Sobowale On Business

April 22, 2024

TINUBUNOMICS: The rich getting richer, the poor getting slaughtered


President Bola Ahmed Tinubu

By Dele Sobowale

“Yes, we will do anything for the poor man; anything but get off his back.” — Leo Tolstoy, 1828-1910.

IF the first year of  Tinubunomics is an indication of what is in store for the middle class and the poor people of Nigeria, then, it is time to abandon hope. Information available to us daily proves beyond reasonable doubt that while Nigeria’s globally rated billionaires have become increasingly richer, the rest of us have become poorer. Start with the banks. Despite the poor performance of the economy, all the banks have declared astonishing profits for the year 2023 and correspondingly high dividends as a result. The chairman of the bank, sitting on billions of shares will rake in billions of naira; the middle class owner of a few hundred thousand shares goes home with a few hundred thousand naira.

The poor, who are not shareholders, get nothing. Yet a great deal of the profits declared resulted from higher prices of goods and services which impoverished the masses. From May 29, 2023 to May 29, 2004, the gap between the wealthy and the rest of Nigerians would have become wider than in at least the previous five years put together. If Tinubu had campaigned on the promise to turn his administration into a government of the rich, by the rich and for the rich, he could not have done a better job of fulfilling that pledge.

Even the apparent success in crashing the exchange rate has a negative side to it which favours the rich. Since this article is not going to be devoted to discussing exchange rate, I will leave untouched the mirage of success in exchange rate management. Let us give a hint of what is happening by using football as an analogy. How many times have we watched games in which the first team to score, eventually, would lose the game? The game of exchange rate is a long one; it is too early to declare a winner. Let me stop for now on that.

Failure of palliatives

“Failures are divided into two classes; those who thought and never did and those who did and never thought.” — John C Salak, VANGUARD BOOK OF QUOTATIONS, VBQ p 54.

When newly sworn-in President Tinubu boldly announced that “subsidies are off” he immediately became a failure “who did and never thought”. That hasty decision, taken without adequate consideration of the consequences, has ruined more Nigerian lives than anybody would ever know. But, each Nigerian, not wealthy, can observe the terrible repercussions in the lives, faces and utterances of our close aQssociates, family, neighbours, co-workers and club members.

The family of seven, two parents and five children can serve proxy for how the ill-considered announcement has devastated millions of lives unalterably. The kids are all in school. Every morning they were provided with N1000 transport and lunch money – which was adequate before Emilokan struck. Today, N3,500 per day is needed for the children. From N20,000 per month, the parents now have to find N70,000. The father is a factory worker and the wife a teacher in a private nursery/primary school. Their salaries have not been increased since the subsidy removal. Now, the two oldest kids, girls, trek to school and no longer collect lunch money in order to help the parents. Painful and heart-wrenching adjustments have been made in every middle and low income class family in Nigeria today. The poor have simply been thrown under the economic bus.

Having failed to think through his government’s policies before talking, Tinubu was surprised about the fall-out. He then committed the second and more serious blunder. He hastily assembled the National Economic Committee, NEC, to help chart the way forward. Like most committees called in an emergency, they seized on the issue of palliatives – without consideration of Nigerian precedents for such measures. One past experience with palliatives was authored by Dr Ngozi Okonjo-Iweala after President Jonathan attempted to remove subsidies in 2012. It started with great enthusiasm and ended in massive corruption – without making any significant impact on the masses of Nigerians.

Tinubu embarked on this treacherous road; promised to give each state N5 billion and food from the National reserves. Why he thought N5bn will solve the problems of 20 million people living in Lagos is a mystery only he can unravel. In the end, only N2bn was released to each state and it was a loan, not a grant. The food items promised as far back as October last year have not been fully supplied till now. At any rate, they amount to only one cup of dry grains per person. Meanwhile, food inflation has escalated to 35 per cent.

Several states have embarked on food palliative programmes – with mostly unhappy results. Corruption has remained the major obstacle. Even the best implemented programmes, eg Lagos State, have not been totally corruption-free. Lives have been lost in the scramble for the food items. Nigerians have been turned to beggars as never before. Astonishingly, the palliatives have touched less than ten per cent of the people in each state despite the best efforts of some Governors like Sanwo-Olu in Lagos and Yusuf in Kano. The Governors invariably targeted the palliatives distribution to coincide with the Holy month of Ramadan to minimise the hunger-anger impact of rising food prices. Still it was all political gimmickry. Collectively and individually, they were addressing the symptoms and not the causes of increasing poverty – which is scarcity of food. In fact, everybody who sent palliatives out has actually fallen into one of the traps which the paradoxes of economics lay for sentimental decision makers.

Setting stage for higher food prices

With so much government and private sector money chasing the inadequate rice, gari and millet supply in March, they have created the conditions for higher food prices in April and May. Meanwhile, the stomach is a rascal. No matter how well it is fed today, it will demand for food tomorrow and days after. Those who distributed food better get prepared to continue to provide them; otherwise, the exercise will amount to “love’s labour lost”. Those who benefited from the hand-out will be hungry again. Then what? Givers cannot continue indefinitely.

Man does not live by bread alone

That was a lesson taught to mankind by Jesus or Yisa over two thousand years ago. Granted, food constitutes the primary need of mankind. But, in the modern society, food alone no longer defines poverty. Workers in some of the good hotels are allowed to help themselves to a lot of unfinished food by clients. But, that advantage does not help pay rising rent, school fees, transport fares to work and lunatic bills by Discos. Despite the best intentions in the world, all the kind-hearted people have achieved is to help cover the ugly faces of deepening poverty among the middle and lower income classes. They might not intend it, but they are also diverting the attention of the victims of Tunubunomics from the fact that the wealthy who distribute rice are actually reaping huge profits from the devastation of the toiling masses. No quantum of rice given by anybody can help parents to pay school fees or for the severely sick to pay for drugs which are now out of reach; neither can a 10-kilo bag of gari get a jobless person employed.

JUST IN: “More pressures on pockets as food inflation rises to 40%” — VANGUARD, APRIL 16, 2024. A lot of the food, costing more, were sold to Nigerians by those giving palliatives.

To be continued.