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Nigerians look to President-elect Timinub for economic recovery | Business & Economics

Ilorin, Nigeria – Olusegun Badmus will be one of millions when Nigeria’s president-elect Bola Tinbu is sworn in on Monday.

But for the 57-year-old bus driver in the central Nigerian city of Ilorin, there is little excitement after years of disappointment with governments, including the outgoing one of President Muhammadu Buhari.

Under Buhari, Nigeria overtook India as the world’s poverty capital, with half of its estimated 200 million people now living in abject poverty. The naira has also lost 70% of its value against the dollar as Africa’s largest economy has endured two recessions.

“The Buhari government has really let us down,” Badmus told Al Jazeera. “He left the country worse than he met, but I just hope Tinubu performs as he promised.”

The former governor of Lagos, the country’s commercial capital, was declared the winner of the February 25 presidential election by the Independent National Electoral Commission ahead of Atiku Abubakar and Peter Obi.

Still, the incoming president is still grappling with legitimacy after winning the election with just a quarter of Nigeria’s 93 million registered voters.

Opposition parties have questioned the election process and results, citing irregularities, vote manipulation and a lack of transparency in the electoral commission’s methods. A hearing on their complaint began on May 8 and is scheduled to conclude on June 23.

Joachim MacEbong, senior government analyst at Lagos-based analytics firm Stears Intelligence, said some opposition supporters wanted the transition process to stall until the cases were decided, a sign of declining trust in government institutions.

“A lot of people don’t think they [institutions] It can be fair and just, and that’s actually the real issue here,” he told Al Jazeera.

While some Nigerians are waiting for the process to play out in court, others have turned to Tinubu for a quick economic solution.

controversial cut

In a country where more than a third of the population is currently unemployed, voters expect Tinub, 71, to create jobs, fix a free-falling economy and boost security in line with his campaign promises.

The president-elect also spoke of plans to revive the agricultural sector, increase power generation to address Nigeria’s notoriously unreliable power system and cut fuel subsidies.

He is often credited with boosting Lagos internal revenues from $3.77 million a month when he took office in 1999 to an average of $32 million a month in 2006, on the eve of his departure.

Economists have predicted that Tinubu, which has criticized the recent redesign and currency swap, is expected to devalue the naira by 15 percent to help stabilize the economy.

The most controversial decision a new president will likely have to make may also be the most impactful — cutting fuel subsidies.

Subsidies were introduced in Nigeria in 1973 as a temporary measure to offset rising oil prices. Although they are used to keep fuel prices affordable, they have persisted and have long been a controversial measure.

They are widely seen as corrupt and wasteful, benefiting only the rich and middle class, not the working class they are designed to help.

From January 2022 to September 2022, Nigeria spent 2.91 trillion naira ($7 billion) on fuel subsidies. That same year, more than $10 billion was misappropriated in a fuel subsidy scam.

In January 2012, then-President Goodluck Jonathan announced he would remove the subsidies, sparking nearly two weeks of nationwide protests by the opposition, organized labour, civil society and other Nigerians.

Jonathan reversed his decision and Buhari vacillated on the issue. But Tinnub said on his first day in office that he was ready to cut subsidies.

“If you look at the fiscal health of this country, sooner or later the subsidies are going to go away,” he said on the campaign trail. “Nigeria’s debt is partly caused by fuel subsidies, which the poorer members of society do not benefit from anyway.”

While that could cost the new president political support, experts say the move is the right one for Africa’s largest oil producer.

Strong opposition from many Nigerians is expected, though, as the end of the subsidy would also bring a spike in the cost of living.

“What I want Tinubu to do is find a way to lower the price of fuel and other goods and services,” Badmus said. “We buy gasoline with all the profits. We take almost no money home.”

If Tinubu’s government passes the test, the money it saves could go towards education and health care for low-income families, MacEbong said.

This month, the world’s largest 650,000-barrel-a-day refinery opened on the outskirts of Lagos. Nigeria’s first private refinery is owned by Aliko Dangote, Africa’s richest man, but state-owned Nigerian National Petroleum Corporation holds a 20 percent stake.

Economists say the project is expected to help Tinubu stabilize its economy and reduce inflation, which currently stands at 22 percent.

“The refinery means we will save the central bank $20-$23 million that could have been used to continue importing PMS [premium motor spirit] into Nigeria,” said Paul Alaje, senior economist at Lagos-based management consultancy SPM professionals.

“So this is big news for us,” he said. “Our foreign exchange reserves will grow significantly, which means that we will see a significant appreciation of the naira in the period to come.”

Bull market?

Nigerian bonds rallied after the Nigerian Election Commission declared Tinubu the winner. Investment banking giant Morgan Stanley is bullish on the market as it hopes a president-elect will prioritize fiscal and financial market improvements.

But analysts cautioned that this was not cause for early celebration, pointing to a series of policy missteps by Buhari that led to the reversal before a similar rise in 2015.

“Markets will always be optimistic about a new president, but it remains to be seen whether that will persist,” MacEbong said. “It depends on the reforms and how quickly they can be done so that the markets get the necessary signal.”

Back in Ilorin, Badmus is skeptical of any economic growth but hopes Tinubu’s time as governor of Lagos state will help turn things around.

“At this point, I trust God, not politicians,” he said as he parked the bus and wrapped up his day. “I hope Tinubu can change the state of this country and be a good medicine for our suffering.”

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