As we anticipated, Bola Tinubu was declared the winner of February’s Presidential election and sworn into office on 29th May. The man who has been a political king maker for decades now, himself, sits on the throne. His victory was fiercely contested by his opposition candidates. Tinubu won with 37% of the vote. Atiku Abubakar of the People’s Democratic Party called the result “a rape of democracy” after getting 29% of ballots. Over 93 million Nigerians were registered to vote in this election yet only a little over 25% of them turned out. Tinubu may have won the battle, but does he have the backing of the people to win the war? His first few weeks in the job will give us a taste of what is to come. After eight years of Buhari’s lacklustre style – it would serve Tinubu well to get to work quickly and efficiently. There is no time to waste if Nigeria is to be turned around. It is on a cliff edge and even the smallest of nudges will see it tumble.
Elections. The country Tinubu is now in charge of is on the brink of both a political and a socioeconomic melt down. He was elected on some bold and innovative promises – now he has to actively follow through on them. There is no time to lose. He needs to immediately get to work and put a winning team together. It must visibly shy away from cronyism and instead creatively build capital that can be used to fund education, electricity, healthcare and roads. The team must also aggressively defend the Naira, encourage consumer and student loans which in turn will generate spending, bringing revenue back, that can in turn be used to beef up the military and security personnel which in turn will help bring a semblance of peace to the land. Nigeria is a nation divided. It always has been but never more so than now. Inclusion and empowerment must be his key focus points. Upward mobility and improved prospects automatically turn disgruntled people into patriots which will do a lot to narrow the divides of social, economic, religious and tribal differences. The court cases against Tinubu, by the candidates he beat at the polls, will go ahead but regardless he is now in charge. Even if his opponents win he will be in charge for quite some time. He must use this time to make the big decisions and the hard choices. His predecessor held office for two terms yet he accomplished almost nothing. Nigerians are hungry for strong decisive leadership. They are literally crying out for change.
Legislation. A bill is scheduled to be read imminently which, if passed, will impose 5 years’ mandatory service on all new doctors graduating in the country. Aimed at slowing the ‘brain drain’ of medical professionals seeking work overseas, the law has been slammed by Doctors’ Unions who called it “obnoxious and outlandish”. It is true that this medical migration needs to be addressed. Nigeria has a population of more than 218 million people, yet it has only 24,000 licenced doctors. Between 2015 and 2021, 5,000 doctors left for the UK alone. Stagnant salaries in the sector do not make staying home attractive. Doctor’s wages haven’t increased in over a decade. Combined with outdated equipment, methods and technology and the already failing health care system is crumbling. Doctors who do remain are low in motivation which leads inevitably to a drop in standards. Legislating a national service period will slow down those who wish to leave but it will not stop them later or fix the problem. Major investment, improvement and incentives must be found. It is the only thing that will encourage people to stay. We fail to see that happening any time soon.
GDP. The National Bureau of Statistics report that Nigeria’s GDP growth dropped to just 2.31% in the first quarter of this year down from 3.52% in the previous reporting period. This drop in performance can be firmly blamed on the cash crunch caused by the chaotic attempt to issue a new currency back in January.
Oil. Nigeria has long been rich in oil but poor in refining but it looks like that is about to change. Nigerian born Aliko Dangote is the richest man in Africa and he has just had outgoing President Buhari declare his USD20 billion refinery in Lagos officially open. Once fully operating this giant project has the potential to dramatically reshape Nigeria’s finances and its future. The facility can refine up to 650,000 barrels per day which will more than meet Nigeria’s demand leaving up to 40% available for export. Additionally, it can generate 435 megawatts of electricity and will create 130,000 jobs. It is expected that the first supplies to the domestic market will be delivered by July. If Dangote’s new toy does exactly what it says on the tin, Nigeria’s USD26 billion spending on imported fuel and fertiliser will drop dramatically and with Nigeria’s finances in their current state that can only be a good thing but …
Fuel Subsidy. Numbers released by the Nigerian National Petroleum Corporation show that Nigeria spent USD9.7 billion on fuel subsidies in 2022. The previous government had committed to keep the subsidy in place until the middle of this year and had allocated USD7.5 million to cover the bills. Successive governments have tried to remove the subsidies, but all attempts have failed. Currently, Nigeria imports all of its fuel, paying out hard currency to do so. If Dangote’s refinery produces everything it promises that will be a game changer. Being able to produce petrol, diesel, kerosene, and jet fuel domestically will drop prices dramatically which could translate to lower prices at the pump rendering government support as obsolete. However, that will require financial responsibility to ensure that the additional income earned from exports is reinvested back into the country and not misappropriated. With a new government just getting to work it is impossible at this time to predict just how committed to development it will be. Nigeria has a well-known reputation for corruption. We may be witnessing the unveiling of a whole new pot of gold to liberate.
