By Lateef Adegbite and Suleiman Umaru
In spite of the fact that former President Muhammadu Buhari, now a wealthy farmer in Daura, his home town, Katsina state had used his eight years in office in turning the Nigeria as a debtor nation, his successor, Bola Ahmed Tinubu, appears to have finally killed the naira by playing into the hands of the World Bank/IMF and the multilateral financial Institutions including London and Paris Clubs.
The Nigerian President may have sent a message to the leadership of the World Bank /IMF, who had been on the neck of the immediate past Nigerian President over the years to remove the subsidy on Premium Motor Spirit, PMS, popular, petrol and scrap the country’s multiple exchange system that he is ready to do their biding on assumption of office on May 29, 2023.
The Lagos state born Nigerian President first policy statement was the removal of Petrol subsidy and unification of the official and parallel-market foreign exchange market rates which was said to have been hailed by them. The Leadership of the World Bank/IMF had estimated the removal of the petrol subsidy and scrapping of the multiple exchange rate system will save the country N 3.9 trillion this 2023, equivalent of 1.6% of the country’s Gross Domestic Product, GDP.
David Malpas, a former World Bank President who could not hide his feelings that at long last a Nigerian President has taken their economy policy advice to end the harmful petrol subsidy regime and scrap the country’s multiple foreign exchange market system, describing the new economic policies initiated by the Nigerian government as ‘’bullish’’.
The erstwhile World Bank President, who was said to have had a running battle with Muhammadu Buhari, the immediate past Nigerian President and Godwin Emefiele, the then governor of CN, ‘’to rethink on the government petrol subsidy and its’ multiple exchange rate system but failed may have penetrated the ranks of the new government.
Compas, the former World Bank President and his team may have failed in their bid to get the then Nigerian government to remove the subsidy on petrol and scrap the country’s multiple exchange rate system because Emefiele, the then CBN governor who had the backing of the former Nigerian President had made them to understand that the bank’s ‘’managed float system of the naira was adopted to address the peculiar challenges of the country’’, meaning that the apex bank have put some measures in place ‘’to help control the naira spiral by buying and selling currencies to maintain a specific range’’.
he may have gladdened the heart of the present Nigerian President when he declared that the removal of petrol subsidy and scrap of the country’s multiple exchange rate system are important steps toward the country’s currency stability, lower inflation and reduced corruption in the most populous African country’’. Far from it. But Emefiele who could not hide his feelings had warned that that the country will have an ‘’uncontrollable spiral on the naira but that was how far he could go before he fell out with the government.
Until his removal from office as CBN governor by Tinubu,the Delta state born banker had told those that cares to listen that ‘’despite the advice offered by the World Bank/IMF, developing economies such as Nigeria, will not take it as the country is at liberty of adopting homegrown solutions to our economic problems’’. He was emphatic: we can not adopt what is being proposed by the then Compas led World Bank/IMF, ‘’a free float of the naira’’.
Describing them as ‘’Development Banks’’, the immediate past governor of CBN, had confirmed that ‘’the apex bank have received their support at different time in solving some of the country’s economic challenges, particular, finance when supply shock of forex exceeds demand. Going by feelers from marketers the President and his economic Management Team may have taken another look at the hasty decision to remove petrol subsidy as the government may reintroduce it.
John Kekocha, the National Secretary of Petrol Marketers Association of Nigeria, PMAN, had said that the government has no option but to reintroduce petrol subsidy regime because the price of the product is now higher than N617.00, per litre at filling stations across the country.
The PMAN National Secretary may have hocked Nigerians when he revealed as an insider that the ex-depot price of petrol at DAPPMAN depots was between N572 and N575.00 , per litre while at the depots controlled by the Nigerian National Petroleum Corporation, NNPC, mow baptised , Nigerian National Petroleum Company Limited, NPCL, with the signing into Law of the Petroleum Industry BIB, passed by the National Assembly by former President Buhari on August 2021, depots, a litre of petrol sells at N556.5.
There are fears in both official and unofficial circles, that the pump price of petrol might hit between N890.00 and N900.00 per litre between now and December due to the free fall of the naira to the North American country of the United States, US, dollar, and the surge in the price of a barrel of Crude Oil, particular, Bonny Light, which is Nigeria type of Crude at the international oil market.
The latest report of the NPCL, shows that the Nigerian government had spent N169.4 billion on subsidy on petrol last August alone which clearly indicates that the government might spend more billions of naira on the commodity between this month month of September and December, 2023.
Reports from the Nigerian Midstream and Downstream Petroleum Regulatory Authority, NMDRA, shows that between June 1, 2023 and June 28, 2023, described as the post-deregulation period in marketers’ circles, the total petrol consumption of the country was put at 1.36 billion litres while the average daily consumption was put at 48.43 million litres.
