Economic experts argue that the World Bank/IMF-backed economic policies of President Bola Ahmed Tinubu are only setting the country ablaze amidst ever escalating insecurity
By Lukmon Ojerinde
“Tax them to penury”, this infamous phrase may have become the infamous slogan for the government of President Bola Ahmed Tinubu. At China on Friday, September 7, 2024, President Tinubu had given an indication that as long as his government lasts, Nigerians would never heave a sigh of relief from ever increasing taxes on various essential amenities, including Petro tax, electricity tax, Value Added Tax (VAT), customs taxes among many others.
While addressing Nigerians living in the far away Asian country Tinubu had said, “The more you want everything free, it will become more expensive and long-delayed to achieve meaningful development.
“Nigeria is going through reforms, and we are taking very bold steps and unprecedented decisions. For example, you might have been hearing from home in the past few days about fuel crisis. What is the critical path to get us there if we cannot take hard decisions to pave the way for a country that is blessed and so talented?”
Before his trip to China to canvas for investments in Nigeria, President Tinubu had increased the official pump price of the Premium Motor Spirit (PMS) to between N855 and N1,200 depending on the part of the country. When Tinubu took over the reins of power in May last year he promptly announced the removal of fuel subsidy. Although his government has continued to subsidize the PMS till date, his unexpected announcement was to increase the official pump price of fuel to between N568 and N800 depending on the location of the country.
Due to the purported fuel subsidy removal which increased cost of transportation and prices of food items, and also drew the ire of the organized labour with its consequent nationwide protests, Tinubu would last July approve a minimum wage of N70,000 for Nigerian workers which is yet to be implemented. But, according to economy experts, the recent hike in the price of fuel has not only diminished the gains from the yet-to-be implemented new minimum wage, but it has triggered a high cost of transportation in and around the country which will cause increase in the prices of food items as well as other essential commodities.
As the President and Commander-in-Chief, Tinubu’s Regime, as the government under his watch is addressed, has dutifully ensued constant increases in Customs exchange rate through the Central Bank of Nigeria (CBN), electricity tariffs and fuel pump price which are affecting living standard of the citizens negatively. At the last count, the country’s food inflation had been pegged at 39.58 percent from the office of the National Bureau of Statistics (NBS). This implies that with the new increase in fuel pump price, cost of living in Nigeria would become unbearable as many citizens must prepare to be living without enough food to eat.
Tinubu has also mulled the idea of increasing VAT to 10 per cent from the current 7.5 per cent. The VAT increase is likely to be officially announced before the end 2024.
The indication that the VAT would surely be increased from 7.5 per cent to 10 per cent any time this year was given by no less a personality than an appointee of the President, Dr. Taiwo Oyedele. He is the Chairman of the Presidential Committee on Fiscal Strategy. Dr. Oyedele had revealed during an interview that his Committee had recommended the VAT increase to Tinubu waiting for its implementation.
In reacting to the VAT increase, former Vice President Atiku Abubakar had lashed out at Tinubu and his economic team for another tax regime increase that would bring further hardship to the doorsteps of the already impoverished citizens.
In a statement on Sunday, September 9, Atiku said, “President Bola Tinubu, alongside his coterie of advisers, has resolved to raise VAT rate from 7.5 percent to 10 percent even as the NNPC has announced a soaring PMS price increase at pump.
“This move unveils a new era of regressive and punitive policies, and its impact is destined to deepen the domestic cost of living crisis and exacerbate Nigeria’s already fragile economic growth.
“President Tinubu and his entourage seem to be resorting to their familiar tactics: heaping burdens upon the impoverished, while steadfastly ignoring their extravagant excesses.
“Tinubu’s actions reflect a profound insensitivity to the plight of the less fortunate as he indulges in opulent renovation of villas and the acquisition of new jets and vehicles for himself and family”.
What worries many opinion leaders and analysts is that amidst the increases in the PMS pump price, Tinubu government has not discontinued fuel subsidy, it is only increasing the pump price, according to them, to fall in line with the dictates of the World Bank and the International Monetary Fund(IMF). Both global financial institutions are alleged to be behind the hardship-induced economic policies of the Tinubu government.
