President Tinubu recently stated that he will continually make hard decisions to move Nigeria forward, even if there is a lack of national consensus.
Saying this during his recent visit to China, President Tinubu mentioned several key reforms his administration has initiated since taking office on May 29, 2023, such as the currency devaluation and removal of fuel subsidies, designed to free up government resources for investment in infrastructure and social services.
According to him, these measures are necessary for reviving Nigeria’s financial stability and ensuring sustainable development.
President Tinubu well acknowledged the stress these decisions have put on Nigerians, but called for patience, assuring that these reforms would eventually lead to a better and improved economy later on in future.
But for most citizens, these “difficult choices” seem one-sided, with the poor and middle class bearing the brunt of the changes, and many wonder if they would survive to see the future the president speaks about.
Chinwe, a Lagos-based hairdresser, begins her day with anxiety. Her fuel tank is half-empty, and refuelling will now cost her almost four times more than it did just a year ago.
As she shops for groceries, the prices of rice, tomatoes, and bread have tripled. To cap it all off, when her sister sends her ₦20,000 for the week, she notices a new ₦50 charge from her digital bank — something that had never happened before.
“How much more can I bear in the name of a reform?” Chinwe asks herself, recalling the hardships that seem endless.
The fuel subsidy removal in June sent petrol prices flying from ₦165 per litre to over ₦800 today. The ripple effect is felt across all sectors — transport costs have increased by over 45%, and food inflation is skyrocketing, with staple goods like rice seeing price hikes of over 50%.
As of September 2024, inflation rates have risen to over 22%, compared to around 17% prior to Tinubu’s administration. Nigeria’s poor and middle class, who spend the bulk of their income on food and transportation, are feeling the worst effects and now, the bank of the free is no longer free.
For years, digital banks like Opay and PalmPay were hailed as revolutionary for their promise of seamless, cost-free banking.
They were the go-to for millions of Nigerians who had grown frustrated with traditional banks and their continuous charges.
However, that changed on September 9, 2024, the date both Opay and PalmPay implemented a new ₦50 charge on all transfers above ₦10,000. Kuda Bank is not left out, as a ₦50 stamp duty on electronic funds transfer has been implemented for a while now.
In the memo sent to customers, Opay stated:
“Dear Valued Customer,
Please be informed that starting September 9th, 2024, a one-time fee of ₦50 will be applied to electronic transfers of ₦10,000 and above, in compliance with FIRS regulations. It is important to note that OPay does not benefit from this charge in any way, as it is directed entirely to the Federal Government.”
Similarly, PalmPay wrote to its customers:
“In accordance with the Electronic Money Transfer Levy (EMTL) regulation of 2022, a ₦50 levy will be charged on transfers of ₦10,000 or more paid into your PalmPay account as mandated by FIRS. Please note that PalmPay does not benefit from this levy.”
This change, while seemingly small, has caused an outcry among Nigerians. For many, the ₦50 charge feels like yet another financial blow amid the ongoing inflation problems.
Customers, who once praised digital banks for their affordability, are now questioning their very existence. On social media, angry users have expressed their dissatisfaction, with some threatening to move away from digital platforms altogether.
“We used to trust these platforms because they were free, but now they’re just like every other bank,” wrote an Opay user on Twitter.
Another PalmPay customer posted, “These companies are supposed to make life easier, but now they’re just adding to our struggles. Is there anything left in Nigeria that doesn’t come with a price tag?”
The Digital Banking Irony: Convenience at a Cost
Digital banking in Nigeria has always been marketed as a tool for financial inclusion, offering access to affordable banking for those underserved by traditional banks.
Opay and PalmPay were the flag-bearers of this movement, growing rapidly by providing free transfers, microloans, and other services. However, with the introduction of the Electronic Money Transfer Levy (EMTL), the very essence of digital banking — cost-efficiency — is being washed away.
Even these banks can no longer bear it. In a time when inflation is eating into household incomes and making basic goods less affordable, digital banks now have no choice but to add to the financial burden.
Nigerians, who flocked to Opay and PalmPay for their promise of free transactions, now feel betrayed by these additional charges, even if the banks themselves do not benefit from them.