Beer. The financial statements of brewing companies have been released. Drink producers generated over NGN900 billion in 2022. That is an increase of NGN161.76 billion (22%) when compared to the previous year. The best performing brewery last year was Champion. The company’s revenue increased by 28.56% year on year. Nigerian Breweries saw a 25.92% growth. Guinness takes third place with a revenue increase of 8.55%. Despite these impressive numbers, net profits in the sector fell by 17%. In June, a newly revised excise duty will be implemented on all alcoholic beverages. The new rate will see beer and stout taxed at NGN75 per litre up from NGN40. When this 87.5% hike hits, profits will either fall or prices will rise. Companies have already been burdened by high foreign exchange rates, soaring energy costs and rising fuel prices increasing transportation costs. Adding yet another tax will increase that burden. Back in 2021, beer manufactures were forced to put prices up after a new tax regime was introduced. The average beverage cost for consumers increased by almost 20% per unit at that time. We anticipate a similar increase will follow shortly – especially if the fuel subsidy is lowered or removed completely. The new rates will take effect from 1st June and will be revised upward by 1st June 2024.
US Convoy. Vehicles carrying US Embassy officials were attacked in Anambra State in May. Two Nigerian men, employed as Embassy staff, and two police officers were killed in the incident. Three more people were kidnapped. US Secretary of State Antony Blinken has said there are, “no indications at this time that it was targeted against our Mission.” No group has claimed responsibility. Security forces “embarked on a rescue and recovery operation in the area,” The hostages were released unharmed.
Tribal Violence. In the north and centre of the country the attacks and hostage taking incidents are too numerous to report. To put things in perspective we focus on just one state. Late May, approximately 50 Fulani tribesmen raided a village in the central state of Benue setting it on fire and killing more than 40 people. In response just four soldiers were dispatched to quash the violence. Needless to say they were overwhelmed and all troops lost their lives. Benue State Emergency Management Agency report that over 5,200 Benue residents have been killed by Fulani since 2015. More than 2 million more have been displaced and are now internal refugees. Numbers like this are repeated time and time again in all 36 states in the nation. Despite paying lip service, previous governments have largely ignored the problem and failed to take action. It has never been more important that the new administration address the violence, find the route cause and equip the troops tasked with fighting it.
Tinubu promised to increase tax revenue and spend it efficiently. That would be great if productivity right across the country hadn’t slumped due to the instability of the currency and insecurity across his nation. He also promised to remove fuel subsidies. That could be risky. It will provoke protests but if he is lucky the pain will be temporary, and people will embrace the new system. Whether or not he is brave enough to try and implement it is another question. His predecessors have made similar grand statements but each one has backed away from the subject when the time came. Nigeria must face its ever-increasing burden of debt as well as invest in infrastructure and transparent practices. Freeing up funds from subsidies will seriously help with both of these areas. Tinubu’s government needs to be visibly seen to be above corruption and be frugal with the national purse. Asking citizens to suffer hardship while squandering the national wealth will not be tolerated. Despite being behind the scenes of the political stage for years he is now firmly in the spotlight as the leading man. Whether or not he has the ability to carry that off remains to be seen. The world is watching. Nigeria is too big to fail. If it does, the regional and international implications would be substantial. So as the curtain comes up on his opening act – the audience is holding its breath to see just what kind of part he will choose to play.