Rejig economic policies, Afenifere tells FG

Rejig economic policies, Afenifere tells FG

29th May 2024

By

Henry Falaiye

The pan-Nigerian social welfarists group, Afenifere, has urged Nigeria’s government to rethink its economic policies, citing high inflation and increased poverty as major concerns affecting citizens.

In a release on Tuesday signed by Afenifere’s Publicity Secretary, Prince Justice Faloye, the group warned that if the Federal Government does not change its current economic policies during the first year of its scorecard review, the ongoing economic turbulence may persist.

It claimed it would further impoverish the citizens in the following years.

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

It stated that the economy had experienced severe turbulence in the one-year administration of Tinubu.

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

“Firstly, it is an illogical economic belief that the subsidy removals and tax increases that remove money from the economy will stimulate economic growth. Therefore, the adoption of flawed neo-liberal theories of subsidy removal and unbridled tax increases must be stopped since they always contract the economy. Ours is no exception as companies are folding up and leaving due to fuel and electricity costs skyrocketing, fuelling galloping inflation and fall of real incomes.

“In apparent over-reliance on a one-sided monetary policy, this current government has been hiking interest rates with the Monetary Policy Rate standing currently at 26.25 per cent from 18.5 per cent a year earlier. The Central Bank of Nigeria also raised the Cash Reserve Ratio to 45 per cent from its 32.5 per cent position a year ago,” it said.

Recall that President Bola Tinubu announced the removal of subsidy on petrol in his speech at his inauguration on May 29, 2023.

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

The naira has further weakened to N1,482.63 on May 27.

Afenifere emphasised that those policies were crowding out the productive sectors of the economy from much-needed loans.

According to the group, hikes in interest rates are not effective in curbing inflation for the twin reasons that whatever loans are withheld from the private sector by the restrictive policies are flowing to the government, which is spending recklessly and pumping the same funds right back into the markets.

Stop economic mismanagement, Afenifere tells FG

It stated, “Energy costs are crucial to the modern economy since energy is an essential ingredient for almost all human activities, so (they) are subsidised by most nations, while querying the need to remove fuel subsidies when, according to the International Monetary Fund, the global average for fuel subsidies to the Gross Domestic Production is 7.1 per cent, compared to ours, that was about two per cent.”

The group noted that the ratio of all subsidies to government expenditure for over 200 million people was about 25 per cent, which was half the cost of governance of 50 per cent enjoyed by just one per cent of the population.

“Past governments failed to prioritise local refineries for petrol and gas production for thermal plants. The national electricity plan intended to subsidise private investors initially and then raise prices to recover investments. However, without significant new investments, the government increased electricity costs, profiting from existing resources. This imposed high energy costs, hindering productivity and job creation.

“The policy of floating the naira without moderating the excesses of the free-market speculators and hoarders, and a nation addicted to capital flight, is questionable economic logic. With 90 per cent of our foreign exchange derived from oil and gas, stopping government funding of the forex market was bound to lead to massive devaluation as witnessed.

“Our collective patrimony is not only meant to fund the political class’s excessive cost of governance but to stimulate the economy and abundance of life to the greatest number of citizens. This is the Afenifere standard of governance,” it stated.

Meanwhile, Afenifere also stressed the need for a stable foreign exchange market to steady domestic prices, enhance investor confidence, and attract both local and foreign investments. It criticised expensive efforts to lure direct foreign investors, noting that existing investors were stagnant or withdrawing due to unfriendly investment conditions.

Afenifere urged the government to prioritise accurate accounting of oil and mineral extraction and strengthen national security to protect economic sites, proposing shifting focus from elite protection to implementing multi-tiered policing as a national priority.

“Unfortunately, it appears that President Tinubu is still possessed by this mindset of taxing the poor to transfer to the privileged, especially cronies. We are being inundated with all sorts of hare-brained tax schemes like communication, and cyber security taxes,” it noted.

The group explained that concentrating solely on elevating the tax-to-GDP ratio from 6.7 per cent to 18 per cent is akin to transferring resources from the less affluent to the affluent.

“The informal sector, which constitutes most of our employment and income, lacks substantial government social support. This means that the increased tax revenue is likely to disproportionately benefit the wealthy, such as civil servants and politicians, instead of addressing the needs of the broader population.

“The administration’s economic strategy lacks foresight and prioritises costly projects over beneficial investments. For instance, choosing the Lagos-Calabar Coastal Highway over the railway system reveals misplaced priorities. Allocating N20 trillion to cronies for the highway instead of addressing homelessness or investing in productive infrastructure is concerning,” it stated.

According to Afenifere, to improve revenue and promote development, the country needs transparency in oil revenue management and the government should focus on building railways like Lagos-Calabar, Ilorin-Yola, and Sokoto-Maiduguri, adding that those projects offer high returns, create better-paying jobs, and reduce reliance on the informal sector.

“At the end of the first year of Tinubu’s administration, the question is whether our continued arrested economic development is due to corruption or incompetence. From failure to mine and refine crude oil to unjustified loans, and excessive cost of governance, it is the people that are made to suffer the tragic consequences. This economic dispensation of Monkey dey work, baboon dey chop must be halted before the sociopolitical fabric of Nigeria is destroyed beyond repair,” Afenifere stated.

https://punchng.com/rejig-economic-policies-afenifere-tells-fg/