Economic policy rejig, Afenifere says FG

Pan-Nigerian social welfare group Afenifere has urged the Nigerian government to rethink its economic policies, citing high inflation and increased poverty as the main concerns affecting citizens.

In a statement on Tuesday signed by Afenifere’s publicity secretary, Prince Justice Faloye, the group warned that unless the federal government changes its current economic policies in the first year of the scorecard review, persistent economic turmoil may persist.

He claimed that this would lead to further impoverishment of citizens in the coming years.

The group advised President Bola Tinubu’s administration to pay attention to the longings of the masses and alleviate their plight.

It said the economy experienced severe turmoil during Tinubu’s one-year administration.

Afenifere called for a better understanding of the economy to stop the alarming rate of inflation, devaluation, rising unemployment, homelessness and poverty.

“First, it is illogical for economics to believe that withdrawing subsidies and increasing taxes that remove money from the economy will stimulate economic growth. Therefore, there must be an end to the fallacious neoliberal theories of subsidy removal and unbridled tax increases, as they always shrink the economy. Ours is no exception, as businesses fail and leave as fuel and electricity prices soar, fueling runaway inflation and falling real incomes.

“In an obvious over-reliance on unilateral monetary policy, the current government is increasing interest rates, with the monetary policy rate now at 26.25% from 18.5% a year earlier. The Central Bank of Nigeria has also raised its cash reserve ratio to 45 percent from 32.5 percent a year ago,” it said.

Recall that President Bola Tinubu announced the abolition of petrol subsidies in his inauguration speech on May 29, 2023.

Meanwhile, on June 14, 2023, the Central Bank of Nigeria announced the unification of all segments of the foreign exchange market, causing the local currency to depreciate from N463.38/$ on June 9 to N632.77/$ on the official forex market. market.

On May 27, the naira further weakened to N1,482.63.

Afenifere stressed that these policies displace productive sectors of the economy from much-needed loans.

According to this group, interest rate increases do not effectively curb inflation for two reasons: Any borrowing withheld from the private sector by restrictive policies goes to the government, which spends recklessly and pumps the same funds back into the markets.

It stated: “Energy costs are crucial to the modern economy because energy is an essential component of almost every human activity, which is why most countries subsidize them, while questioning the need to eliminate fuel subsidies when, according to the International Monetary Fund, the world average of fuel subsidies for Gross production is 7.1%, compared to ours, which is about two percent.

The group noted that the ratio of total subsidies to government spending for more than 200 million people is about 25 percent, which is half the cost of 50 percent government that benefits just one percent of the population.

“Previous governments did not prioritize local refineries to produce gasoline and gas for thermal power plants. The national electricity plan was initially intended to subsidize private investors and then raise prices to stimulate investment. However, without significant new investment, the government raised electricity costs using existing resources. This has resulted in high energy costs, hampering productivity and job creation.

“The policy of maintaining the naira exchange rate without mitigating the excesses of free market speculators and hoarders and a nation addicted to capital flight is questionable economic logic. Since 90 percent of our currency comes from oil and gas, stopping government funding of the forex market has certainly led to massive devaluation, as we have witnessed.

“Our collective legacy is not only to finance the excessive costs of governance by the political class, but also to stimulate the economy and the abundance of life for as many citizens as possible. This is the standard of Afenifere management,” he said.

Meanwhile, Afenifere also stressed the need for a stable foreign exchange market to maintain domestic prices, enhance investor confidence and attract both local and foreign investments. He criticized costly efforts to attract foreign direct investors, noting that existing investors had stagnated or withdrawn due to unfriendly investment conditions.

Afenifere urged the government to prioritize accurate accounting of oil and mineral extraction and strengthen national security to protect economic facilities, proposing a shift in focus from elite protection to the implementation of multi-level policing as a national priority.

“Unfortunately, it appears that President Tinubu is still gripped by the mindset of taxing the poor to pass it on to the privileged, especially cronies. We are inundated with all kinds of crazy tax schemes, such as communications and cybersecurity taxes,” it noted.

The group explained that focusing solely on raising the tax-to-GDP ratio from 6.7 percent. up to 18 percent is tantamount to the transfer of resources from the less well-off to the well-off.

“The informal sector, which provides most of our employment and income, lacks significant social support from the government. This means that increased tax revenues are likely to disproportionately benefit wealthy people such as civil servants and politicians, rather than meeting the needs of wider society.

“The administration’s economic strategy lacks foresight and favors costly projects over beneficial investments. For example, the choice of the Lagos-Calabar Coastal Highway over the rail system reveals misplaced priorities. “It’s disturbing to spend $20 trillion on a freeway for buddies instead of solving homelessness or investing in productive infrastructure,” he said.

According to Afenifere, to improve revenues and promote development, the country needs transparency in the management of oil revenues and the government should focus on building railway lines such as Lagos-Calabar, Ilorin-Yola and Sokoto-Maiduguri, adding that these projects offer high returns , create better-paid jobs and reduce dependence on the informal sector.

“At the end of Tinubu’s first year in office, the question arises as to whether our continued stunted economic development is due to corruption or incompetence. From lack of oil extraction and refining to unjustified borrowing and excessive management costs, people are suffering the tragic consequences. This economic license for monkeys and baboons to work must be stopped before the socio-political fabric of Nigeria is damaged beyond repair,” Afenifere said.