Indeed, with the average daily consumption level of 48.43 litres of petrol, it is estimated that the government subsidy on the Commodity this time around would be close to N290.00 per litre, meaning that the Tinubu’s government would be incurring close to N4.04 billion as subsidy daily and which may rise to N421.3 billion monthly.
A petrol dealer who spoke to The Value News on condition of anonymity disclosed that the amount could rise to as high as N1.68 trillion between now and December , 2023 , should the naira continues its free fall against the US dollar and crude price in the international oil market maintains its upward surge.
Recall that former President Buhari had spent over N8 trillion on petrol subsidy, in his eight years in office. This is money that, which marketers said ought to have been used to rehabilitate the country’s moribund refiners PortHarcourt, Rivers state Kaduna and Warri, Delta state with a combined capacity of 445b/d.
Enough on the issue of Petrol subsidy. We turn to the government unification of the country’s multiple foreign exchange rate system which had become a problem. Adams Oshiomhole a former governor of Edo state and now an elected Senator of Federal Republic of Nigeria may have made a mockery of Tinubu’s scrapping of the country’s multiple exchange rate system when he expressed doubts over the World Bank/IMF and the West Praise of Tinubu’s economic policies, particular the free market and floating of the naira in the foreign exchange market.
Appealing to the Nigerian President, that ‘’the country doesn’t need to copycat Washington DC and all these other international finance capitals, as it is their interest they are after’’ stressing that ‘’there is no such thing as ‘’common interest in their dictionary’’.
The Edo state born politician was said to have made it clear to the Nigerian government that the free float of the naira at the foreign exchange market can never stabilize it. This may have informed why he had said that ‘’the state must intervene to regulate and determine the value of the naira’’.
Oshiomhole may have alluded to Ibrahim Babangida, a retired Army General and former Nigerian military President who had started the devaluation of the local currency but told Nigerians that ‘’market forces can never stabilise the naira’’. He wondered where tinubu had gotten the impression that free float of the naira at the foreign exchange would stabilize the local currency.
The question o the lips of most people is: who will rescue Nigeria from this economic mess? Sani Musa, Chairman of the Senate Committee on Finance, who is worried over the high of cost in the country due to the poor state of the economy was said to have assured Olayemi Michael Cardaso , a former Head of Citibank in Nigeria and now governor of CBN, that the Committee will do everything possible‘’to facilitate the promulgation of Laws that will improve the Nigeria’s badly damaged economy’’.
The new CBN, governor and his four deputies who were said to have been subjected to series of questions on many subject matters including the formation of parallel government from the Federal government ‘’based on the kind of the. interventions and actions by their predecessors’’ may not have been caught unawares as they responded to all the questions without shaking.
Godswill Akpabio, a former governor of Akwa Ibom state, may have opened the floor for the barrage of questions from the Senators to come in from different directions for Cardaso and his Management Team members. The Senate President may have warned the new CBN Leadership’’ to keep away from the apex bank’s supposed activities in Agriculture, road construction, tourism, purchase of planes, cocoa building, university hostel and Library projects, commissioning health centres and purchase of drugs.
He was said to have sought to know from the CBN new Leadership ‘’what kind of industries the bank was running with the monies it had been spending which was said to be in trillions over the years’.
Given the uncontrollable spiral of the naira in the parallel market since the unification of the official and parallel foreign exchange markets may have informed why Cardaso, the incumbent governor of the CBN had said that he will’’ prioritize clearing the apex bank’s backlog of unsettled foreign exchange obligations to the country’s Commercial banks”.
Folashudun Shonubi, the immediate past acting governor of the apex bank was said to have told the CBN new Management team on September 5, 2023, that the bank had concluded negotiation on dollar debts with the Money Deposit banks , disclosing that the over $10 billion foreign exchange backlogs would be cleared within one to two weeks.
The former Commissioner of Economic Planning and Budget in Lagos state under Tinubu’s administration as the governor of the state had assured the Lawmakers while being screened that they will do everything within their powers ‘’to enhance transparency, fix Corporate governance and restore confidence in the Nigerian economy and integrity of the apex bank’’. We will come up with operational rules that are open, transparent that any of the foreign exchange players understands’’, he had said.
The former Lagos state Commissioner had said that his administration will ‘’maintain price stability , revert to evidence-based monetary policies’’, stressing that he will ‘’continue with his predecessor’s unorthodox monetary policies to bolster the naira, nearing N1000.00 to the US, dollar at the parallel market.
As a prelude to rescuing the local currency, Bismark Rewane had said that the country’s economy must be freed from oligarch’s interest , meaning state capture and shifting state resources to private pockets and leading to beneficiaries”. Rewane would want to know how the government is spending the money that is coming their way from the removal of the subsidy on petrol and reducing subsidy in exchange rates. He had said that the fundamental issue is that there must be growth and there must be productivity which the removal of petrol subsidy and scraping of the country’s multiple exchange rate system have not addressed. between May 29, 2023 and now.
