Business
Rapid Economic Reforms Must Tackle Escalating Poverty, Stakeholders Warn
Stakeholders caution President Bola Ahmed Tinubu about the urgent need to address escalating poverty in Nigeria and avoid hasty implementation of economic reforms that could erode any progress made.
World Bank Reveals Alarming Rise In Poverty
Recent revelations by the World Bank indicate that the removal of fuel subsidies in Nigeria during the first half of 2023 resulted in over four million people sinking into poverty. Urgent action is required to prevent an additional projected 7.1 million Nigerians from falling into poverty by the end of the year.
Sequential Implementation Of Reforms Essential
Renowned economist and Nigeria’s first professor of capital market, Uche Uwaleke, emphasizes the importance of sequenced reforms. The policy document developed by the Policy Advisory Council, led by distinguished Senator Tokunbo Abiru and supported by KPMG, outlines the need for a gradual approach. The initial phase involves announcing the intention to remove subsidies, followed by implementing non-cash palliatives, increasing refined capacity through strategic partnerships, and finally, effecting the complete removal of fuel subsidies.
Monetary Policy Considerations
Professor Uwaleke further highlights the advisory council’s recommendations regarding monetary policy. Before unifying exchange rates, the government should model the economic impact and determine the required quantum of external reserves. The backlog of foreign exchange demand, amounting to approximately $12 billion, along with contingency reserves, must also be considered. Unfortunately, some of these recommended steps were not followed in the current implementation.
Board Of Economists Expresses Concerns
The Board of Economists echoes the concerns of experts, cautioning against hasty implementation without proper communication on the impact and availability of palliative measures. While acknowledging President Tinubu’s efforts to reform the economy, the board warns that the short-term consequences of these policies could negatively affect the masses and further burden the nation.
World Bank’s Recommendations For Mitigating Impact
The World Bank emphasizes the significance of compensating transfers to protect vulnerable households from initial price shocks resulting from subsidy reform. It recognizes the removal of petrol subsidies and foreign exchange reforms as vital steps toward addressing long-standing macroeconomic imbalances. These reforms have the potential to establish a solid foundation for sustainable and inclusive growth, despite adverse consequences such as rising inflation and a debt-to-GDP ratio of approximately 46%.
Stakeholders Discuss Sustainable Reforms
During a panel discussion, stakeholders from various backgrounds offer perspectives on sustaining reforms and mitigating their impact on the poor and vulnerable. State governors Alex Otti and Seyi Makinde stress the need for collective efforts to protect the most vulnerable members of society. The World Bank Country Director in Nigeria, D. Chaudhuri Shubham, recommends a robust cash transfer programme to provide swift relief to the households most affected by the reforms.
Balancing Reforms And Economic Growth
Professor Uwaleke reiterates the importance of avoiding rushed reforms that may have adverse effects on output, inflation, and poverty reduction goals. To alleviate the current suffering, the government should swiftly implement existing palliative measures, including mass transit and minimum wage. Interventions should primarily focus on non-cash-based solutions and reducing out-of-pocket expenses in crucial areas such as healthcare.
Effective Communication with Citizens
Economists advise the new government to engage in urgent and effective communication with citizens. This will enable Nigerians to comprehend the implications of the actions.
Sterling Bank has announced the removal of transfer fees on all local online transactions.
The move was confirmed by the bank on Tuesday in a press release.
The development makes it the first major Nigerian bank to eliminate the contentious charges for digital banking.
The statement noted that the bank reaffirmed its commitment to customer-centric banking, declaring that the zero-transfer-fee policy is real and effective immediately.
The initiative is expected to bring significant relief to individuals and small business owners who conduct frequent transactions.
The bank’s Growth Executive in charge of Consumer and Business Banking, Obinna Ukachukwu, described the decision as a values-driven approach aimed at ensuring fair and inclusive banking.
“We believe access to your own money shouldn’t come with a penalty.
“This is more than a financial decision—it’s about redefining banking to put customers first,” he stated.
Under the new policy, Sterling customers will not be charged for local transfers conducted via the bank’s mobile app.
Ukachukwu emphasised that the bank’s decision is about more than just competitive strategy.
He said, “We’re not yet the biggest bank in Nigeria, but we’ve been the boldest.
Sterling fearlessly believes in the future of Nigeria, and this is us backing Nigerians with more than words.