The new charges come at a time when Nigerians are already feeling the pinch of rising living costs. The ₦50 levy may seem small on paper, but for people whose financial situations are already precarious, these added costs quickly pile up, creating an additional burden.
Are Nigerians Paying the Price for Reforms by Tinubu?
While President Tinubu has put policies forward, that may eventually lead to long-term benefits, the immediate impact is one of heightened financial pressure, and the patience of Nigerians is wearing thin.
As Chinwe sits down to tally her weekly expenses, she can’t help but wonder: at what point does reform stop being about the future and start addressing the present realities?
Tinubunomics: Where Do We Go From Here?
Added to the key decisions made by President Bola Ahmed Tinubu, including introducing economic diversification efforts focusing on agriculture, technology, and manufacturing, more profoundly, in July 2023, security sector reforms were implemented to tackle insurgency and banditry. Educational and healthcare system reforms followed in August and September 2023, respectively.
Anti-corruption measures began in October 2023, tax reforms in November 2023, and significant infrastructure investments in December 2023. Energy sector reforms and judicial reforms commenced in January 2024. What’s more????
These policy decisions raise questions about their pros and cons, touching upon the broader ‘leadership question,’ as Dr. Sunday Adelaja discussed in his classic works.
Leadership involves making strategic decisions and formulating policies that guide organizations or nations towards their objectives. John C. Maxwell defined leadership as the ability to influence others and create a vision, emphasizing that effective leaders make informed decisions and set impactful policies.
In light of the ongoing challenges, the Central Bank of Nigeria (CBN) has adjusted its monetary policy, including increasing interest rates to manage inflation. However, these measures may also slow economic growth by raising borrowing costs.
The Tinubu administration has committed to long-term reforms aimed at stabilizing the energy sector and reducing fuel price volatility, but the immediate effects continue to stress household budgets and economic stability. Balancing short-term impacts with long-term goals remains a critical challenge for the administration.
Thus the questions about whether these policies serve the masses’ interests, as emphasized by thinkers like Amartya Sen, Joseph Stiglitz, Paul Collier, and Elinor Ostrom. Sen’s Development as Freedom (1999) highlights how policies in education and health expand freedoms.
Stiglitz’s Globalization and Its Discontents (2002) advocates for policies addressing global inequality, while Collier’s The Bottom Billion (2007) stresses targeted aid for the poorest nations. Ostrom’s Governing the Commons (1990) shows the effectiveness of local governance. Robert Putnam’s Bowling Alone (2000) and John Rawls’s A Theory of Justice (1971) emphasize community engagement and fairness in policy. Mariana Mazzucato, Michael Sandel, Nancy Fraser, and James Robinson further discuss the impact of inclusive and ethical policies on societal benefits.
The effectiveness of government policies should fundamentally address the masses’ challenges. However, current policies by President Tinubu and his administration, including fuel subsidy removal, seem to impose huge pressure on the populace without clear benefits trickling down. Thus, there is a need for absolute examination and necessary adjustments to ensure that policies are not just well-intentioned but also effectively serve the public’s interests.
Considering Nigeria’s current situation, one might look at Argentina’s approach to tackling severe inflation as a potential model. By raising interest rates to 40% and implementing austerity measures, Argentina aims to stabilize its economy, though this comes with its own set of challenges.
The call for justice and balance, as reiterated in the Biblical exhortation to “let justice roll down like waters,” points to the need for policies that consider both short-term impacts and long-term benefits.
For us, we opined that leadership must reflect sacrifices and ensure that the burden of necessary reforms is shared equitably. Again, the fintech industry’s N50 levy on transactions above N10,000 could have mixed effects, potentially discouraging transactions and affecting financial inclusion while providing additional revenue to fintechs.
The overall impact will depend on consumer and business responses, as well as regulatory measures to ensure fairness and competition.
In a nutshell, while some policies by President Tinubu are designed to address critical economic challenges, the balance between immediate sacrifices and long-term benefits is important. Effective leadership, we believe, should reflect the needs and welfare of the masses, ensuring that reforms genuinely contribute to national progress.
Until the government finds a way to cushion the blows of these reforms, Nigerians will continue to ask whether the price they are paying is too high.
