Besides Planned Reversal on Fuel Subsidies, Expect a Reversal on Naira Float

TheCable reports that the Nigerian government is considering bringing back fuel subsidies, temporarily, as the paralysis caused by high energy costs continues to put the nation into a miry clay. In the last five days, I have made that point many times here. Yes, Nigeria must forget the liturgical purity of campaign promises or manifestos and face governing realities.

Also, the nation must also ignore big banks like Morgan Stanley which just put out a report which has no basis on the current state of Nigeria. That report will work in America but has no chance in Nigeria! We must understand that, unlike the United States, the Nigerian government has limited tools to stimulate consumer demand since consumer lending is largely non-existent.

American multinational investment bank and financial services company, Morgan Stanley, has lauded Nigeria’s president, Bola Tinubu’s reforms to reposition Nigeria’s economy, urging for more sound policies.

In the company’s recent advisory report titled “Tales from the Emerging World Nigeria’s New Dawn?”, it hailed the Tinubu-led administration, for several strategic reforms implemented, to recover the dwindling Nigeria economy.

The report began by stating how the previous administration of President Muhammadu Buhari led Nigeria to suffer eight years of stagnation, despite his claims to tackle corruption.

And if that is the case, the correlation between interest rate and consumer behaviour is weak in the short term. Also, a high cost of fuel will have a devastating impact on production, and that will push inflation high, and in a non-credit economy, welfare losses become rampant since people have limited means to borrow, to compensate for the high costs of items.

TheCable reports that the Nigerian government is considering bringing back fuel subsidies, temporarily, as the paralysis caused by high energy costs continues to put the nation into a miry clay. In the last five days, I have made that point many times here. Yes, Nigeria must… pic.twitter.com/wT1i74Y6aP

— Ndubuisi Ekekwe (@ndekekwe) August 15, 2023

In the next few weeks, I expect a reversal on the Naira float because that policy cannot work, based on the fundamental principles of economics. Nigeria still has many core tools, and the government must be bold to use them to bring Naira back to a better position. And this should be a lesson: we must be nuanced on policy formulation, and plan better.

EXCLUSIVE: Tinubu considering 'temporary subsidy' on petrol as landing cost rises

President Bola Tinubu is considering a “temporary subsidy” on petrol as crude oil prices and foreign exchange rates continue to soar, TheCable understands.

There is yet no final decision,… pic.twitter.com/sX2dZngedl

— TheCable (@thecableng) August 15, 2023

Nigerian Government is Reportedly Considering Providing Temporary Fuel Subsidy

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