- Say Bretton Woods’ policies killing country’s economy
- ‘End borrowing spree, focus on cutting waste’
- How Nigerians struggle to make ends meet amid economic crisis
Some finance and economic experts have faulted the ‘short term’ hardship narrative the Bretton Woods institutions are deploying to describe the harrowing experiences Nigerians are going through.
With the pump price of petrol hitting N1, 200 per litre, naira exchanging for N1, 600 to a dollar, food inflation at about 40 per cent, transport fare spiking to the level that has pushed some Nigerians to quit their jobs even as many are facing existential threat, the endorsement of the hardships by the World Bank and the International Monetary Fund has been attracting backlashes.
Speaking on the development, the Senior Partner and Chief Economist at SPM Professionals, Paul Alaje said that the World Bank and IMF policies have failed Nigeria.
He said the devaluation of the currency at a time when the Federal Government removed subsidy on petrol was the root cause of the current economic challenges being faced in the country.
He said, “First of all, let me highlight the policy option we took and what we should have done. So, policy option number one that we have done is that we removed fuel subsidy. Fuel subsidy should not have been removed when you are floating your currency. If you remove the subsidy, your currency should be either fixed or managed to float.
“So, what we should do first is to go back and peg the currency. If you peg your currency today to N1000, some of the things that are expensive within six and nine months, the prices will come down. We are importing everything. If you want to buy your phone today, check how much it will be. The exchange rate is a problem because we are not producing what we are consuming.
“Do you know that immediately after the Second World War, Germany floated her currency? That brought untold hardship to the same Germany that we know today. Until Germany took two steps where it first pegged their currency against the dollar, there was stability. Because actually everything you are importing in dollars. So, if you are importing against the dollar and allow it to flow as you are importing, is that not suicide? Is that not deliberately eating rat poison? But those who advise us, we are not the first they have advised.
“How do you advise a country that is bleeding to increase power tariffs? And you want production to happen when the price of petrol is increasing due to subsidy removal, and you still want production to grow?”
“They advised Taiwan that all of the countries followed them between 1980 and 1990. Because the policy kept failing, they left them alone. They advised Japan, in the 60s to 70s, and Japan also abandoned their policies and followed their mind.
“Let me give you a classical example. Vladimir Putin did the direct opposite of the austerity programme. Remember, this was done in Nigeria before in 1986 under the Structural Adjustment Program (SAP), which was an austerity programme. Vladimir Putin saw Russia became so poor that the factory could no longer pay their workers. They were giving people tissue papers as salaries to go and sell in the black market. In this same world, there was a global crisis between the 80s and 90s, and the agency of the world that was advising people was the International Monetary Fund (IMF).”
When asked if the government should stop following the advice from the IMF and World Bank, Alaje said the time has come for Nigeria to stop borrowing from foreign sources.
He said, “How do you advise a country that is bleeding to increase power tariffs? And you want production to happen when the price of petrol is increasing due to subsidy removal, and you still want production to grow?
“Productivity is what can bring you out of the mess. If we must take painful decisions, the decisions must be sensible, not painful and senseless decisions. If we continue like this, it can only get worse.
“So, we need to stop borrowing from the IMF in foreign currency. Before Buhari left office, the Minister of Finance said we spent over 90 per cent of our revenue to service debt. We devalued, we stopped subsidies, so that freed up government revenue. The amount we are using to service debt reduced about 40 or 50 per cent of revenue.
“It’s back to 64 per cent and do I think it will go up? Yes. Do you know why? It is penny-wise pounds foolish. Why do you devalue your currency, all the money you owe in that currency will also be devalued. So, you need more of your Naira to service the loan. Imagine when you are not paying back.”
Also speaking, a developmental economist, Bukar Mohammed, said the recent request for foreign borrowing of $2.2bn by President Bola Tinubu has reignited concerns about Nigeria’s unsustainable debt trajectory.
