Tinubunomics: An Elaboration of Economist Niran Olayinka’s Analysis

I will first and foremost like to commend our dear brother Mr. Niran Olayinka for penning on page 18 of today’s ThisDay Newspaper, this simply but beautifully written analytical article on President Tinubu’s recently deployed or unveiled economic reform policies. The beauty of the article is its easily accessible language that was devoid of the typical technical arrogance and complexity one usually encounters with seasoned economists of his caliber. His analysis, while being technically sound, adopts a language that is accessible to the “common man”. Contextualized in a church sermon and the well-known story of David and Goliath, the article sets the tone that everyone was welcomed aboard. The analogy of David being mocked by his own brothers is also apt. The most virulent critics of President Tinubu’s policies on social media sadly have been his own kindreds, the Yoruba. Of course, being the cosmopolitan people that we are, we Yorubas do not believe in circling the wagon or being shy to criticize our own, but as is customary with us, some of the Yoruba critics of Tinubu have gone beyond objective analysis and have laced their criticisms with venom, envy and bad belle. Mr. Niran Olayinka’s analysis on the issue of subsidy removal as has been universally acknowledged is long overdue and a no-brainer. Anytime the government places it’s finger and in the case of the oil subsidy scam, the government placed its two feet on the supply-demand-price equilibrium. What results is the mafia-style rent collection behavior and insane corruption that have plundered our commonwealth for decades. With the subsidy removed, we have seen the interplay and moderating power of the market on human behavior, on Nigerian driving habits and our consumption pattern. We have seen drastic drop in our national average petrol (PMS) consumption due to behavioral change but more so, credited to the removal of the incentive to profiteer from oil smuggle across our borders. Our country can no longer serve as the Santa Claus doling out petrol freebies to our neighbors in West Africa. The perennial long queues for PMS have abated and the economy-crushing traffic jams on our urban landscape have reduced. I was shocked that it took me just over two hours to travel from Ibadan to the airport on a recent visit. However, in order for the nation to derive the full- and long-term benefits of the oil subsidy removal policy, government must make as its highest priority, the resuscitation and expansion of our crude oil refining capacity, driven largely by the private sector. We hope the newly created ministry of Marine and Blue Economy signifies a commitment to tapping into all the benefits (up and downstream) of the marine economy including our off-shore oil potentials. On student loan, while it is a welcomed policy to reduce the obscene over-dependence of our tertiary institutions on federal allocation for their sustenance, we will not get to the promised land without major structural reform in our entire education system and specifically our higher education sector. The wasteful misalignment between the products of our higher institutions; be it its graduates or its research output or lack thereof, and the critical areas of needs in our economy must be corrected immediately. Our universities are not churning out the right quantity and right quality of university graduates needed to drive a dynamic 21st century digital economy. Simply put our tertiary institutions are producing square pegs for an economy’s round holes. Many of our professors are still recycling lectures from the dinosaurian age and are therefore impacting the obsolete knowledge to our youngsters thereby causing immeasurable damage to our economy. Furthermore, while Mr. Olayinka drew examples from the US and the UK student loan schemes, we must not gloss over what an intractable and monumental national financial crisis the student loan scheme has become for those countries, especially the US. We need to investigate the crisis in the US student loan scheme for lessons to be learned to guide the deployment and implementation of our nascent program. Millions of Americans have student loan debt, amassing to more than $1.6 trillion by the end of last year, according to the Federal Reserve Bank of New York. The burden of these loans has disproportionately fallen on the shoulders of students from the lower strata of the economy. It’s no use burdening a young Nigerian with a loan of 2 million Naira on a degree that guarantees only a spot in the unemployment market. On forex policy, that is not my forte. However, we have to find the safe middle ground between the corruption-ridden insanity of the round tripping behavior that the CBN forex policy encouraged in which the rich were making billions of Naira from simply converting forex received from the CBN to black market trading, and a free-floating forex market. No sane economy nor a responsible government can afford to leave total control of its currency to the vagaries of an imperfect market where speculative and predatory behavior are rampart. While Mr. Niran Olayinka highlighted the increase in revenue inflow into the different tiers of government as a result of the devaluation of the Naira, it would not translate into better living condition for the populace until we have full local government autonomy. We must rescue our local government administrator from the thieving and predatory fingers of the monarchical governors at the state level who have usurped the citizens’ right to elect the people who have the most direct impact on their welfare, the local government administration. But would rather prefer to impose their hand selected cronies to manage local government allocations as their fiefdoms.  Once we have assured the autonomy of the local given government, we the people must then take the next critical storm to hold them accountable for the judicious use of our commonwealth. We also must elect the best of us to serve at the local government level. That is a challenge the Ijesha Development Council (IDC) and other communities across the country must make

Nigeria’s economy resilient despite hard reforms –Report

Cape Economic Research and Consulting, an economic think-tank group, has projected that Nigeria’s economic outlook for the third quarter of 2023 maintains its resilience, albeit with a moderated tone, driven by substantial policy reforms. In its Economic Newsletter for August, which was shared with NIGERIAN ANCHOR on Saturday, the think-tank emphasized that the effects of subsidy removal and the recent exchange rate policy adjustment are gradually permeating the economy, resulting in elevated inflationary pressures and anticipated dampening of aggregate demand. The report underscores the lasting impact of subsidy removal and exchange rate unification until households and businesses fully adapt to the new economic landscape. The implementation of essential support measures is anticipated to bolster the economy’s resilience. Consequently, the report predicts that output growth will remain positive during the third quarter of 2023. CAPE observed that the heightened cost of production, fueled by significant increases in input costs, including wages, has led to a slowdown in production. As the government prepares to roll out relief measures to mitigate the repercussions of recent policies on the economically disadvantaged, aggregate demand and output are projected to respond favorably. The report anticipates a further increase in inflation for August 2023. Projections indicate that headline food and core inflation could rise to 23.51%, 26.41%, and 21.34% respectively. The main drivers of this forecast are food prices, exchange rates, and short-term assets, contributing 5.94%, 1.96%, and 0.44% respectively. CAPE also highlights the macroeconomic implications of persistent negative interest rates, including low savings and investment, the emergence of parallel markets with higher interest rates, inefficient resource allocation, and suboptimal investment efficiency. Additionally, these rates constrain the government’s capacity to raise resources through bond issuance. The newsletter sheds light on the tightening stance adopted by numerous central banks in both advanced and emerging economies throughout 2022 and the first half of 2023. While this approach has led to price moderation in some economies, core inflation remains relatively persistent. However, these measures have brought about output moderation and financial stability, accompanied by an elevated risk of potential financial crises.