Economic Policies of the New Government and Social Implications -By Daniel Udeze Jr.

On May 29, President Bola Ahmed Tinubu was sworn in as the 16th President of the Federal Republic of Nigeria. President Tinubu assumed office in the midst of a divided nation, a struggling economy, and escalating insecurity.

Here are the key economic policies and their implications for everyday Nigerians:

Targeting higher GDP growth and significant reduction in unemployment.
Implication:

Nigeria has experienced a mix of growth and contraction in the past five years: 2019 (2.1%), 2020 (-1.79%), 2021 (3.65%), 2022 (3.25%), and 2023 Q2 (2.21%). A higher GDP would mean increased economic activity, potentially leading to improved living standards, job creation, infrastructure development, investment opportunities, and increased government revenue for public services. However, GDP alone should be considered alongside other indicators to assess overall well-being.

Reviewing complaints about multiple taxations and anti-investment inhibitions.
Implication:

According to the NBS Nigeria Capital Importation Report, Nigeria’s Foreign Portfolio Investment (FPI) fell by 60% between 2018 and 2022, while Foreign Direct Investment (FDI) declined by 80% during the same period. Implementing this policy would attract domestic and foreign investors, stimulate business establishment, promote competition, and foster economic stability, leading to better livelihoods and growth opportunities.

Repatriation of profits and dividends through an improved FX market framework.
Implication:

This policy can attract foreign investors, increase capital inflows, strengthen the economy, enhance foreign reserves, and potentially lead to economic growth and development.

Mandating the central bank to implement a unified exchange rate.
Implication:

There will no longer be separate parallel (black market) and official market exchange rates. A single rate will govern trade and other engagements. This may lead to more stable and predictable exchange rates, benefiting individuals and businesses involved in international trade and those reliant on imported goods. Directing funds towards meaningful investments in the real economy could stimulate growth, job opportunities, and improved living standards.

Making electricity more accessible and affordable for businesses and homes.
Implication:

Accessible and affordable electricity is vital for business growth. It enables cost reduction, enhanced productivity, and improved competitiveness in both domestic and international markets.

Instituting budgetary reform to stimulate the economy without engendering inflation.
Implication:

Through prudent management of government spending, reduction of wastage, and focus on productive investments, this policy aims to achieve balanced economic growth while mitigating inflationary pressures.

Removal of the fuel subsidy with provisions terminated in

According to Dataphyte, Nigeria spent $13.7 trillion on fuel subsidies between 2005 and 2020. The removal of this subsidy will free up government finances, which can be redirected towards infrastructure, healthcare, education, and social welfare programmes. It can encourage competition, attract private investments in the petroleum sector, and potentially improve supply chain and distribution networks.

In conclusion, the successful implementation of these policies is crucial to observe the direction they will take and their impact on the Nigerian economy. It requires a concerted effort from the government, relevant institutions, and stakeholders to ensure effective execution, monitoring, and evaluation of these policies