There is no doubt that President Bola Ahmed Tinubu is in a hurry to turn the economic situation of Nigeria around within the shortest time possible. He appears determined to make a positive impact in the lives of majority of Nigerians as if in a race to lift above poverty level 100 million people that are living on less than one dollar per day by the end of his first 100 days in office. This is a great achievement in itself for Nigeria where possibly for the first time in our political history we are having an executive president that has worked tirelessly and meticulously for a long period of time to attain leadership of the country. He needs the support of every peace and progress loving citizen to lead the country out of the wood.

However, to any discerning mind who is familiar with the policies of this government, it is clear that the Presidency has been bombarded by the World Bank/International Monetary Fund (IMF) team or people oriented in the multilateral institutions on solutions to the country's economic problems. It is our view that the solutions proposed by the World Bank/IMF, a profit-oriented organization owned and managed by capitalist oriented western economies, although designed for internal use, but may be dangerous if swallowed! This is due to the uniqueness of each country's socio-economic landscape.

While the solutions and policies proposed by the World Bank/IMF are not bad in themselves, however, any nation that adopts these policies without customizing them to suit their local environment and diversity may be worse off. In the next sections, we will discuss the similarity in the major policies taken by the current administration within its first 30 days of inauguration and the policies proposed by the World Bank/IMF. Further, we will provide an analysis of the challenges associated with the differing policy stance and thereafter suggest solutions, which in our opinion, will ensure that Nigerians are better served if they are implemented.

Congruence of policies

  1. Review of fiscal measures

One of the first conditionalities for accessing World Bank ("the Bank") /IMF loan is review of fiscal measures. The Bank holds the strong view that inappropriate fiscal policies is one of the major reasons most economies fail. Thus, the Bank requires that fiscal measures should be redesigned to cut inappropriate expenditure. Scarce economic resources must therefore be allocated to activities that produce compensatory return. Removal of all forms of subsidies is rooted on this premise.

The new President believes in this principle more than even his core advisers. For example, the President removed the Petroleum subsidy on the first day in office, and also signed the Students Loan Bill into law which may be an indication that financial support for education may soon follow. The electricity companies did not also waste time to remind the populace to expect an upward review in tariff.

Unfortunately, the first set of casualties of this policy change are the poor people. The very same people that the President has set out to assist and bail out of poverty so that they can breathe are not only worse off, but it was estimated that about additional 4million joined the over 100million people already below poverty level on the removal of just fuel subsidy. How can one then explain a solution that has made the people to be protected worse off while the so-called rich targeted by the policy have only made slight adjustment to the living standard?

While we are not canvassing for the retention of the subsidy regime, however, we should also consider the warning from the Nigeria Labour Congress (NLC) whose suggestion has been ignored by successive governments. The NLC has continued to insist on fixing local refineries before handing over the determination of the price of energy to the invisible hands of the market. We are aware that inflation level has been moderate contrary to permutations by the experts, but it should be noted that prices stopped upward movement at the point where it emptied the pockets of consumers.

The hitherto educational support or subsidy is not exempted from World Bank/IMF policy. It is not a coincidence that school fees are already being hiked in most Federal Government institutions to as much as 400% increase in one fell swoop in an institution. There is no gainsaying that where this trend continues, education will become out of the reach of the poor given that they patronize the public educational institutions. How humane are these policies if the end result is to further weaken the poor?

  1. Exchange systems and restriction

Another notable World Bank/IMF pill is the removal of restrictions on foreign exchange (forex) movement. The new government embraced this policy by unifying the not less than three forex rates prevailing on assumption of power. The policy shift immediately devalued naira by more than 65%. Unfortunately, the further depreciation has however not abated even as at date. Given our high import dependent economy, Nigeria experienced imported inflation which further increased the price of petrol within a short period of time.

There is no doubt that in a system bedeviled by high corruption, high rent-based entrepreneurs, weak regulatory system and poor enforcement culture, the best solution out of the logjam was the adoption of floating exchange rate. It cuts misallocation of forex from highly connected rent seekers to sectors where they are needed. It enables allocation of the limited foreign currency by pure market forces in more transparent manner.

