Tinubu’s policies on fuel subsidy removal, unification of exchange rate good, but require palliatives – Gombe FRC boss
…. Policies need demand management, money should be put in the hands of people
ABUBAKAR INUWA TATA, Executive Chairman Gombe State Fiscal Responsibility Commission, in this interview with the Editor of PERISCOPE NIGERIA, CHIMA AZUBUIKE, the Economist shares ways President Bola Ahmed Tinubu’s administration could mitigate the biting economic hardship.
What does Fiscal Responsibility Commission do?
The Commission ensures that Gombe State Government operates within the fiscal space that is efficient with expenditure that is prudent. The Commission also ensures that government is able to realise alot of revenue and at the same time when they are financing their budget gap they do it in such away that is sustainable.
What do you think about President Bola Tinubu’s policies?
This administration of President Bola Ahmed Tinubu came with alot of policies if you look at the policy brief you will see beautiful, superlative ideas. The ones he started with which many people are happy about is fuel subsidy removal and the unification of exchange rate. These two policies are critical and can uplift the economy but they need to be followed up with so many palliatives and demand management policy. Policies that can ease the pressure on households and businesses but sadly up to this moment there is no critical effort by the current administration to ensure that the subsidy removal and the hardship brought to citizens and voters are addressed because if you look at the way things are going you will be shocked to realise that people are living in crisis. If you look at the indices of cost of living crisis you will discover that the food price is on the increase galloping inflation. If you look at the issue of power the energy price is also expensive, the disposal income that the people can use for day to day activity is becoming lean.
What does this connote to the economy?
In the first quarter of 2023 the economy slowed down the growth rate is about 2.3 per cent as against 3.35 in the last quarter of 2022 meaning that the economy is slowing down and it’s going which reason was adduced to the currency crunch as a result of redesign and now the problem of subsidy removal and foreign exchange unification can even cause more harm than what the redesign has caused because the redesign policy starved people from having access to their resources which slowed down the economy from growing. Now people don’t even have the money because their salaries, or whatever that they earn is been eroded by high rising price overtime.
What does this portend to manufacturers?
Once you have a depressed demand manufacturing and other agricultural activities will also be depressed like now many manufacturers are complaining particularly small businesses Medium Scale Enterprises are complaining of increasing inventories. When you have inventories of unsold products that means you can’t produce any longer because people are not buying today people are not buying alot of things they are surviving from hand to mouth, so they are concentrating on what they can eat. 80 to 90 per cent of their resources go for their consumption marginal propensity to consume is going higher, while marginal propensity to sale is not there.
What exactly should this government do?
We expect this government to come with pragmatic approach of stimulating the economy by pumping money into the hand of people so that people can begin to demand one or two things but the way things are going people will concentrate on the basic needs. When you have large inventory the next thing is to disengage people because you can’t be producing when you can’t sale. This is exactly what is happening in Agriculture today there is increase in inputs for instance companies are increasing the amount of poultry feed but at the other end people are not demanding for eggs. So now we have inventories of millions of naira of unsold eggs in every farm. If people concentrate only basic needs they can’t construct, the construction companies will be affected they can’t build and they can’t hire people and the economy won’t be stimulated as people don’t buy the economy will slide deep into recession.
Are there dangers to food security?
People can’t go to their farms because of transportation initially you can transport yourself at N500, if it comes to fertiliser application, weeding pesticide application and other things you need to carry others along each person now is costing you about N1,500 against N500 that we had in 2022 and many can’t fuel their car and carry people to the hinterland because urban farmer carries people to the villages but the cost transporting the workers and input is becoming higher, so most of my neighbours cultivated their land majority said they can’t get cheaper fertiliser, transport themselves to the farms. It an indicator that next year there will be unavailability of these products and the prices may be higher than what we are experiencing now.
Recently government set up committee to cushion tax burden of companies, would there be any positive implications ?
So what government should do is not supply management policy because the committee is about reducing taxes is to help companies, manufacturers to have good business environment but you only have good environment when people are buying your goods and services. There is need for government to be proactive and come up with demand management policy like things that can stimulate demand for goods and services.
Will salary increase have effects?
If you increase the salary of a worker even 100 per cent increment, the food prices have increased more than 100 per cent, transportation has increased more than 100 per cent even when you are increasing the salaries of public, civil servants they will not be at the status they were before the policies. The public sector is maybe 40 per cent of the total economy, the informal sector or shadow economy is even bigger than the formal economy therefore what about people who are not in government? About 133 million Nigerians are in abject poverty according to NBS and now you are throwing more people into more food poverty. When you can’t get three, two square meals but you get one square meal by hard way then there are alot of issues.
Any more issues to be worried about from the economic situation?
There is increase in criminality. After intervening in salary review, they provide palliatives for the poor and vulnerable because most of them do not have jobs. The dependency rate in Nigeria is 1-10 people, at the moment many are withdrawing their children schooling in places far from home to areas they can trek because of cost fuel.
When should government do the needful?
During the early period when the government has the trust of the people they need to be proactive by coming with policies that can mitigate and reduce pressure on individual and other economic agent.
Will the border opening solve the quagmire?
Many have canvassed for government to open the border because people are suffering, but I have always told them that even if you open the border the exchange rate is not the same. If you are importing from nearby African countries it will not be as cheap as it were before, now it N772 to a dollar, when you are importing it comes with imported inflation the thing will not be available at the price you envisaged. What we need is money in the hand of people so that they do things by demanding one thing or the other those people will continue to produce and the entire system will prosper without that I don’t want to say lawlessness but people may be out on the street protesting or doing other things because the economy is biting hard. The oil that you see is a micro variable, once you tinker with it, it will affect almost everything.
