By Adedapo Adesanya
On Monday, May 29, Nigeria will get a new president as President Muhammadu Buhari will vacate office after eight years for his successor, President-elect Bola Ahmed Tinubu, a transition that comes with a lot of burdens.
Mr Tinubu, a member of Mr Buhari’s All Progressives Congress (APC), was announced by the Independent National Electoral Commission (INEC) as the winner of the February 25 election, defeating Mr Atiku Abubakar of the People’s Democratic Party (PDP) and Labour Party’s Mr Peter Obi.
However, the country faces massive headwinds of problems, including surging inflation and piling debt, which analysts who spoke to Business Post said are the top priority for Mr Tinubu’s administration.
In April, Nigeria’s headline inflation rate increased to 22.22 per cent as it increased by 0.18 per cent compared to the March 2023 headline inflation rate of 22.04 per cent. The NBS said on a year-on-year basis; the headline inflation rate was 5.40 per cent points higher compared to the rate recorded in April 2022, which was 16.82 per cent.
Plans by the country to control inflation and strengthen the Naira have seen interest rates raised for an unprecedented seventh consecutive time.
However, there are yet no signals that inflation will slow anytime soon, meaning the country will likely hike the rate further after research showed the increase in borrowing costs is yielding results.
The monetary policy committee on Wednesday lifted the benchmark rate by half a percentage point to 18.50 per cent, Governor Godwin Emefiele said in Abuja.
With the end in sight, Mr Buhari pleaded with lawmakers to hurriedly approve an $800 million loan from the World Bank, a move that could see Nigeria’s public debt pass $150 billion this year from over $60 billion when he took over.
His borrowing spree has drawn warnings from the World Bank that Africa’s largest economy was using 96 per cent of its revenue to service debts.
Earlier this month, the Budget Office of the Federation told the incoming legislature, which approves the country’s borrowing needs, that Nigeria’s debt-to-revenue ratio was worsening and could spell doom if the country exceeds its limit.
“We now have very limited borrowing space, not because our debt to GDP is high but because our revenue is too small to sustain the size of our debt. That explains our high debt service ratio. Once a country’s debt service ratio exceeds 30 per cent, that country is in trouble, and we are pushing towards 100 per cent, and that tells you how much trouble we are in,” the Director-General of the Budget Office, Mr Ben Akabueze, said.
Speaking to Business Post, Mr Akin Fatunke, a chartered accountant and public affairs analyst, said the country needed the incoming administration to take the bull by the horn.
“Economic viability should be hinged on efficient loan and self-sufficiency management geared towards investments at the commanding heights. West Africa has too many nation-states, many of which are simply not economically viable.
“I look at how Giuseppe Garibaldi masterminded the unification of Italy and how Otto Von Bismarck masterminded the unification of Germany, I look forward to a Nigerian hero masterminding the unification of West Africa,” he said in a correspondence to Business Post.
He tasked the incoming president to “Build a global economic giant that will rival the likes of China and India with their populations that are in excess of one billion people.”
On his part, Mr Nelson Ekujumi, a business and public affairs analyst, was optimistic about the capabilities of the incoming administration, noting that, “The incoming administration as headed by President-elect Asiwaju Bola Tinubu (GCFR) and Vice President-elect Senator Kashim Shettima (GCON) are astute accountant and economist technocrats respectively who are well versed in financial matters and I have a strong optimism that Nigeria’s debt will be tackled.”
He expects them to “plug economic loopholes to generate more sources of revenue that will limit our borrowing and put in place measures to ensure greater productivity and make life affordable and accessible such that the cost of living will be on a manageable scale for a vast majority of Nigerians.
“The factors engendering high cost of living is expected to be tackled frontally to arrest and reduce inflation.”