Unfortunately, the negative effect of government's failure to monitor forex allocation that would have given a level of preference to some sectors that should not be run on pure market forces is borne by the poor. Immediately the floating forex rate system was adopted, the cost of virtually all items including medication and access to healthcare facilities that government failed to provide skyrocketed. No one has thought of the impact on our educational system, where system of teaching is now aided by technology. It would also become more difficult for commercial vehicle operators to maintain and operate decent automobiles. Companies with imported debt or those relying on imported raw materials will now have to struggle to maintain decent margins commensurate to their operational cost. This may be due to their inability to increase prices for highly competitive products especially where demand for their product is highly elastic.

In summary, adopting floating exchange rate system is good in itself, but the failure to segregate the market with the aim of protecting the highly vulnerable is the downside of wholehearted adopting this World Bank/IMF conditionality. It further impoverishes majority of Nigerians that are currently wallowing in abject poverty.

  1. Strengthen tax administration

This administration has not hidden its desire to use tax revenue to drive its agenda. It not only announced intention to triple tax revenue within two years of its first term in office, it has also engaged the services of one of the leading tax specialists to head its tax reform agenda. It has also announced that every segment of the economy will contribute its quota including market women most of whom are struggling to eke out a living. It has also sent signal to the multinational companies with economic interests in Nigeria that it is no longer business as usual.

There is no doubt about the fact it is part of civic responsibility of every citizen to pay appropriate tax promptly in accordance with the provisions of the law. However, tax compliance will become a burden in a system where there is poor accountability especially on the part of the government. It is easy to allege that the non-payment of tax is one of the reasons for the poor state of economic development in the country. But how can one justify the massive economic profligacy exhibited by most government officials in cornering the commonwealth of the nation to the detriment of the poor. How would anyone be willing to pay tax voluntarily when it is visible to the blind the unbridled show of opulence by government officials in country where majority of citizens live on less than one dollar per day. The massive display of recklessness in spending during election is enough to discourage any voluntary tax compliance and payment.

In any event, whilst this article is not against the plan to extend the tax net even to the lowest level in the society, it may be counter-productive where the revenue generated is not deployed to benefit the majority of the people. Higher tax revenue automatically leads to reduction in disposable income of the people. Given the already high cost of living, the citizen may be further impoverished where they are made to cough out more taxes from the little at their disposal. Their inability to purchase goods and services may further depress the economy in form of unsold stock and consequential impact on the manufacturing companies that are currently operating below the optimum capacity.

Suggested solutions

There is need for the President and its economic management team to re-orientate themselves and implement the World Bank/IMF copied policies in a way that will not eventually destroy Nigeria. There is need to customize the policies to meet the country's special circumstance. We need to learn from two sets of economies that implemented the policies - those that failed and what they did wrong and urgent lessons from those that succeeded. Economics is not a hardcore science where the outcome of policies can be accurately predicted. Human behaviour is influenced by survival instinct. It is however difficult to predict how each one will react to the same policy under the same circumstance. Nevertheless, there are predictable consequences of bad policies web in the garb of appropriateness and convenience. This is what we need to be extremely careful about. Therefore, we have suggested the following few actions, which in our opinion, will cushion some of the negative consequences of the policies already implemented by the current administration:

  1. Presidential assistance to Dangote to complete the refinery

The most visible solution to putting an immediate halt to continuous spending on importation of fuel is to provide presidential assistance to Dangote Group to complete their refinery. The Presidency should assist the Group by removing every bottleneck on their progress and getting them to double up their efforts towards completion. Government can engage the services of people that are knowledgeable in building and operating refineries to man the desk that will bear insignia of Presidency to work with Dangote Group on daily basis to complete the project. The urgency should also be visible to all where the appointed committee provides monthly feedback to the President and Nigeria at large on milestones achieved. One of the assistance that can be provided is to get the construction to be happening for 24 hours daily non-stop in order to optimize the time available. Government can deploy all arms of security personnel for this purpose. Importation of any item as well personnel for the purpose of the project should be seamless and proactive.

