I think that rather than sit down and pin the situation down to the usual “need to diversify the economy,” or the “we have secured $20 billion in investments” claim, the administration needs to take practical steps to deal with Nigerians as fellow citizens, rather than laboratory tools being used for scientific experiments in the hands of IMF/World Bank.
By Taiwo Adisa
Last week, the Manufacturers Association of Nigeria (MAN) reeled out some statistics that painted a very gloomy economic scenario of the nation since President Bola Tinubu took over. The most scary aspect of that picture was the claim that more than 300 companies have shut down, while some 380,000 jobs have been lost in the last two months.
Senator Ahmed Abdukadir, who spoke in Abuja during an investigative hearing by the National Assembly, said that the hike in electricity tariff has been chiefly responsible, as he lamented that one of the companies that employed 360,000 workers has been forced to drastically cut the workforce to 5,000. Power alone is responsible for at least 40 per cent of companies’ overheads, he said.
Also, on the dot of the Tinubu administration’s first anniversary, the International Centre for Investigative Reporting (ICRC) undertook a series of x-raying service delivery under the administration. In one of the series, it listed companies that have divested from Nigeria in the last one year, mentioning multinationals in different sectors of the economy. Some of the names include Procter and Gamble, Kimberlerly-Clark; Microsoft; Sanofi; Equinor GlaxoSmithKline; Bolt food, and Jumia Food among others. The decision of Guinness to divest from Nigeria last week was another bad hit for the economy.
Though, some might want to explain away the enormity of the disaster to a rise in local capacity, the fact that the country is losing big partners who have operated in our economy for decades should tell anyone that similar companies would think twice before venturing into the Nigerian market.
Whether there is a rise in local capacity or not, the loss of a long-standing multinational partner should send cold shivers down the spines of planners of an economy such as ours. Particularly because it is one economy whose operators are forever in search of Foreign Direct Investment (FDI). If the oil majors are divesting from your economy, the big service providers are doing the same as well as the global manufacturers, how are you going to convince anyone out there that your economy is receptive to foreign investment?
Incidentally, two main policies of the Tinubu government have been adduced as the immediate trigger of the exit by these companies. One is the exchange rate policy, and the second is the rise in electricity tariff.
Not a few have expressed surprise that the ship of the nation’s economy is hitting the rock right under the nose of the Lagos men. The haemorrhage is perhaps unprecedented, except compared to the situation of the country under the pariah status when General Sani Abacha ran his dictatorship. Lagos is the economic capital of the country, even as Abuja remains its political capital. on the streets, they say Eko o Gba gbere. An alternative lingo would be Warri no dey carry last. Lagos is known for its fast pace. The whole of Nigeria has always prided Lagos as suave in business, and the least they expect is that the Lagos character would permeate the system when the nation comes under the leadership of Lagos “boys.”
It all points to one thing. Nigerian leaders must remain circumspect while imbibing advice from Western economic managers. One of the key items of debate among economists in the wee days of President Muhammadu Buhari was the push by the IMF and the World Bank that Nigeria should float its currency. An euphemism for the devaluation of the Naira. The man in charge of the Central Bank of Nigeria at the time resisted the bid and was able to hand over the nation’s currency at an official rate of N460 to the US dollar. On assumption of office, President Tinubu acceded to the push by the Bretton Woods institutions by first removing subsidy on fuel, the main driver of the economy, floated the naira and then further removed subsidy on energy. The combined effect of the policies is the downward spiral fall of the nation’s currency and the strangulation of the individuals’ purchasing power due to the skyrocketing inflation.
The prices of products can no longer be guaranteed even within the same day. Big businesses that had completed their AGMs and notified their head offices of a particular amount they made as profits saw such profits wiped out within hours due to the gallivanting exchange rates.
No serious business can survive such undulating measures, and global businesses are used to much more serenity than what Nigeria is offering.
The combined effect of the IMF/World Bank-induced policies has not only pauperised Nigerians it is killing them softly. Take, for instance, the pharmaceutical sector. The multinationals that left us are only deepening the holes of economic and financial misery. First, we don’t have alternatives to the medications they produce, meaning that we have to import their products from wherever their headquarters are located. Secondly, we have thrown a number of our citizens who work in those companies into the already saturated unemployment market. Talk of double jeopardy. Drugs that used to sell for N5,000 are not going for between N25,000 and N30,000. Those that used to cost close to N20,000 before May last year are now in the region of N100,000 or more.
Above all, it is Lagos that loses. Most of the multinationals are either located in Lagos or Ogun State. The warehouses are fast turning into religious houses. More are turning to homes for the destitute. One company was said to have invested over $300 million to set up its factory in Agbara less than three years ago, and it had to announce its exit, leaving hundreds of factory hands and executives in limbo. As Lagos and Ogun States’ economy gets hit, Nigerians are suffocating unbearably.
I think that rather than sit down and pin the situation down to the usual “need to diversify the economy,” or the “we have secured $20 billion in investments” claim, the administration needs to take practical steps to deal with Nigerians as fellow citizens, rather than laboratory tools being used for scientific experiments in the hands of IMF/World Bank.
One thing I’ve seen is that these institutions will never come back to say sorry no matter how fatally flawed their experiments turned out to be.
In the days of General Ibrahim Babangida, the government was hoodwinked into believing that there was no alternative to the Structural Adjustment Programme (SAP). Any discussion aimed at finding alternatives or even discussing the possibility was disrupted and proponents were arrested. At the end of the long years of experimentation, there was no positive result from the laboratory. Still, Nigerians have died in their numbers owing to the negative effects of the SAP. I read somewhere last week that the World Bank was quoted as telling the CBN that rate hikes alone can’t tame inflation. However, the same policy was said to have been adopted on the advice of the global banker.
Rather than adopting the policies of the Bretton Woods institutions hook line and sinker, third-world countries would do themselves a huge favour by first juxtaposing the social-economic realities in their polity before swallowing poisonous doses.