The recent approval by the Senate of the request by President Tinubu for the borrowing of $800m from the World Bank has been raising concerns among Nigerians. The angst is not just about the danger of further increasing the stockpile of our already unsustainable debt level but also of whether borrowing for consumption- in this case borrowing to enable the government transfer the sum of N8,000 per month over six months to 12 million poor households – is the best way of cushioning the inflationary impacts of the removal of fuel subsidy and flotation of the Naira on the poor in Nigeria.
It should be recalled that President Bola Tinubu in a letter to the Senate explained that the loan would be used to scale up the national social safety net programme. He also claimed that the monthly social cash transfer would have “a multiplier effect on about 60 million households”.
There are several issues that are embedded in this discourse:
One, the discourse on social protection triggered largely by the conditional cash transfer of N5,000 per month to some households under the Buhari government, is a worthy conversation. This is especially so given the increasing incidence of poverty in the country at a time the traditional social safety nets such as the extended family system are becoming weaker as the society becomes more individualistic.
The Ministry of Humanitarian Affairs, Disaster Management and Social Development, established on August 21 2019 via an executive pronouncement by President Buhari, we were told, received a monthly transfer of N500bn from the CBN. There are ongoing controversies over its programme design, in particular how it chose its poor households, and whether its alleged cash transfers really got to its intended targets.
Two, that the Tinubu government should sustain the conversation on social protection is also in order. There are three issues that especially miff most Nigerians in the new conversation about social protection: the first is trying to tie it to cushioning the inflationary impact of theremoval of subsidy on Premium Motor Spirit (fuel) and theflotation of the Naira. The second is that the money for the proposed cash transfer has to be borrowed from the World Bank and the transfer is to last for only six months.
The third is the lack of empirically verifiable impact assessment of the four-year cash transfer programme by the Ministry of Humanitarian Affairs which allegedly has been engaged in such transfers since 2019.For any social protection programme to have the buy-in of the populace, there must be clear evidence that it is capable of delivering on its promise. A 2016 book jointly published by the Food and Agriculture Organisation of the United Nations, the United Nations Children’s Fund and Oxford University Press, titled From Evidence to Action: The Story of Cash Transfers and Impact Evaluation in Sub-Saharan Africa, made this point very eloquently.
According to the book, for “impact evaluation to be effective in influencing policy in a given context, they need to be embedded in the ongoing process of policy and programme design. Much of the policy impact lies in the credibility of the programme created by having an evaluation as well as a learning environment where implementation and design issues are addressed. Programmes can thus be promoted and directed in a manner in which evidence is brought to bear as needed in the process of decision making”. Not only do we not have any impact assessment of how far the disbursements to the Ministry of Humanitarian Affairs impacted on poverty reduction, the number of Nigerians falling into the absolute poor bracket has paradoxically been increasing despite the programme.
The World Bank, for instance, informed us that more than four million Nigerians fell into the absolute poverty trap in the first six months of the year (with another 7.1 million set to join if the impact of the removal of subsidies is not well managed). Besides, the Ministry has been less than transparent in its operations. For example, it claimed to have spent over N500m in school feeding and conditional cash transfers in Ogun and Lagos states as well as in Abuja (hardly among the poor areas of the country) during the COVID19-lockdown.
Three, giving conditional cash transfer of N8000 per month to 12 million households amounts to moving subsidy from one item that potentially benefits all demographics to subsidizing one demographic that may probably not be the worst hit by the inflationary impacts of removing subsidy on fuel because most of the very poor Nigerians live in rural areas, not very far from their farms, and do not depend substantially on markets for their social reproduction.
While I believe that the subsidies on PMS have become unsustainable, I am equally of the view that effectively checkmating the fraud in the subsidy regime and drastically reducing the level of the subsidy (rather than removing it in its entirety) will be more productive. For instance, maintaining a level of subsidy on PMS and fertilizer will also mean subsidizing food, manufacturing (because most depend on generators) and the Middle class (who are the most productive segment of the population). Maintaining a level of subsidy on PMS will cascade throughout the entire value chain of the country and therefore better than trying to narrowly target a particular demographic.
Four, while the Tinubu has done relatively well in trying to run an inclusive government (compared to Buhari) and has received deserved accolades for that, he risks squandering the honeymoon he seems to be enjoying from most Nigerians if he fails to appreciate the depth of the hardship in the country and that what is needed are measures that will boost production, create employment and make life more tolerable for most Nigerians rather than cash transfers that seem to have been not properly thought through.
More importantly, the President must avoid being captured by some political jobbers who seem to believe that every criticism of his programmes are coming only from the opposition or a certain ethnic demographic. That was precisely what some aides made the Buhari government believe when the likes of Femi Adesina labelled such people ‘wailing wailers’. Ironically today, despite Buhari’s modest achievements in the field of providing infrastructure and using personal diplomacy to secure top positions in some international organizations for some Nigerians, the ‘wailing wailers’ seem to have been vindicated. Even before he fully exhausted his tenure, Buhari repeatedly said he was tired and was looking forward to be as far away from Abuja as possible once he handed over power to a successor.
Five, Nigerians appear to be enduring the unprecedented hardship caused both by the removal of fuel subsidy and the flotation of the Naira for a number of reasons: first is a general belief that the country was already in an extremely bad economic shape under Buhari and that Tinubu had no hand in it.
Second, is given the way Tinubu has been hyped as a political strategist and economic visionary who transformed Lagos state, people continue to believe that he may have a magic wand that would quickly turn the hardships into gains for most Nigerians – to shame his critics. After all, is he not the JAGABAN, who outwitted his powerful traducers to emerge the APC’s presidential candidate in spite of the hurdles placed on his way and went ahead to win the election (or be declared the winner by INEC)? If Tinubu fails to turn things around quickly, there will most likely be a crisis of expectations and a feeling of another hope betrayed – with snowballing effects.
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| President Tinubu |
Source: Vanguard Nigeria
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