Financial Times editorial critiques President Tinubu's economic reforms, removal of Emefiele

In a recent editorial, The Financial Times (FT) of London has raised concerns about the manner in which the former Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, was removed from office, calling it “odd” and suggestive of political revenge.

Emefiele’s initial arrest over allegations of illegal possession of firearms was noted as a contentious starting point for his removal.

FT acknowledged that President Bola Tinubu had begun his tenure with ambitious economic reforms, including the removal of a costly fuel subsidy and a shift towards a market-driven exchange rate. However, the report also highlighted that four months into Tinubu’s administration, there are growing signs of economic instability and challenges.

The removal of the fuel subsidy, which had cost the Nigerian government $10 billion in 2022, was commended by FT as a necessary step to eliminate opportunities for middlemen and profiteers.

However, the report emphasized the need for transparency in how the saved funds would be utilized to improve the lives of Nigerians, suggesting direct payments to the vulnerable and investment in public services.

FT raised concerns about the lack of a clear rationale behind some of Tinubu’s policies, particularly the new exchange rate regime, which has yet to be adequately explained.

The report noted that after allowing banks to bid freely for foreign currency, the naira depreciated nearly 30%, driving inflation to an 18-year high of nearly 26%.

Dollar liquidity tightened as investors sought to clear a backlog of $7 billion in previously unsatisfied demand.

The report also pointed out a gap between the official and black-market exchange rates, with the parallel rate falling to N1,000 versus an official rate of N785.

It highlighted the opacity surrounding Nigeria’s net foreign reserves, potentially as low as $4 billion, which exacerbated economic challenges.

FT attributed Nigeria’s inability to sell its full OPEC quota to “chronic oil theft” and emphasized the urgency of curbing such activities to protect the country’s resources.

The report suggested that the recent confirmation of Olayemi Cardoso as the new CBN governor could stabilize the institution, given Cardoso’s background as a former Citibank Nigeria chair. It emphasized the importance of maintaining the central bank’s institutional independence.

FT advised President Tinubu to be more transparent in communicating his policies to the public and cautioned against announcing plans without a clear implementation strategy.

The report concluded by urging Tinubu to regain momentum in his economic reforms, as the initial promise of his presidency risked losing momentum just four months into his tenure.