Experts insist that these institutions’ dictates to the Nigerian ruler which favours the western world may be responsible for the government’s inability to fix the local refineries. They also insist that if Tinubu was sincere with the touted fuel subsidy removal, why would the Nigerian National Petroleum Corporation Limited (NNPCL), remain the sole importer of fuel in a deregulated energy market.
For example, the Chief Executive Officer (CEO) of CITA Petroleum, Dr. Thomas Ogungbande said government was still paying subsidy, otherwise fuel price would have got to N1,600 per litre.
Tinubu’s tax and other economic policies are putting the living conditions of the citizens in jeopardy. School children are affected as many parents can no longer cater to the financial needs of their children in school, there are jobs losses as companies cannot bear the economic crisis, there is unbridled abuse of substances among the youths who cannot find any meaningful jobs to do but engage in criminal activities.
The People’s Democratic Party(PDP), said government policies are draconian which are bringing citizens to their knees according to Debo Ologunagba, the PDP’s National Publicity Secretary during a media briefing in Abuja last week.
But President Tinubu would think that fuel pump price increase would free up resources for investments in critical projects as propounded by Vice President Kashim Shettima who represented his principal at the 17th Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria held in Abuja on Monday, September 10.
However, the Afenifere, the Yoruba socio-cultural organisation, would rather think that some “foreign financial institutions are pushing free market policies” down the throat of helpless citizens using Tinubu government as the implementation tool. This view was expressed by the National Publicity Secretary of Afenifere, Justice Faloye on Tuesday, September 11 during a television interview in Lagos.
Faloye’s reference pointed to the Bretton Woods Institutions -the World Bank and the IMF- which had overtly lent their support to the purported fuel subsidy removal and floating of the Naira, since June 2024.
Also last June, the People’s Redemption Party (PRP), came hard on the government for choosing to implement monetary policies of the World Bank and IMF. National Chairman of the PRP, Falolu Bello faulted the institutions’ economic policy prescriptions being forced down on Tinubu for implementation despite their dire consequences on the wellbeing of the masses.
Bello: “Removal of subsidies on fuel, electricity, etc., devaluation of our currency, increase in interest rates etc-all International Monetary Fund and World Bank economic policies-have combined to push the nation’s misery index to an unprecedented level.
“Headline inflation is inching up to 40 percent and rising, poverty levels are exacerbating, unemployment and underemployment levels are increasing because of our capacity utilisation and factory closures, taxes are being increased, so are interest rates”.
Amid the ongoing pricing and supply crises in the downstream sector of the Nigerian oil industry, the IMF, has tasked the Federal Government to prioritize building and accelerating a social safety net that protects vulnerable citizens.
But taking this position in an interview on Arise TV last week, the Resident Representative of the IMF in Nigeria, Dr. Christian Ebeke, also hinted that petrol is still selling below market price, indicating the possibility of a further upward price movement.
The IMF executive expressed worry that Nigerians are going through significant hardship due to policies being implemented by the present Federal Government.
Ebeke stated: “I think this upward adjustment of petrol price at the pump comes at a time Nigerians are already feeling significant hardship.
“There is a lot of pain for Nigerians coming from multiple shocks, compounded shocks, including high inflation, high food inflation. Now, the country is dealing with devastating floods, among others.
“So the upward adjustment to pump rice comes at that particular moment when the economy is also dealing with multiple shocks and Nigerians are feeling this pain.
“I would advise that as we clearly stated in our annual review of the Nigerian economy which we published in May and our advice is very clear.
“It is important to strengthen social protection in Nigeria. It is important to accelerate the mechanism and the disbursement of this support to the most vulnerable, so they can cope with this multiple shocks they are actually facing now”.
The ruling All Progressives Congress (APC) on Tuesday September 10, 2024 conceded that the economic reforms of the President Tinubu administration have caused terrible hardship for the people, but that the fruits of the reforms will bear fruits “in the fullness of time”.
Party spokesman, Felix Morka in a statement in Abuja said the president has taken bold steps to fix Nigeria’s long broken economy.
