How I will approach subsidy removal, FX, other changes – Atiku Abubakar

The Peoples Democratic Party’s 2023 presidential contender, Atiku Abubakar urged president Bola Tinubu to take his suggestions into account in order to boost Nigeria’s faltering economy.

In a Sunday tweet headlined: “What we would have done differently”, Abubakar disclosed that the country’s energy and economic sectors need to undergo significant reforms.

He went on to say that he is in favor of the naira floating as well as the elimination of the fuel subsidy.

The PDP leader, however, bemoaned that although he is not the president, his recommendations are “in the interest of the Nigerian people,” accusing Tinubu of causing the “trial-and-error economic policies” that have caused residents to endure “excruciating pain”.

Nigerians have been feeling the effects of the economic changes implemented under the Tinubu administration ever since the fuel subsidy was eliminated and the foreign exchange was unified.

The cost of food, transportation, fuel, and other necessities has gone up as a result.

The former vice president who worked with former president Olusegun Obasanjo from 1999 to 2007, detailed his suggestions for resolving issues including insecurity and lessening the impact of subsidy removal on the general public via his X handle.

According to Atiku Abubakar, the reform program is outlined in his policy statement, My Covenant with Nigerians, which calls for “comprehensive diagnostic assessments of the country’s situation, greater consultation with stakeholders, and clear plans for achieving desired outcomes”.

The tweet read: “We would have planned better and more robustly: My reform journey would have benefited from more thorough preparations, deeper diagnostic assessments of Nigeria’s conditions, increased consultation with key stakeholders, and well-defined ideas for the final destination.

“We would have relied on my comprehensive reform agenda as set out in My Covenant with Nigerians, a policy document that aimed to protect our fragile economy by preventing business collapses.

“Our document outlined policies that were consistent and coherent.

“We would have sequenced our reforms to achieve fiscal and monetary alignment.

“Introducing reforms to set an appropriate exchange rate, cost-reflective electricity tariffs, and PMS prices all at once is certainly excessive.

“Additionally, the Central Bank’s aggressive tightening of the money supply complicates matters.

“As importers of PMS and other petroleum products, removing subsidies on these products without a stable exchange rate would be counterproductive.

“We would have been more strategic in addressing reform challenges.

“I would have recognised the risks of reform failure and the challenges posed by weak institutions, and I would have worked tirelessly to address them.

“As a responsible leader, I would pause, reflect, and, if necessary, adjust implementation.

“I would have led by example.

“Any fiscal reform to improve resource management must first eliminate revenue leakages due to governance costs, including government expenses and procurement processes.

“Neither I nor my team would live in luxury while citizens suffer.

“We would have communicated more effectively with the people —courteously, tactfully, and diplomatically.

“Transparent communication is essential for public trust, which is vital to helping the public understand government actions”, he added.

Atiku reaffirmed his support for the abolition of gasoline subsidies, calling their management “opaque and rife with opportunities for corruption”.

He described the subsidy regime as a haven for rent-seeking and named the Nigerian National Petroleum Corporation Limited (NNPCL) as a key beneficiary of the status quo.

Nigeria is “the least efficient OPEC member in terms of refining capacity utilisation and the percentage of crude refined,” according to Atiku, who also criticized the nation’s “poor refining infrastructure”.

In order for Nigeria to process at least 50% of its existing oil output and sell half of this capacity to ECOWAS nations, he pushed for the gradual privatization of state-owned refineries.

He recommended removing subsidies gradually as opposed to abruptly, as Tinubu had done.

“A phased approach would allow for adjustments, adaptation, and minimal disruption.

“When I was vice president, we adopted a phased strategy and completed phases one and two of subsidy reform before our tenure ended.

“Unfortunately, the incoming administration in 2007 abandoned the reforms”, he added.

He pointed out that the majority of nations implementing subsidy reforms, such as Malaysia and Indonesia, do it gradually, frequently taking up to five years to completely eliminate subsidies.

According to source, Atiku Abubakar also commented on forex reforms: “A fixed exchange rate system was unsuitable, as it contradicts our goal of an open, private sector-driven economy.

“However, given Nigeria’s economic conditions, a fully floating exchange rate system would be too extreme.

“We would have encouraged the Central Bank to manage a gradualist approach to FX management, favouring a managed float”, he concluded.

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