Nigeria’s President Bola Tinubu’s economic policies, particularly the elimination of the fuel subsidy and the consolidation of multiple foreign exchange windows into the single Importer and Exporter (I&E) window, have faced criticism for causing a drastic irreparabledepreciation of the naira, rendering it seemingly irreparable, according to a recent report by Price Water Coopers (PwC).
In its report titled ‘Nigeria’s Economic Outlook: Seven Trends That Will Shape Nigerian Economy in 2024,’ released last Wednesday, PwC acknowledged that Tinubu’s implemented measures had led to a significant devaluation of the naira. However, the report suggested that these moves were strategically designed to appeal to foreign investors and were anticipated to contribute to the overall improvement of the economy in 2024.
Among the key initiatives outlined in the report were the removal of the fuel subsidy, which amounted to $10 billion in 2022, and the consolidation of multiple foreign exchange windows into the single I&E window. This restructuring reportedly caused the naira to depreciate by 98% between May and December 2023, with the aim of spurring growth and regaining investors’ confidence.
Tinubu, in his inaugural speech on May 29, 2023, announced the absence of provisions for the fuel subsidy in the 2023 budget. Additionally, he embraced a free float strategy, collapsing various forex windows into the I&E, allowing market forces to determine the forex prices.
While the abrupt elimination of subsidies resulted in hardships for citizens, causing a 100% increase in the prices of goods and services, PwC defended the decision, asserting its necessity to attract investors and combat oil bunkering.
The PwC report anticipates that planned fiscal and monetary policy reforms in 2024 will stimulate economic growth, reduce inflation, and address forex challenges, ultimately driving increased investment in the country.