There is the concern that people may allege that Dangote is being granted excessive privilege to the detriment of others. However, critics can also not deny the overreaching impact that the project will have on the economy. If one person has been 'foolish' enough to put the burden of entire 200 million people on his head and has gone this far, the non-foolish thing to do is to divert available resources to ensure that the project sees the light of the day as soon as possible.

It should also be noted that there are so many things that are required to be done for the project to see the light of the day. Most of these are completely outside the control of Dangote Group. It does not therefore make any sense for government to continue to watch from the sideline under the guise of being a private project while the country is an obvious net loser.

  1. Provide robust education and health facility support for all Nigerians

All advanced economies in the world make adequate and world class education and health facilities available to their citizens, irrespective of level. One of the best ways to deliver this is for the Federal Government to completely hands off direct provision of both to citizens. It is obvious that the Federal Government has not been able to provide these facilities in equitable and fair manner to everyone. Rather, the funds should be channeled through the States who stand in a better way to monitor delivery to the last mile.

For instance, the Rivers State government under Mr. Rotimi Amaechi was able to achieve some significant level of development in the provision of primary and secondary education to the point that made some people transfer their wards from private schools to government's. Lagos State government also successfully pioneered similar efforts in the health sector. One can imagine the impact of having a health facility of the status of Lagos State University Teaching Hospital available to every two million people across Nigeria?

In essence, the Presidency should jettison the idea of total withdraw of 'subsidy' for essential sectors especially education and health in favour of market-based system for all items in the country. The price for education is ignorance which comes at a huge cost. A sick person is ready to pay anything to regain his or her health. Education and health are priceless, and government should be in the fore front of making these available to everyone at affordable prices.

  1. Adequate fiscal support to restore the dignity of naira

The floating exchange rate system will only be of benefit to the country if there are adequate non-monetary policies to drastically reduce demand for foreign currencies and simultaneously, astronomically push up supply. No one is in doubt of covert and overt efforts that government may be making to ensure that forex earnings from supply of crude oil is restored to full level. The need to cut Nigerians' excessive dependence on imported goods and services should be addressed without restraint. For instance, import duty on ostentatious items including exotic and bullet proof automobiles and consumables should be 100%, irrespective of importer or final beneficiary including government functionaries. Government should also make every effort to gear up export of goods and services from Nigeria.

  1. Take advantage of shortage of labour in western world by getting qualified and disciplined Nigerians to travel out

The 'Japa' syndrome is an opportunity that should be maximized to enhance forex earnings and reduce unemployment. Some Asian countries such as Philippine and India optimize the benefit. They provide adequate support for emigration for their highly mobile and qualified citizens. They also have adequate support from their foreign missions to provide support to their citizens in host countries. In addition, Nigeria embassies should be strengthened to support host countries to discipline erring Nigerians. We should not only be ready to support good behaviour, but in the forefront of ensuring that bad behaviours are sanctioned in accordance with the provisions of the local law without fail. This will serve as deterrent to others and improve the image of the country.

  1. Adoption of Pareto Optimality in tax reform

Our tax reform should permit the poor to breathe. We should focus our efforts on the 20% of the society that controls 80% of the resource to pay appropriate tax. This is where government is failing seriously. There is poor correlation between the wealth of citizens and tax compliance. Our tax system should therefore be reformed to ensure that there are adequate sanctions for non-compliance. The tax-to-GDP ratio can drastically increase if the people that control the bulk of the wealth of the nation pay appropriate tax. It is very unfortunate that most of the recent tax reforms focused on taxing the poor at the expense of the rich. How does one explain imposition of tax on non-alcoholic beverages in order to control sugar consumption while leaving out the sugar supply into the country? Government also started subjecting investments in education and health facilities to tax when these people are only filling the gap created by the same government. Our tax reform should aim at leaving more money in the hands of the poor and getting the rich to pay more for their wealth. This is what decent societies do.

We have no doubt in our mind that the current administration is doing its best to address the economic situation in Nigeria. We commend the efforts of the government to resolving the self-inflicted economic problems facing the country. Our suggestion is that we exercise caution to avoid making the situation worse by adopting solutions that are not suited to our political and socioeconomic climate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.