He said at a time when the economy is battling with high inflation, unemployment, and dwindling foreign reserves, concerns have mounted when this cycle of endless borrowing will end.
Asked about the better options left to make Nigeria better, he said, “This borrowing spree by the Nigerian government is a gamble the country can no longer afford. The administration must focus on cutting waste, combating corruption, and fostering economic growth through innovation and investment, rather than mortgaging the nation’s future.
“The National Assembly must shed its ‘rubber stamp’ image and prioritize the interests of Nigerians. As the country teeters on the brink of economic collapse, leadership must take bold, transparent steps to restore trust and build a sustainable future—or face the wrath of an angry and determined youth population.”
A human rights activist and national president, Arewa Youth Consultative Forum, Yerima Shettima, said Nigerians are experiencing so much hardship at the moment.
“Really, it’s a bad experience and we are all in it together. Sometimes, I imagine what is happening, it has never been this bad. I look forward to seeing the government coming up with policies that will favour the people, not anti-people policies.
“I still think that some of the policies of the government are hard and harsh on the people and the government must have a second look at some of their policies. I still want to give the government more benefit of the doubt in terms of performance and time delivery, but if after more time nothing changes, then Nigerians will not have a choice, but to move to the streets en masse.
“It is only then that we can declare that the government is not serious. The truth that must be told which we also know is that the eight years of President Muhammadu Buhari was a disaster, and nobody should expect an immediate magic in things turning around. President Buhari’s regime wrecked the economy, left hopelessness on the state of insecurity and in almost every other sector there was nothing much left to be desired.
“You may say, it was still an APC government under President Buhari, but Tinubu was not in-charge. All we need to do is to continue to plead with the President Tinubu administration to have another critical look at some of its reform models and see what they can adjust in terms of strategy and method. The truth is that any reform that you are implementing should be seen to have a positive result and effect on Nigerians. If it is otherwise, then something is wrong. I am not giving excuses for the government for not doing much, yet as expected by Nigerians, but I am saying that with what was handed down to this government by the last administration, it will not be an easy task to overcome the past mess within a year plus.
“The government needs to do more because expectations are high. If things continue this way, I mean, this hardship for a longer time and the government continues this way, then Nigerians will not have another choice, but to declare it a failure. But given what they inherited, the disaster of the Buhari tenure, it’s politically proper to still have the faith that things will get better, unless they prove me wrong.”
Considering the high cost of living, coupled with the worsening insecurity, Moving Minds, a humanitarian organisation, revealed that many rural dwellers are moving to urban areas, especially in the North East and North Central states of Nigeria.
According to the organisation, in the past, the rate of rural-urban migration has been more in the South East and South West regions, but the north is taking over because people are relocating to safe areas and are also looking for opportunities to sustain a living too after losing loved ones, properties and means of livelihood to terrorist attacks.
According to Mathew Alabi, an Economist and university don, rural dwellers are the most impacted in the current economic challenges in the country.
“I am from there and I feel their pain. They face unique challenges from limited job opportunities to poor infrastructure and limited access to social services. These are also in addition to the higher costs they have to pay for goods and services.
They buy fuel higher, grocery higher, even recharge card higher. I paid N320 for N10,000 for POS in my village Ushi, in Ekiti State, in August. Imagine how the rest of the rural dwellers survive. It is harsher out there,” Alabi decried.
A middle-aged mother of two based in Anambra State, Chiamaka lamented that her family has been struggling to earn a living, since relocating from Port Harcourt.
“We are in the village now, but things were not as hard as they are now. It is really tough here, even tougher than in the cities,” she lamented.
She also regretted that the farms where rural dwellers usually engage for food and sustenance are depleting in size due to growing housing needs.
Again, she argued that people in the urban areas seem to enjoy some level of price stability compared to rural dwellers.
“Before I relocated from Port Harcourt to the village, we were buying a bottle of palm oil for N1, 200. But when I got to the village, I realised that it was about N1, 500.
