By Uche Nnadozie
If you are reading the Financial Times and the article is titled “Shock Therapy Alone Will Not Cure Nigeria’s Economic Ills,” you might think the publication is a disgruntled political party media unit or the sore losers of Nigeria’s 2023 general election.
This pessimistic article, rife with conspiracy theories, cherry picking, confusion, half-truths, cherry-picking, and shameless anger-baiting, suggests that Nigeria’s best path forward is backward. Our progress as a nation is surely not policy flipflops despite some bumps along the way.
While the writer concedes that President Bola Tinubu’s reforms are crucial for economic survival, the article lacks the intellectual honesty expected from a reputable platform like the Financial Times.
The article deliberately fails to acknowledge that Tinubu’s administration has made incredible economic strides, implementing various initiatives to stimulate growth, stabilize the financial environment and mitigate the impact of the removal of fuel subsidy, merging the corruption infested forex market and other crucial reforms.
Economic reforms are not a quick fix. Transforming an economy, which the writer admits is struggling on multiple fronts, requires not only decisive action but also patience to see the results.
It is for this reason, I repeat what has been highlighted over and over again while hack writers continue to pretend not to see either because of their contract or simply out of diabolical mischief to create resentment and anarchy in the country.
From the various documents of the government in the public domain and especially policies, remedies and expected outcomes already active by the various government offices and officials which the Tinubu administration is determined to push to the finish line, here are the reforms, their pain points, medium and long-term gains:
Exchange Rate Unification:
Short-Term Pain – Higher inflation and adjustment costs.
Long-Term Gain: A unified exchange rate eliminates distortions, attracts foreign investment, and improves market efficiency. Egypt’s 2016 reform led to increased foreign direct investment from $8.1 billion in 2015 to $9.1 billion in 2018 alone.
Subsidy Removal:
Short-Term Pain – Increased fuel prices and living costs.
Long-Term Gain: Savings from subsidy removal can be redirected to essential sectors like education, health, and infrastructure. Indonesia’s 2015 subsidy reform saved $15 billion, reinvested in infrastructure and social programmes, boosting economic growth.
• Tax Reforms:
Short-Term Pain – Increased burden on businesses and individuals.
Long-Term Gain: A broadened tax base improves government revenue and reduces reliance on oil income. Ghana’s 2017 tax reform increased tax revenue by 20%, enabling more public investment.
Economic Diversification:
Short-Term Pain – Transitional challenges as the economy adjusts.
° Long-Term Gain: Diversification reduces vulnerability to oil price shocks and fosters sustainable growth. Malaysia’s strategy transformed its economy from commodity-based to a global hub for electronics and manufacturing.
Comparative Examples
India’s 1991 Economic Reforms: Despite initial disruption, these reforms led to an average GDP growth rate of 6-8% over two decades, lifting millions out of poverty.
Brazil’s 1994 Plano Real: Introducing a new currency and stringent fiscal policies tamed hyperinflation and stabilized the economy, paving the way for sustained growth.
Economic Benefits with Facts and Figures:
Increased FDI – Countries that implement structural reforms typically see a rise in FDI. Nigeria would follow this trend, similar to Egypt’s 11.1% increase post-reform.
Higher GDP Growth: Reforms can lead to significant GDP growth. For instance, India’s GDP grew from $274 billion in 1991 to $2.87 trillion in 2019.
Improved Fiscal Health: Reduced subsidies and increased tax revenue lead to better fiscal health. Indonesia’s fiscal deficit reduced from 2.59% of GDP in 2015 to 1.93% in 2018.
It is important that businesses like the media who are domiciled in regions that encourage countries like Nigeria to reform support the Tinubu economic policies. As a matter of fact, many Western-styled news media have in the past cast aspersions on Nigeria’s past leaderships for simply maintaining subsidies.
Now that the subsidies have been taken out by a courageous leader, why has a publication like FT changed the goal post?
Therefore, maintaining President Tinubu’s economic reforms, which were well thought out, by the way, despite its teething pains, is essential for Nigeria’s long-term prosperity. Or does it mean newspapers that flourish in developed countries don’t want such development in Nigeria?
Learning from countries that have undergone similar transformations, these reforms promise robust economic growth and development, increased investment, and diversified revenue streams. Such a foundation is critical for Nigeria to achieve sustainable development and economic resilience.