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Nigeria was supposed to be Africa's powerhouse. Its vast population, cultural influence and oil reserves seem to set it up with a chance to be a big player among the world's major economies. But now it's facing what some are calling the biggest economic crisis in a generation and a government that is failing to meet its country's basic needs. With the world turning increasingly away from fossil fuels, did Nigeria get too hooked on oil?
I have consistently maintained the position that the first subsidy had to go. This one's beneficiar measure add outleast its usefulness. Our economy is going through a tough patch.
A year into the presidency of Bullet Tinubu. We're asking if reforms that he's tried to implement can help turn the country around, or whether they're making things worse for everyday.
Nigerian's on the ground.
I'm Jennifer Zabasadjap and this is the Next Africa Podcast, bringing you one story each week from the continent driving the future of global growth with the context only Bloomberg can provide. Bloomberg's and Duka or Jinmo has been working on this story and he's joining us now from abujab and Duka, thank you so much for joining us, and really great story.
For everybody who hasn't taken a look at it, they should.
So let's just start with President Tanubu because this is really sort of the crux of the story here and what's happened since he was elected a little over a year ago. Now talk to us about who he is and how Nigeria was faring when he was elected last year.
Well, he's a format two time governor of Lego State.
Lego State is Nigeria's commercial capital, the richest state of the country, the most populous city in West Africa, and he was elected on the back of what he did in Legos. He improved infrastructure, he tripled the internally generated revenue in the state and when he contested last year in the election, he came in on that promise of
turny Ninjuria around as he did in Legos. During his time as governor, he was instrumental to Noble in the formation of the All Progressive Congress that's his party in twenty fifteen and when the party came into power in twenty fifteen, he was elected as the facto leader of the party and Ninia was in a difficult place when he took over. We had inflation that was in w d already, we had more, especially an economy that was struggling with.
Very high budget deb seats.
You had declining could production, which is a big problem. And so he came in promising to fix that. And mister sinopul knew exactly what he was getting into because he admitted that his challenges were there and that he was going to fix them.
So then let's just get into some of the challenges. Then what is it actually looking like though on the ground for everyday Nigerians.
Most Nigerians would tell you that you're facing the most difficult periods of their lives. And if you look at the data, it backs it up. Inflation is at a three decade high. The last time Nangeria experience such a high level of inflation rate was in the mid nineties when you still had the military rule.
Here in Nigeria.
You have Nigerians, we were already spending around six percent of your incommon fold alone, now having to spend far more just to survive. And I've seen the consequences of that. Earlier this year, we saw people hungry, people raiding warehouses where greens were kept and the army had to be calling to protect those warehouses. We saw stampede in legal people hewing up to get food and a couple of people die there. So things are quite die on the
ground now. So people have gone through this very difficult period of high inflation rate and they've not really seen our wages increased to keep up with that.
Do people blame President Tinubu for this?
I mean he's only been in an office just over a year, and if you think about it, he's also from the same party as President Buhari, who was his predecessor. Who are people sort of pointing the finger at They.
Blame him partly because this is his party. This party has been in past since twenty fifteen and he was instrumental in the emagence of form a President WM in twenty fifteen.
So many Ninjerans feel that.
He's part of this face this problem where people are passing through.
Now.
There are those also who are a little bit fair to him and they said, look, this man has only been in power for just over a year and challenges he met are not of his own making. And he even said that when he was campaigning that he's going to be his own man. He wasn't going to take the responsibility for the problems challenge is created by his
party and by his predecessor. He's worked back on some of the policies of the previous government and he's made that clear that some of those policies did not work. So policies, especially two big reforms, have fined his government so far. When he came in last year at the end of May, he announced during his inaugurration that fuel subsidies was gone. And you have to understand that Nigeria
is Africa's largest oil producer. However, we don't have local refinery and Nigerias so we have Africa's largest oil producers importing all of his refined fuel. Both governments then subsidizes this important fuel by but its not just what ten billion dollars in twenty twenty two, and that's huge.
That's money that could.
Have spent on education, money that could have spent on building hospitals when I could be spent.
On building rules.
And once in the book came in, he stopped that I'll come back to this later gen just to say that he had challenges and that has had to be to be reintroduced.
That was one policy.
The second policy was the exchange rate, and that was a big problem.
For businesses in Nigeria.
And so what you had during the former regime of president where it was different exchange rates. We had one for certain importers that we are close to the government. We had one for those who were trying to pay school fees for the.
Children aboard those we are going abroad for health care services.
And these multiple exchange rates, you know, equated a situation where there was around tripping and there was loss of habitraging the system.
And once it came in singable, he also stopped that.
So those we are two period forms of the previous administration that he stopped during his first month in office last year.
It's interesting because a lot of African leaders are facing this dilemma, right because they need to sort of contend with the economic situation that their country is in. But then they're also hearing it from everyday citizens, right. We're seeing that in Kenya similarly. But would you say the situation has just continued to get worse then, just given what you mentioned about the fuel subsidies, about the naira sort of plunging.
