Tinubu: Petrol subsidy, multiple FX rates were a noose around economy’s jugular

President Bola Tinubu says the removal of the petrol subsidy and the unification of the foreign exchange (FX) rates were crucial decisions for the progress and development of Nigeria’s economy.

The president spoke in a national broadcast on Sunday amid the #EndBadGovernance protests.

On May 29, 2023, Tinubu said the petrol subsidy was gone, bringing an end to decades of subsidising petrol consumption for Nigerians.

The announcement triggered a scarcity of the commodity as petrol prices rose by more than threefold.

As the policy began to take a toll on citizens’ survival, the Central Bank of Nigeria (CBN) announced the unification of all segments of the foreign exchange (FX) markets – collapsing the FX windows into the investors and exporters (I&E) window.

The CBN policy, which grossly devalued the naira, stoked inflation to unbearable levels — further worsening the livings of Nigerians as food, transportation, and other essential services became expensive.

In the past three days, Nigerians have been on the streets in protests against “economic hardship” and what they describe as “bad governance”. The demonstrations could extend beyond the planned 10 days.

But speaking in his national address on Sunday, Tinubu said the policies were “painful but necessary”.

According to the president, the petrol subsidy and multiple FX rates were a “noose around the jugular of Nigeria’s economy”.

Tinubu said the economy, for decades, “has remained anaemic and taken a dip because of many misalignments that have stunted our growth”.

“Just over a year ago, our dear country, Nigeria, reached a point where we couldn’t afford to continue the use of temporary solutions to solve long-term problems for the sake of now and our unborn generations,” he said.

“I therefore took the painful yet necessary decision to remove fuel subsidies and abolish multiple foreign exchange systems which had constituted a noose around the economic jugular of our Nation and impeded our economic development and progress.

“These actions blocked the greed and the profits that smugglers and rent-seekers made. They also blocked the undue subsidies we had extended to our neighbouring countries to the detriment of our people, rendering our economy prostrate.

“These decisions I made were necessary if we must reverse the decades of economic mismanagement that didn’t serve us well. Yes, I agree, the buck stops on my table. But I can assure you that I am focused fully on delivering the governance to the people – good governance for that matter.”

‘SIGNIFICANT STRIDES IN 14 MONTHS’

Tinubu further said for the past 14 months, Nigeria has made significant strides in rebuilding the foundation of the economy.

“On the fiscal side, aggregate government revenues have more than doubled, hitting over 9.1 trillion Naira in the first half of 2024 compared to the first half of 2023 due to our efforts at blocking leakages, introducing automation, and mobilising funding creatively without additional burden on the people,” he said.

“Productivity is gradually increasing in the non-oil sector, reaching new levels and taking advantage of the opportunities in the current economic ambience.

“My dear brothers and sisters, we have come this far. Coming from a place where our country spent 97% of all our revenue on debt service; we have been able to reduce that to 68% in the last 13 months.

“We have also cleared legitimate outstanding foreign exchange obligations of about $5billion without any adverse impact on our programmes.

“This has given us more financial freedom and the room to spend more money on you, our citizens, to fund essential social services like education and healthcare.”

The president also said the financial freedom has led to the states and local governments “receiving the highest allocations ever in the country’s history from the federation account”.