy mechanism for many years, depleting $84.39 billion from the public coffers between 2005 and 2022 in a nation grappling with significant infrastructure deficiencies and a pressing need for improved social services.
He further alleged that the state-owned oil corporation, NNPCL, accumulated trillions of Naira in debts due to the unsustainable subsidy payments it absorbed.
Upon assuming office, Tinubu’s administration did not allocate funds for fuel subsidy payments in the national budget beyond June 2023.
“The budget itself had a notable feature: it allocated 97 percent of revenues towards debt servicing, leaving minimal provisions for operational or capital expenditures. The preceding government resorted to extensive borrowing to cover such expenses,” noted Onanuga.
Discussing the exchange rate, he mentioned that the government had also subsidized it, with the central bank spending an estimated $1.5 billion monthly to defend the local currency against the overwhelming demand for the dollar.
“This artificially fixed rate led to market distortions, hindering the fulfillment of obligations to international entities like airlines and impeding foreign direct investments, particularly in the oil sector. To tackle these challenges, Tinubu’s administration eliminated the subsidy regime and floated the naira from day one,” added Onanuga.
Despite initial obstacles, there has been a restoration of stability, with the exchange rate now standing below N1500 to the dollar and promising signs of further appreciation.
Pointing to a trade surplus of N6.52 trillion in Q1, a stark contrast with a deficit of N1.4 trillion in Q4 of 2023, along with renewed interest from portfolio investors, Onanuga cited these as indicators of a growing economic confidence. Support from institutions like the World Bank, AfDB, and Afreximbank is also contributing to Nigeria’s enhanced creditworthiness.
Efforts to curtail inflation, especially in food prices, through increased agricultural productivity and state-led initiatives promoting affordable food, were also highlighted by Onanuga.
Concluding by drawing parallels between Nigeria’s economic struggles and those in the USA and Europe, he affirmed the Tinubu administration’s commitment to surmounting these challenges.
“Our nation has faced economic adversities in the past, a history reflected in our cultural narratives. As we had triumphed before, we are confident in overcoming our present predicaments swiftly,” Onanuga remarked.
JUST IN: Tinubu inherited a stagnant economy – Presidency responds to New York Times
In response to a New York Times report criticizing the Nigerian economy’s current downward trajectory, the Presidency has reacted.
Sunday witnessed the Special Adviser to the President on Information and Strategy, Bayo Onanuga, responding to the report attributed to Ruth Maclean and Ismail Auwal.
The Presidency viewed the feature story ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’, published on June 11, as reflecting the known pattern of prejudiced, simplistic, disparaging portrayals by foreign media outlets of African nations over the years.
Onanuga mentioned that due to the report’s biased narrative, it was important for the government to address the misconceptions presented by the reporters regarding the economic policies under President Bola Tinubu’s administration, which commenced in late May 2023.
He noted a significant aspect of the report highlighted the challenging experiences of some Nigerians amidst the inflationary pressures over the last year, placing the blame solely on the policies introduced by the new administration.
He reiterated that Tinubu did not create the current economic challenges facing Nigeria but inherited them.
“As a respected economist in our country once stated, Tinubu inherited a stagnant economy. The economy was in dire need of intervention to prevent a collapse, similar to that seen in Zimbabwe and Venezuela,” he pointed out.
Onanuga explained that this backdrop influenced the policy directions taken by the government in May/June 2023, which included ending the fuel subsidy program and unifying the multiple exchange rates.
He highlighted that Nigeria had sustained a fuel subsidy scheme for years, depleting $84.39 billion from public funds between 2005 and 2022 in a country with substantial infrastructure gaps and a critical need for enhanced social services.
Onanuga alleged that the state-owned oil company, NNPCL, had accrued trillions of Naira in debt due to unsustainable subsidy payments.
By the time Tinubu assumed leadership, the national budget did not account for fuel subsidy payments beyond June 2023.
“The budget notably allocated 97 percent of revenue towards debt servicing, leaving minimal provisions for operational or capital expenses. The prior government resorted to extensive borrowing to cover these costs. Like fuel, the exchange rate was also subsidized by the government, with…
The Central Bank of Nigeria is estimated to spend around $1.5 billion monthly to protect the currency from the persistent demand for the dollar in the import-heavy economy.
A significant gap existed between the official exchange rate and the rates used by over 5000 BDCs licensed by the Central Bank, leading to arbitrage. This imbalance, along with failure to meet remittance obligations, negatively impacted the economy.
To address the financial challenges, Tinubu’s administration made crucial changes like rolling back subsidies and floating the naira. Despite initial turbulence, the naira has shown signs of stability with the exchange rate improving.
The economy saw a trade surplus, attracting long-term investors and loans from institutions like the World Bank and AfDB. Confidence has been restored through reforms, leading to positive indicators like slowing inflation rates.
Efforts are underway to boost agricultural production to combat food inflation. States like Lagos and Akwa Ibom have established discounted retail outlets for raw food items. The government’s focus on agriculture includes investments in dry-season farming and providing incentives like fertilizers to farmers.
Nigeria’s economic struggles are not unique, as other countries face similar challenges. The government is committed to addressing these issues through various measures.
Nigeria is currently grappling with severe economic challenges, including inflation, currency devaluation, and food scarcity. Recent reforms have triggered price hikes, exacerbating the situation.
Deteriorating economic conditions have sparked protests over low wages, food shortages, and healthcare crises. The decision to reduce fuel subsidies and float the currency has been blamed for the economic turmoil.
The ongoing crisis underscores the need for swift and effective measures to stabilize the economy and mitigate the suffering of the population.