Have things gotten worse?
It depends on what you ask Jen. You won't get this straightforward us.
And if you ask ordinary Naingerians who have been at the receiving end of inflation that's spiked, triggered out of course by what you've mentioned, currency clunging. Currency has been developed twice since June last year. If you ask those Nigerians were having to grapple with this economic situation, they will say, look things I've gotten wars on that presenting boom.
If we speak to foreign investors and we've seen lots of portfolio influence coming into night Egeria, they will say these reforms is carried out and what they're expected of him. The currency situation was such a nightmare for people to plan. Volatility created and you know the people who say that has continued into his time.
But we've seen some stability in recent times.
We've seen the parallel ex generate has almost equal with the official ex generate and that will be counted as a win by the Central Bank and by this government. So it depends on what we're asking foreign investors, the IMF, the World Bank. They think the administration and the reforms carried out so far on the rights track. However, for Narina enguriers, the feel that this is the worst period of their lives.
And you gonna stick with us.
When we come back, we'll talk about how the largest oil producer in Africa, of course that's Nigeria is still facing an energy crisis.
We'll be right back and welcome back.
And Duga is stal with me as we look at Nigeria and its economy as it faces what some are calling the worst economic crisis in a generation. So and Diaka, we were talking briefly about this before the break. Nigeria is the largest oil producer in Africa. You wouldn't know that based on imports that you were just mentioning. It's also a member of OPAK. So why is the money not reaching the economy? What is the disconnect here?
It's a question that most Nandurans ask themselves every day, especially if you go to the Niger Delta where you have these communities where the oil is socked out from. Most of those communities are some of the pogrest communities in the country, if not in Africa, So they live in that much wealth, it doesn't trickle down to them. And it's a combination of several factors. The state owned National Patrolum Company, it's one of the most opique companies
in the world. Its books are rarely opening. It's released its last audited accounts in twenty twenty two after several years of not doing that. At a moment, for instance, jen no one knows the true state of the subsidy payments in Nigeria. We know for a fact that Fewgerslam prizes have been cucked since.
August last year. We don't know how the NPC is doing that.
The piece it keeps insisting that is no longer paying any subsidy on that we know that it is not possible because food is an international product and we've sent prices fluctuting international markets, but it remains stable here in Nigeria.
So it means that the mass is not adding up.
But the end piece won't give you any answers to that, and it gives you snapshot of how there is that lack of transparency and accountability in Nigerias or sector and that has led to a lack of investment by the big oil companies.
So then and just to wrap up. I mean when we look forward.
I know it's hard to predict just given all of the moving parts that are happening right now, but what is the outlook or maybe what is going to ultimately determine whether or not these reforms that President Tinubu is putting in place is actually going to start working. I mean, what is it that we need to pay attention to. Is it when people stop demonstrating? Is it when imports of oil go down? What would you say? I think we have to look at the exchange rate.
We have to pin this on some of the big reforms of this government and to stand out so far one the free flot of the nairad and allowing the currency here to treat at its true value. We have to see if the government at some point begins to defend that, and that will be an indication that has then gone full circle from where it started.
At the momento, the science look good.
We've seen a major almost a major differences is quite minimal between the parallel markets of the nyorus value on the street and what is SCIPI in the Central Bank of Ninjuria is selling officially.
On that score, I would say.
The government is doing well so far. I think the next big thing though, is inflation. We have to keep an eye and the inflation rating the higinerier is quite high at the moment and the SIPEN has made clear that its one big barcel at the moment is making sure that inflation vite uses which feel it has picked and that's the indication we get from looking at the data. On the other hand, the big hurdlings across it is subsidy payments and what it decides to do with that one.
It's more of a political issue than it is an economic issue, because most Nigerians see that cheap fuel that they have to buy the poems as the only thing that they gets from the government.
And you don't blame some of them in the roads and bad states.
In the hospitals are barely maintained, their calls for their treatment. I don't think the government has the political will to let gasoline sell at this true value in Nigeria, we think at the moment, and it did a suppose it by is selling for around half its price. If he decides to sell it freely, I think we might see Kenya style protest sooner rather than the thy in Nigeria.
Right. We've seen in Kenya how the president has had to step to pressure from young people, so it will be interesting to see how that plays out in a country like Nigeria. Dukajin incredible reporting. Thank you so much for joining.
Us this week. My pleasure, jim My pleasure.
And as Juka mentioned, time will only tell whether Tanigu's reforms are actually bearing fruit. But if Kenya is any example, the president may not have much time to prove to Nigerians that the short term pain is in fact for the long term gain.
This program was.
Produced by Adrian Bradley. If you like the episode, don't forget to comment and subscribe. Wherever you are listening to this podcast, I'm Jennifer's Abasaga. Thanks as always for listening