![]() ![]() First, to help maintain the public’s support, the administration needs to clearly communicate that it faces a tradeoff in addressing Nigeria’s two major economic challenges: high inflation and high unemployment. The arbitrage between the black-market and official foreign-exchange rates, in the previous regime, fueled rent-seeking uneconomic profits of round-tripping, where banks divert foreign exchange obtained from the CBN at a lower official rate to the parallel market for higher profits.īut there’s plenty more Tinubu must do. Newly installed Acting Governor of the CBN Folashodun Shonubi ended the practice of using multiple exchange rates and replaced it with a liberalized exchange rate regime. The administration has responded with new security measures and bold economic policies, including the removal of the fuel subsidy it has also signed the Student Loan Act, a much-needed mechanism for increasing access to higher education, and suspended the Central Bank of Nigeria (CBN) governor, a step taken to depoliticize the office. The Tinubu administration certainly did not create these conditions, but it must now address them with economic and security measures. The Nigerian government’s social contract with the country’s citizens is broken and made harder to repair by economic-inclusion and inequality challenges that often manifest in bouts of insecurity and banditry. Tinubu should lead the coordination of a united African movement on the global stage that pushes wealthy countries to support African debt relief and new financing for climate action. ![]() While these deals will offer relief to Senegal and Zambia, they are mere palliatives that distract from united African positions and fall short of systemic recommendations from the Africa High-Level Working Group on the Global Financial Architecture, including structural reforms that lower financing costs and availability, overhaul the Group of Twenty (G20) Common Framework, and amplify African voices in global forums. For example, Senegal and the International Partners’ Group-including France, Germany, the European Union, the United Kingdom, and Canada-signed a 2.5-billion-euro clean-energy agreement, while Zambia negotiated a $6.3 billion debt restructuring plan with its creditors. There is currently a grave need for leadership among and better coordination between African countries, as shown by dissonance between African countries on their visions for a new global financial architecture during the recently concluded Summit for a New Global Financing Pact and bilateral deals by African Union members. Meanwhile, at this inflection point for African leadership on the global stage, Tinubu has been elected chairman of the Economic Community of West African States (ECOWAS). ![]() Now with Tinubu having removed the subsidy and also having implemented foreign-exchange reforms, Nigeria is expected to save $5.10 billion in the second half of 2023, which could go toward the government’s financing of growth and development projects. For example, the Nigerian government spent $10 billion in 2022 on just the petroleum subsidy, and another $2.41 billion in the first five months of 2023. Nigerians expect Tinubu to unify the country and address economic hardship caused in part by the removal of unsustainable subsidy regimes that constrain the government’s ability to finance growth and development. Tinubu is inheriting a country burdened by concurrent security and economic challenges. Tinubu can take advantage of this moment and establish Africa’s most populous nation as an economic powerhouse-and an African superpower in partnership with the multilateral system to advance the continent’s geopolitical interests and development agenda. As the international order appears to be transitioning from US hegemony to a US-led multilateral system, Bola Ahmed Tinubu is settling in as the new president of Nigeria.
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