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The Presidency has reacted to a report published in the New York Times criticising the Nigerian economy as facing the worst trajectory in a generation.
Special Adviser to the President on Information and Strategy, Bayo Onanuga, responded on Sunday to the report by Ruth Maclean and Ismail Auwal.
According to the Presidency, the feature story, titled ‘Nigeria Confronts Its Worst Economic Crisis in a Generation’ and published on June 11, reflected the typical predetermined, reductionist, derogatory, and denigrating way foreign media establishments have reported on African countries for decades.
Onanuga stated that due to the ‘misleading’ slant of the report, the government needed to clear up some misconceptions conveyed by the reporters regarding the economic policies of President Bola Tinubu’s administration, which took office at the end of May 2023.
He noted that the report painted a dire picture of some Nigerians’ experiences amid the inflationary spiral of the last year and unfairly blamed it all on the new administration’s policies.
He argued that the report, based on several interviews, is at best jaundiced, portraying all gloom and doom without mentioning the positive aspects of the economy or the amelioration policies being implemented by the central and state governments.
Onanuga emphasized that Tinubu did not create the economic problems Nigeria faces today but inherited them.
“As a respected economist in our country once put it, Tinubu inherited a dead economy.
“The economy was bleeding and needed quick surgery to avoid being plunged into the abyss, as happened in Zimbabwe and Venezuela,” he noted.
He explained that this context led to the policy direction taken by the government in May/June 2023, including the abrogation of the fuel subsidy regime and the unification of the multiple exchange rates.
Onanuga highlighted that Nigeria had maintained a fuel subsidy regime for decades, which consumed $84.39 billion between 2005 and 2022 from the public treasury, in a country with significant infrastructural deficits and a high need for better social services.
He also alleged that the state oil firm, NNPCL, had accumulated trillions of Naira in debts due to unsustainable subsidy payments.
He noted that when Tinubu took office, no provision was made for fuel subsidy payments in the national budget beyond June 2023.
“The budget itself had a striking feature: it planned to spend 97 per cent of revenue servicing debt, with little left for recurrent or capital expenditure. The previous government had resorted to massive borrowing to cover such costs.”
Onanuga further explained that like oil, the exchange rate was also subsidized by the government, with an estimated $1.5 billion spent monthly by the CBN to defend the currency against the unquenchable demand for the dollar.
“This low rate led to arbitrage and failures to fulfil remittance obligations to airlines and other foreign businesses, drying up foreign direct investment and investments in the oil sector.
“To address these issues, Tinubu rolled back the subsidy regime and floated the naira on his first day”, Onanuga said.
Despite initial challenges, Onanuga noted that some stability is being restored, with the exchange rate now below N1500 to the dollar and prospects for further appreciation.
He cited a trade surplus of N6.52 trillion in Q1, as opposed to a deficit of N1.4 trillion in Q4 of 2023, and renewed interest from portfolio investors as indicators of improving economic confidence. Loans from the World Bank, AfDB, and Afreximbank are also contributing to Nigeria’s renewed bankability.
Onanuga highlighted efforts to control inflation, especially food inflation, through increased agricultural production and state-led initiatives to sell food at lower prices.
“The Tinubu administration has invested heavily in dry-season farming and provided incentives to farmers.”
The New York Tmes Article is reproduced below for our readers
Nigeria is facing its worst economic crisis in decades, with skyrocketing inflation, a national currency in free-fall and millions of people struggling to buy food. Only two years ago Africa’s biggest economy, Nigeria is projected to drop to fourth place this year.
The pain is widespread. Unions strike to protest salaries of around $20 a month. People die in stampedes, desperate for free sacks of rice. Hospitals are overrun with women wracked by spasms from calcium deficiencies.
The crisis is largely believed to be rooted in two major changes implemented by a president elected 15 months ago: the partial removal of fuel subsidies and the floating of the currency, which together have caused major price rises.
A nation of entrepreneurs, Nigeria’s more than 200 million citizens are skilled at managing in tough circumstances, without the services states usually provide.
They generate their own electricity and source their own water. They take up arms and defend their communities when the armed forces cannot. They negotiate with kidnappers when family members are abducted.
But right now, their resourcefulness is being stretched to the limit.
No Money for Milk
On a recent morning in a corner of the biggest emergency room in northern Nigeria, three women were convulsing in painful spasms, unable to speak.
Each year, the E.R. at Murtala Muhammed Specialist Hospital in Kano, Nigeria’s second-largest city, received one or two cases of hypocalcemia caused by malnutrition, said Salisu Garba, a kindly health worker who hurried from bed to bed, ward to ward.
Now, with many unable to afford food, the hospital sees multiple cases every day.
Mr. Garba was sizing up the women’s husbands. Which source of nutrition he recommended depended on what he thought they could afford. Baobab leaves or tiger nuts for the poor; boiled-up bones for the slightly better off. He laughed at the suggestion that anyone could afford milk.
More than 87 million people in Nigeria, Africa’s most populous country, live below the poverty line — the world’s second-largest poor population after India, a country seven times its size. And punishing inflation means poverty rates are expected to rise still further this year and next, according to the World Bank.
Last week, unions shut down hospitals, courts, schools, airports and even the country’s Parliament, striking in an attempt to force the government to increase the monthly salary of $20 it pays its lowest workers.
But over 92 percent of working-age Nigerians are in the informal sector, where there are no wages, and no unions to fight for them.
