Nigeria and the Challenges of Economic Reforms (Part 1)

A couple of days ago, President Bola Ahmed Tinubu marked his second year in office. Understandably, he gave himself a pass mark. The opposition were not sparing; they dubbed his administration a failure citing the pains being felt by the citizens and using other indices.
Nigerians have actually lamented the pains and anguish the policies of the current administration in Nigeria have brought on them: namely, the removal of subsidy on energy as a whole (electricity and fuel) and the floating of foreign exchange transactions. The resultant effect is the astronomical rise in the prices of goods and services. In Nigeria, the cost of fuel affects many other areas of the economy, ranging from transportation to sale of goods and other services. So, it is understandable if the people are unhappy. And salaries have not increased to meet the rise in the cost of goods and services. The last salary raise was a mere token; salaries cannot be raised to meet up with the rise in prices for so many reasons, some of which are the ability to pay by the state governments, private sector and a propensity for demand pull inflation, which will add to the existing high prices in the economy. Yet these policies are very necessary for Nigeria, not just to survive economically, but thrive and grow. Prior to the reforms, there has been monumental corruption in management of the foreign exchange market involving highly placed individuals in the country. The huge gap in the sale of foreign currencies at the official sources and the black market made it very profitable for some of our political and business elites to access foreign currencies at the official rate and then sell to those in need at the black-market rate. The same level of corruption marred the downstream oil sector that was heavily dependent on importation. Subsidies were paid to nonexistent importers of refined petroleum products, which many times, still remained unavailable. It is therefore incontrovertible that these policies are necessary to correct the distortion in the economy, reduce corruption, free the productive sector and assist it in unleashing its capacity on the system and ultimately stimulate growth. However, these ideals have not been achieved: why? (To be continued…)