The Central Bank of Nigeria dismissed a report claiming it had introduced N5,000 and N10,000 banknotes to facilitate cash transactions as false.
In a statement posted on its official X handle on Wednesday, the apex bank described the report as fake and urged Nigerians to disregard it.
“The content is not from the Central Bank of Nigeria. Kindly note that the official website of the CBN is cbn.gov.ng,” the statement read.
A statement from the CBN’s communications department further clarified, “The only official sources for releasing statements to the media are our website or statements from our department. There is also no Deputy Governor by such name. We are investigating the source of this fake content.”
The report quoted one Deputy CBN Governor, Ibrahim Tahir Jr., the move is aimed at reducing cash-handling costs and providing Nigerians with more efficient means of conducting large transactions.
“The introduction of these new high-value denominations aligns with global best practices and will enhance economic activities while reducing the stress associated with carrying large amounts of cash,” the Governor stated. The CBN said there is no such name in its leadership.
“The new N5,000 note will feature the portrait of Chief Obafemi Awolowo, while the N10,000 note will showcase Dr. Nnamdi Azikiwe, both in recognition of their contributions to Nigeria’s development.
“Additionally, the new notes will incorporate enhanced security features, including color-changing ink, holograms, and anti-counterfeiting technology, making them impossible to replicate,” the fake report stated.
The fake report also said the nationwide rollout would begin on May 1, 2025, with commercial banks instructed to start issuing the new notes via ATMs and over-the-counter transactions.
Mixed reactions have trailed changes in the management of the Nigerian National Petroleum Company Limited (NNPC Ltd.) and its board by President Bola Tinubu.
The President had on Wednesday reconstituted the board of the NNPC Ltd., removing the Chairman, Chief Pius Akinyelure and the Group Chief Executive Officer (GCEO), Malam Mele Kyari.
Tinubu removed all the board members appointed with Akinyelure and Kyari in November 2023.
The new 11-man board has Mr Bayo Ojulari as thevGroup Chief Executive Officer (GCEO) and Ahmadu Kida as Non-Executive Chairman.
Some experts have reacted to the development in an interview with the News Agency of Nigeria (NAN)non Wednesday in Abuja.
Mr Olabode Sowunmi, an Oil and Gas Expert described the development as a calculated effort to put some life and energy into the oil and gas industry.
Sowunmi, CEO, Cabtree, described it as a welcome development.
He said that the NNPC Ltd. was a limited liability company with the
Federal Government as its major shareholder.
“It is a calculated effort to put some life and energy into the industry.
“It is expected that this will mean new thinking, new focus and more results,” he said.
According to Sowunmi, even the proposed Initial Public Offer (IPO) which is targeted at listing NNPC in the stock market, will not have prevented Kyari’s removal, as he is a government appointee.
“The government can remove any government appointee at anytime,” he said.
Yushau Aliyu, an economic expert said the changes were timely, especially when the IPO was underway.
“However, the IPO must be professionally determined by relating to the development in the oil market as well as the willingness of the general public.
“Investment potential with the economic growth targets of Nigeria 2030 should also be considered,” he said.
He said that the President was empowered by the Petroleum Industry Act (PIA 2021) to dissolve both the NNPC Ltd. board and the CEO.
Another expert, Dr Sand Mba-Kalu, said that Nigeria’s oil and gas sector needed stability and predictability, along with strict adherence to legal standards, to attract sustainable investment and encourage transformation.
According to him, the move represents a bold initiative within the larger framework of aiming to meet our national production and refining targets in the energy sector by 2027 and 2030.
Mr Lawrence Nze, an Economist said that most of the policies introduced under Kyari never solved the challenges in the oil sector.
Nze said that the Naira for crude policy appeared not to be working since it had not resulted to any serious reduction in price.
According to him, Dangote Refinery was gradually achieving that with its slight reduction in ex-depot price which usually affects pump price, but suddenly, authorities in the oil sector cancelled it.
“To me, it looks like a sabotage against the people. Why can we not stop importation? It means that there is a deal that someone or group of people are benefiting from.
“It is not rocket science to get the energy sector working. Nigerians want cheaper petroleum products, is that too much to ask for?
“Only President Tinubu knows why he sacked Kyari, and whatever be the reason, Nigerians should have access to cheaper petroleum products, especially fuel.
“I will advise the president to ensure that the Naira for crude policy works in the country to enable local refineries operate on a cheaper scale,” he said.