Last week, Mr Onanuga hogged news headlines again. This time he assayed to entrap the canard that Nigerians are poorer under the Tinubu administration. If nothing at all, Mr Onanuga has form on matters like this. If the papers are to be believed, as it was under the Buhari administration (generally now agreed to be one of the lousiest this country has ever had), he is struggling again to see the hunger that Nigerians are reportedly suffering from.
“My daughter was on the Virgin Atlantic Flight that took off from Lagos to London today. I asked her to find out whether the plane was filled up or going to London near empty judging by the noisy campaign from a section of the country about the ‘hardship’ in our country.
“My daughter sent back this one-line text, after boarding: ‘daddy, the flight was filled up o’.”
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Thus observed Mr Bayo Onanuga, on 6 September, 2016, writing on his Facebook page. He used this vignette to illustrate his problem with the local media. Mr Onanuga’s daughter’s feedback, made him “wonder whether all the seeming orchestrated campaign in the media was not mere propaganda to make the Buhari regime look really bad.” On the back of his musings, he called for the media to “objectively conduct a reality check about our reports, whether we are not over sensationalising so-called hardship that we talked about”.
Last week, Mr Onanuga hogged news headlines again. This time he assayed to entrap the canard that Nigerians are poorer under the Tinubu administration. If nothing at all, Mr Onanuga has form on matters like this. If the papers are to be believed, as it was under the Buhari administration (generally now agreed to be one of the lousiest this country has ever had), he is struggling again to see the hunger that Nigerians are reportedly suffering from. Going by the ease and viciousness with which he dismisses critics of the Tinubu government as “economic illiterates,” one must only assume that Mr Onanuga’s grasp of the dismal science is some of the best in the country.
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That ought to make the following case easy for him to follow. From an official rate of about ₦464/US$1 immediately before and after the inauguration of the Tinubu administration, and a parallel market rate around ₦750–₦775/US$1 in late May 2023, the naira briefly traded above ₦1,500/US$1, and at times approached ₦1,900/$1 in some markets in early 2024, before steadying around its current ₦1,400/US$1 mark. Inflation raced away as imported goods became more expensive.
What are we to make of the additional fact that a large proportion of the country’s workforce operates out of the informal sector? One answer is that they do not get paid the minimum wage because of this. So, whether Mr Onanuga likes it or not, the logic of his government’s reforms and the structure of the domestic economy mean that our people continue to hurt.
The central bank introduced several measures, including higher interest rates, efforts to clear foreign exchange backlogs, tighter regulation of the foreign exchange market, and increased dollar inflows from portfolio investors, to take the sting of the crisis. Surely, Mr Onanuga is familiar with the central bank’s role as the “chaperone who ordered the punchbowl removed just when the party was really warming up” – and what this means for economies?
Just before the Tinubu administration took office on 29 May, 2023, the official regulated pump-station price of petrol was approximately ₦185–₦210 per litre in much of the country, depending on location and transport costs. After President Tinubu announced that “fuel subsidy is gone” during his inauguration speech, the Nigeria National Petroleum Corporation (NNPC) adjusted prices within days to roughly ₦488–₦500 per litre. We know where fuel prices are today. The effect of this on inflation, thankfully, coincided with the pressure from the naira’s depreciation.
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The reforms that led the economy into this bind were necessary. About this, there is no question. For far too long, successive Nigerian governments, afflicted by intellectual gigantism had lived above their means, bequeathing their people with a dwarf economy. A more efficient allocation of domestic resources, based on better price discovery processes, was always going to lead to better economic outcomes. But an economist of Mr Onanuga’s standing ought to be familiar with the concept of the time lag. In other words, that the requisite changes in investment, productivity rates, and GDP that the Tinubu government is aiming for will not occur immediately – not matter how smart the president is. These results will take more than one electoral cycle to materialise. In the meantime, the effect on inflation, disposable incomes, and therefore, consumption was immediate – and negative.
This is the pain versus gain conversation around reforms. It also lies at the heart of the understanding that serious reform efforts inevitably create losers and beneficiaries. In other words, this is the argument that, by recognising the incidence of the former category before the latter, and its disproportionate impact on the famous poor and vulnerable segments of the population, makes a strong case for the design of palliatives to cushion this effect. The increase by the Tinubu government, in July last year, of the national minimum wage, was one such effort at cushioning the adverse effects (which Mr Onanuga so easily dismisses) on the economy from the government’s reforms.
… it is remarkable that Mr Onanuga’s modelling of the domestic economy cannot see any of the downsides of his government’s policies. But it is by far more dangerous for the economy’s outlook, if models such as his make up the counsel that the Tinubu government relies on in its decision making.
Wage increases present a different set of problems. In the absence of higher productivity or an increase in the supply of goods and services (none of which has happened here), they are nearly always supportive of a rise in general prices. What are we to make of the additional fact that a large proportion of the country’s workforce operates out of the informal sector? One answer is that they do not get paid the minimum wage because of this. So, whether Mr Onanuga likes it or not, the logic of his government’s reforms and the structure of the domestic economy mean that our people continue to hurt.
What is more, additional reforms will need to be put in place to embed the price discovery gains made earlier by the administration. Less bureaucracy, more market-led outcomes, and a more ethical regulatory environment focussed on consumer welfare – all these describe the outlines of the much-needed changes to the economy’s supply-side that the Tinubu administration is yet to embark on.
This is why it matters that the IMF (another body of economists with a penchant for model-based country analysis) also believes (and our domestic number crunchers concur) that “conditions for many Nigerians remain difficult”. Writing in its most recent report on the economy, the fund argues that “Poverty reached 63 percent (national poverty line), and 27 million Nigerians are estimated to have faced food insecurity in the fall of 2025”. In light of all this, it is remarkable that Mr Onanuga’s modelling of the domestic economy cannot see any of the downsides of his government’s policies. But it is by far more dangerous for the economy’s outlook, if models such as his make up the counsel that the Tinubu government relies on in its decision making.
Uddin Ifeanyi, a journalist manqué and retired civil servant, can be reached @IfeanyiUddin.
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