For the Afolabi family in Ibadan, in southwestern Nigeria, the descent into poverty started in January with the loss of an electric tuk-tuk taxi.
Forced to sell the taxi to pay his wife’s hospital bills after the difficult birth of their second child, Babatunde Afolabi turned to occasional construction work. It paid badly, but the family managed.
“We had no thoughts about starvation,” he said.
But then, he said, cassava — the cheapest staple in many parts of Nigeria — tripled in price. All they can afford now, he said, is a few biscuits, a little bread, and for their 6-year-old, 20 peanuts a day.
A Country Built on Gas
Nigeria is a country heavily dependent on imported petroleum products, despite being a major oil producer. After years of underinvestment and mismanagement, its state refineries produce hardly any gasoline.
For decades, the national soundtrack has been the hum of small generators, fired up during daily power outages. Petroleum products move goods and people around the country.
Until recently, the government subsidized that petroleum, to the tune of billions of dollars a year.
Many Nigerians said the subsidy was the only useful contribution from a neglectful and predatory government. Successive presidents have pledged to remove the subsidy, which drains a hefty chunk of government revenue — and later backtracked fearing mass unrest.
Bola Tinubu, who was elected Nigeria’s president last year, initially followed through.
“It was a necessary action for my country not to go bankrupt,” Mr. Tinubu said in April, at a meeting of the World Economic Forum in Saudi Arabia.
Instead, many Nigerians are going bankrupt — or working multiple jobs to stay afloat.
Mr. Garba, the hospital worker, used to be solidly middle class, even though 17 family members, including 12 children, depended on him.
After shifts at the hospital, where he is setting up the first statewide ambulance service
in addition to working in the emergency room, for which he is paid $150 a month, he heads to the Red Cross. There he occasionally receives a $3.30 volunteer stipend for helping tackle a severe diphtheria outbreak.
At night, he works at the pharmacy that he and a colleague set up. But few people have money for medicine anymore. He sells about $7 worth of medication per day.
Last year, Mr. Garba sold his car when the gas subsidies were removed, and now takes a tuk-tuk to work. Unable to power the generator, he reads medicine labels at the pharmacy by the light of a small solar lantern. He can only afford to buy rice and cassava in small quantities.
Life under the previous government was very expensive, he said, but nothing like today.
“It’s very, very bad,” he said.
It’s gotten so dire that there have been several deadly stampedes for free or discounted rice distributed by the government — including one in March at a university in the central state of Nasarawa where seven students were killed.
Mr. Tinubu promised to create a million jobs and quadruple the size of the economy within a decade, but has not said how. The International Monetary Fund said last month the state has started subsidizing fuel and electricity again — though the government has not acknowledged this.
“There’s still very little clarity — if any — on where the economy is headed, what the priorities are,” said Zainab Usman, a political economist and director of the Africa Program at the Carnegie Endowment for International Peace.
The Tapping Craze
A spate of new crypto-mining games that promise to generate income the more the user plays has people across Nigeria spending all day tapping on their smartphone screens, desperate to earn a few dollars.
People tap as they pray, in mosques and churches. Children tap under desks at school. Mourners tap at funerals.
There’s no guarantee any of them will ever benefit from the hours they put in mindlessly tapping. Then again, they can’t count on the national currency, the naira.
The government has twice devalued the naira in the past year, trying to enable it to float more freely and attract foreign investment. The upshot: It’s lost nearly 70 percent of its value against the dollar.
Nigeria cannot produce enough food for its growing population; food imports rise 11 percent annually. The currency devaluation caused those imports — already expensive because of high tariffs — to explode in price.
Nigerians can become paupers almost overnight. So they’re searching for anything that might hold its value — or ideally, get them rich.
“People are looking for me everywhere,” said Rabiu Biyora, the undisputed king of tapping in Kano, opening one of his five foldable phones to add to his 2.7 billion taps on the TapSwap app. “Not to attack me, but to collect something from me.”
A relaxed, businesslike 39-year-old followed everywhere by young tech-savvy acolytes, Mr. Biyora would only say that he made “over $10,000” from the previous tapping craze.
With the proceeds from his tapping, Rabiu Biyora is opening an office in Kano to promote and educate people on cryptocurrencies. Nigeria already has the world’s second highest cryptocurrency adoption rate.
He profits from everyone else’s taps, so he encourages them in posts on social media, and by providing free internet to anyone willing to sit outside his house. Nigerians don’t need much encouragement — despite the risks and volatility, Nigeria has the second highest cryptocurrency adoption rate in the world.
So every evening, struggling young men gather by Mr. Biyora’s home and tap.
Pleas for Help
In much of Nigeria, it’s normal to share with your neighbors and give alms to the poor.
Every day, people come to the gate of Kano’s Freedom Radio station to drop off sheets of paper containing heartfelt appeals for help paying medical bills or school fees, or to recover from some disaster.
A radio presenter chooses three to read out daily, and often a sympathetic listener calls in to pay the supplicant’s bill. But lately the appeals have multiplied, and offers of help have dried up.
Good Samaritans used to come to the E.R. and pay strangers’ bills for them, Mr. Garba said. That rarely happens now either.
Still, Mr. Garba said, the number of patients coming to his hospital has almost halved in recent months. Many of the sick never even make it. They can’t afford the 20-cent bus ride.
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