Former Deputy Governor of the Central Bank of Nigeria (CBN), Professor Kingsley Moghalu, has said the removal of fuel subsidy and devaluation of naira by President Bola Tinubu were right policies wrongly implemented.
The Professor of Political Economics said both the petrol (fuel) subsidy and defence of naira by the previous administration of ex-president, Muhammadu Buhari, and CBN governor, Godwin Emefiele was not the best policy for the country.
Moghalu said what was wrong with the execution of the removal of the fuel subsidy and suspension of naira defense against the US Dollar was that President Tinubu failed to put measures in place to cushion the effects of the policy on the citizens.
He said the President “hurriedly”, without proper planning for consequences, removed fuel subsidy. He added that the President announced the floating of the naira without monetary tightening and a substantive CBN governor.
“The petrol subsidy and the forex subsidy were unsustainable. The fact that wrongheaded execution of their removal – removing the petrol subsidy hurriedly without proper planning for consequences and alternative transport solutions for the people, and floating the exchange without first tightening monetary policy and without a substantive Central Bank of Nigeria Governor with a real plan in place — is a very different thing from whether those reforms were needed.
“The issue was, and is, competence of conception and execution. Framing and executing evidence-based public policy is a real challenge for Nigeria and many African countries. I say this because the reality of the suffering faced by Nigerians should not confuse us as to why the situation is this way. My position on the fuel subsidy and exchange rate subsidy, given our country’s fiscal realities in 2023, remains consistent and not populist,” the former CBN Deputy Governor said.
Experts have continued to question “fuel subsidy is gone” statement of President Tinubu on his inauguration day on May 29, 2023. Also questioned was the government’s decision to allow naira to gain its strength against foreign currency.
An Economist, Olayiwola Adejare Lawal, in an interview, said Nigeria’s economy being import-dependent requires subsidies to grow.
Lawal said the federal government’s decision was against the local economics of Nigeria. He said economic advice against fuel subsidy and in support of naira floating would affect Nigeria’s economy.
Moghalu, however, said if policies to incentivize productivity and exports were put on ground before the fuel subsidy removal and naira float were carried out, the policy would have been beneficial.
The President of the Institute for Governance and Economic Transformation Africa further said the leaders have also failed to sacrifice while asking citizens to bear the pains of necessary but poorly executed policy,
“Beyond this, executing painful reforms requires the legitimacy of shared sacrifice. That such a sacrifice on the part of the political leaders of Nigeria is absent, while asking citizens to bear the pain of necessary (although incompetently executed) reforms damages the legitimacy of the reforms.
“If it is accompanied by policies to incentive productivity and exports it would be beneficial,” he added.
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