Nigerians look to president-elect Tinubu for economic change | Business and Economy

Ilorin, Nigeria – On Monday, when Nigerian President-elect Bola Tinbu is sworn in, Olusegun Badmus will be one of several million viewers.

But for the 57-year-old bus driver from the central Nigerian city of Ilorin, there is little emotion after years of being disappointed in the government, including the outgoing administration of President Muhammadu Buhari.

Under Buhari, Nigeria overtook India as the world’s poverty capital with half of its estimated 200 million people now living in extreme poverty. The naira also lost 70 percent of its value against the dollar as Africa’s largest economy experienced two recessions.

“The Buhari government really let us down,” Badmus told Al Jazeera. “He leaves the country worse than he knew it, but I only hope that Tinubu can act as he promised.”

Tinubu, a former governor of the country’s commercial capital, Lagos, was declared the winner of the February 25 presidential election ahead of Atiku Abubakar and Peter Obi by the Independent National Electoral Commission.

Still, the incoming president is grappling with legitimacy issues after winning the election with just a third of the vote in a poll in which only a quarter of Nigeria’s 93 million registered voters cast ballots.

Opposition parties have questioned the electoral process and the result, citing irregularities, electoral fraud and a lack of transparency in the electoral commission’s methods. A hearing on their complaints began on May 8 and is scheduled to end on June 23.

Some opposition supporters expect the transition process to stall until there is a verdict in these cases, signaling waning trust in government institutions, said Joachim MacEbong, a senior government analyst at research firm Stears Intelligence. , based in Lagos.

“Many people don’t feel that [institutions] it can be fair and impartial, and that’s really the real problem here,” he told Al Jazeera.

While some Nigerians wait for that process to take place in the courts, others are already looking for quick economic solutions in Tinubu.

controversial cuts

More than a third of the country’s population is currently unemployed, and voters expect Tinubu, 71, to create jobs, fix the free-falling economy and beef up security in line with his campaign promises.

The president-elect has also discussed plans to revitalize the agricultural sector, increase electricity generation to address Nigeria’s notoriously unreliable power system and cut fuel subsidies.

He is often credited with increasing Lagos’ internally generated revenue from $3.77 million a month on his inauguration in 1999 to an average of $32 million a month in 2006 on the eve of his departure.

Economists are already predicting that Tinubu, which criticized a recent redesign and currency swap, is expected to devalue the naira by as much as 15 percent to help stabilize the economy.

The most controversial decision the new president has to make may also be the most shocking: cutting fuel subsidies.

Subsidies were introduced in Nigeria in 1973 as a temporary measure to offset a rise in oil prices. They have remained in place and have long been a controversial measure despite the fact that they are used to keep fuel prices affordable.

They are widely seen as a conduit for corruption and waste, benefiting only the rich and middle classes rather than the working-class people they were designed to help.

From January to September 2022, Nigeria spent 2.91 trillion naira ($7 billion) on fuel subsidies. In the same year, more than $10 billion was embezzled in a fuel subsidy scam.

In January 2012, then-President Goodluck Jonathan announced that he would abolish the subsidies, sparking nearly two weeks of nationwide protests by the opposition, organized labor, civil society, and other Nigerians.

Jonathan reversed his decision and Buhari wavered on the issue. But Tinubu already signaled his willingness to cut subsidies in his first days in office.

“If you look at the fiscal health of the country, you will see that the subsidy has to go away sooner rather than later,” he said on the electoral campaign. “Nigeria’s debts are partly due to fuel subsidies, and the poorest people in society don’t benefit much anyway.”

While that could see the new president lose points politically, experts say the move is the right one in Africa’s biggest oil producer.

Still, serious resistance is expected from many Nigerians because the end of the subsidies will also cause the cost of living to rise.

“What I want Tinubu to do is find a way to lower the price of fuel and other goods and services,” Badmus said. “We buy gasoline with all our earnings. We hardly have any money left to take home.”

If Tinubu’s administration passes this test, MacEbong said, the money it saves could be diverted toward education and health care for low-income households.

This month, the world’s largest single-train oil refinery opened on the outskirts of Lagos, with a production capacity of 650,000 barrels per day. Nigeria’s first private refinery is owned by Africa’s richest man, Aliko Dangote, but the state-owned Nigerian National Petroleum Corporation owns 20 percent of the shares.

The project is expected to help Tinubu stabilize the economy and reduce inflation, which currently stands at 22 percent, economists said.

“The refinery means that we will save the central bank between $20 million and $23 million that would have been provided to continue importing PMS [premium motor spirit] in Nigeria,” said Paul Alaje, a senior economist at SPM Professionals, a Lagos-based management consulting firm.

“So that’s great news for us,” he said. “We are going to have significant growth in our foreign exchange reserve and that means that in the next period we will see a significant increase in the value of the naira.”

A bull market?

After the Nigerian electoral commission announced Tinubu’s victory, Nigerian bonds soared. Investment banking giant Morgan Stanley was bullish on the market, based on its hopes that the president-elect would prioritize fiscal and financial market improvements.

But that shouldn’t be cause for early celebration just yet, analysts warned, pointing to similar gains in 2015 before a pullback, sparked by a series of policy mistakes by Buhari.

“The market will always try to be bullish on the new president, but whether that will continue remains to be seen,” MacEbong said. “It depends on the reforms and the speed with which they are made so that the market receives the necessary signals.”

Back in Ilorin, Badmus is skeptical of any economic growth, but hopes that Tinubu’s time as Governor of Lagos State can help turn things around.

“Right now, I have my faith in God and not in politicians,” he said as he parked his bus and finished his workday. “I hope that Tinubu will change the situation in the country and be a balm for our suffering.”