By Michael Chibuzo
In the first part of this series, I introduced the raft of bold economic decisions taken by President Bola Ahmed Tinubu in the early days of his administration and how it signalled an ambitious attempt to re-engineer Nigeria’s economy away from unhealthy inefficiencies towards productivity-driven growth.
With the conclusion of a 3-day Cabinet Retreat where the President’s detailed vision and expectation across all sectors was unveiled to cabinet members, political appointees and to the federal bureaucracy, the pathway of Tinubunomics was effectively solidified. Clear deliverables were set out for each sector within specific time frames. I will visit some of these deliverables later. Crucially, a Delivery Unit was established to coordinate execution of policies and evaluate performance.
Like I pointed out before, at the heart of Tinubunomics is the quest to restructure Nigeria’s financial architecture. If we can get the finance question right, then we can open the floodgates of infrastructural development, which has been Nigeria’s most daunting challenge for decades. Today, we have a clear message from the President that monetary policies and fiscal policies would be distinct.
On the fiscal side, the Finance Minister and Coordinating Minister of the Economy, Wale Edun is leading efforts to promote economic stability and growth through reforms in our revenue and tax administration as well as reorganisation of our borrowing and spending plans. The Presidential Committee on Fiscal Policy and Tax Reforms led by Taiwo Oyedele is charged with coming up with reform proposals and has already submitted certain interim recommendations it termed ‘Quick Wins’ to the President for implementation.
The recommendations are meant to address crucial economic issues such as exchange rate management, impact of fuel subsidy removal, moderation of inflation, and facilitating economic growth. Some of the 20 quick wins that is of particular interest to me include:
– Policy signalling and collaboration by MDAs, economic management, and policy execution team.
– Measures to address duplication of functions in public service, ensure prudent public financial management and optimize value from government assets and natural resources.
– Use of technology “Data4Tax” to expand the tax net; increase personal income tax exempt threshold and personal relief allowance; and tax break for private sector in respect of wage increases to low-income earners, transport subsidy and net increase in employment.
– Suspension of multiple taxes which place burdens on the poor and small businesses and compensate with windfalls revenue of certain agencies.
When the above selected recommendations are viewed together, one will see a clear attempt by the Tinubu administration to simplify tax administration and improve efficiency of tax collection, which invariably leads to increased revenue generation for the government. Also, one can categorically state that Tinubunomics means tax exemption for the poor and the vulnerable as well as small scale businesses. President Tinubu simply does not want to tax poverty or tax small businesses to extinction.
On the Monetary side, the CBN Governor, Yemi Cardoso is the manager and in line with President Tinubu’s pledge to ensure delineation of fiscal policy from monetary policy, the CBN Governor has stated unequivocally that the apex Bank under him will focus on achieving price stability and influencing supply of money and credit in the best possible way that will boost the economy. This definitely will involve synergy and periodic handshakes between the monetary side and the fiscal side.
However the clear message of Tinubunomics is that monetary tools would no longer be utilized exclusively to solve fiscal problems as seen in the recent removal of restriction placed on access to forex for the importation of 43 items. Tinubunomics is also in favour of allowing the Naira to find its true value with the CBN making sure there is enough forex liquidity in the official market. What the CBN equally needs to do is to eliminate all unnatural factors such as dollar speculation, hoarding etc that distort the ability of the Naira to attain stability. This is an ongoing effort with promising early signs.
The expection of the re-engineering of the monetary and fiscal regime boils down to the attainment of visible economic growth that creates jobs and wealth for the vast majority of Nigerians. This brings me back to the sectoral deliverables that were outlined in the 3-day Cabinet Retreat. These deliverables are the end-product or expected output of Tinubunomics and some of them include:
1. Boosting agriculture to achieve food security is one of priority areas of Tinubunomics and already President Tinubu has demonstrated in the 2023 Supplementary Budget that he is serious about achieving food security for Nigeria with the provision of N200 billion to restock our food reserves, cultivate additional 80,000 hectares of land with wheat, maize, rice and cassava, provide seedlings, farm inputs, and implements to enhance mechanised farming.
2. Unlocking energy and natural resources for sustainable development is also another expected end product of Tinubunomics. This is gaining priority attention from the President with efforts to tap into our CNG resource as alternative fuel source; overhaul our solid mineral landscape with priority on value addition before export; becoming a massive gas producing and exporting nation with Western Europe as a targeted market and boosting local petrol refining including bringing the three government-owned refineries back to productivity.
President Tinubu has established a Presidential CNG Initiative mandated to drive the CNG revolution in Nigeria. The short-term target is to convert 55,000 vehicles to run on CNG in the first 6 months. More CNG conversion centers and CNG filling stations are springing up across the country to drive this process.
3. Enhancing infrastructure and transportation as enablers of growth is yet another expected visible plank of Tinubunomics. A little pointer to this is seen in the N300 billion and N100 billion allocated to the Ministry of Works and the Ministry of Housing respectively in the 2023 Supplementary Budget. These provisions are preliminary funding for more than 250 ongoing road/bridge projects and for an unprecedented 40,000 new housing units across the country.
Mobilising enormous private capital for road infrastructure funding, with tolling to recoup investment and guarantee their maintenance without recourse to government budgetary provisions is the new normal under Tinubunomics. The new flagship road projects under this model are the Lagos to Abuja superhighway and the Lagos to Cross River coastal superhighway all billed to utilise concrete technology. National Rail connectivity is also a key priority intended facilitate mass transit of people and goods including agricultural produce.
4. Industrialisation/Manufacturing is one of the key components Tinubunomics expects to drive Nigeria’s GDP growth to $1 trillion by 2026. To achieve that, power availability and supply is key. Under the Presidential Power Initiative, power infrastructure is set to witness incremental expansion in the generation capacity and decentralisation of the transmission architecture with the creation of a super grid and many semi-autonomous regional grids increase our transmission capacity tremendously. The structure and coverage of the distribution companies will also witness an overhaul.
Industrialisation as viewed in Tinubunomics will in the short to medium term revolve around processing of our abundant primary raw materials such as solid minerals and agricultural produce into value-added products. Wholesale export of unprocessed raw materials does not have a place under Tinubunomics. This alone has the potential to transform Nigeria into a middle power in manufacturing within a decade.
5. Technology, digitisation and innovation are very important pillars in Tinubunomics and are expected to drive growth and efficiency in many sectors such as agriculture, manufacturing, transportation, service, port logistics, education, health, financial inclusion, identity management, revenue management, and a host of other sectors of the economy. The seed of digital revolution has already been sown with the upcoming 3MTT programme and other digital innovations in the works.
In less than six months in office, President Bola Ahmed Tinubu’s economic agenda, christened Tinubunomics, has taken a recognisable shape with a clear set of objectives. The coordinates of the destination Tinubunomics intends to arrive at in the short and medium terms are simple: attain a GDP of $1 trillion in three years, increase tax-to-GDP ratio to 18% in three years, stabilise the Naira by having enough liquidity in the foreign exchange market, attain local self-sufficiency in refined petroleum products, boost food security and kick-start a homegrown industrial revolution.
At the rate President Bola Ahmed Tinubu and his performance-hungry cabinet are going and with all the foundations being laid to achieve a leap in economic growth, it will take a mad man from Upper Iweka to bet against the success of Tinubunomics.