“Now, it goes for over N2, 000. A paint of garri in Port Harcourt is about N2, 800 and about N3,000 in my village, which shouldn’t be,” she said.
Victoria, a mother of four, who recently relocated from Lagos to her village in Imo State, in anticipation of her husband’s retirement in 2019, narrated that life has not been the same since returning to the village.
“It has been a big struggle to eat and meet other basic needs here in the village. Unlike before, the village is no longer a safe haven for those who cannot afford life in the cities. Please stay back,” she admonished.
But as the economic hardship bites hard, many rural dwellers have resolved to fate.
“Where do we run to? Nowhere. We keep on surviving now. At least you see old women going to farms to fetch firewood and sell for survival. People manage whatever they harvest from the farms and vegetables from their gardens,” she concluded.
Igwe Nzekwe, chairman, Delta State Forum of Kingdoms and Clans/Communities President-Generals, said life is harsher for many rural dwellers due to the dwindling opportunities they have.
According to him, subsistence farming is not helping again as food merchants from the cities buy up farm produce from local farmers at higher rates, leaving the community with little to feed on.
Improving infrastructure, opening accessible roads, offering farmers grants and inputs, establishing discounted stores, siting industries closer to them, are among suggestions by Nzekwe to alleviate the sufferings of rural dwellers in face of the economic hardship.
Experts have observed that fuel, food and utilities are more expensive in rural areas due to higher transportation costs.
“The administration must focus on cutting waste, combating corruption, and fostering economic growth through innovation and investment, rather than mortgaging the nation’s future.”
There are also scarce employment options and low wages, as many businesses are not willing to open shops in some of these rural communities because of the low purchasing power of the dwellers.
Also, inadequate transportation, healthcare, and education have forced many of the rural dwellers to seek healthcare, childcare, and social support from the city centres that are usually hard-to-reach and faraway.
While rural communities struggle to access basic needs with limited resources, schools and other facilities that should have supported their livelihood are underfunded by the government.
According to the World Bank, about 25 percent of rural households live below the poverty line while about 40 percent of rural residents lack access to healthcare based on the WHO data.
Similarly, the International Labour Organisation data shows that about 60 percent of rural youth migrate to urban areas for better opportunities.
According to analysts, the cost-of-living crisis has disproportionately affected rural dwellers, exacerbating existing challenges.
While it is certain that urgent action is needed from the government to address the harsh realities faced by rural communities; analysts have also urged Nigerians to be more proactive and innovative to cope with the current realities.
They also urged the government both at the federal and state level to create and invest more in initiatives aimed at alleviating the current crisis.
It is believed that targeted support for low-income families through subsidies and assistance will go a long way in alleviating challenges faced by these classes of Nigerians.
Similarly, advocacy and policy reforms seen at pushing for rural-friendly policies coupled with more investment in infrastructure and job creation are considered as some of the critical measures to be taken by the government.
With the persistent cost-of-living crisis, these rural dwellers, who have many untold stories, have resigned to their fate as the government, especially local governments, which is the closest to them, do little or nothing to alleviate their plight.
A former Chief of Staff to former President Muhammadu Buhari and Nigeria’s former Permanent Representative to the United Nations, Prof. Ibrahim Agboola Gambari, declared last week that years of economic prescriptions from the International Monetary Fund and the World Bank have failed to transform Nigeria’s economy for the better.
Gambari stated that if the economic policies of the IMF and World Bank had been effective, Nigerians would be living more prosperously today.
He said, “Frankly speaking, all the prescriptions of the IMF and the World Bank over the years, where has it gotten us? Now that I’m no longer part of the government, I can speak more freely.
“It’s time we define our problems and design ways to solve them. If the IMF and World Bank’s prescriptions had been correct, we should be living happily today—but we are not. To make matters worse, the world itself is changing, and the international community is evolving; global relationships and norms are shifting.”
President Bola Tinubu had also acknowledged that his administration’s reforms had weakened the purchasing power of many Nigerians.