Standing at ReformsGate, peeping into 2025

The casualties are not only those who are dead.

 They are well out of it.

 The casualties are not only those who are dead.

 Though they await burial by instalment.

….We are all casualties…

From The Casualties by John Pepper Clark

Nigerians from all walks of life are ending 2024 at the ReformsGate. From here we are peeping into 2025, wondering what the next 12 months would hold in stock for us. Only a few households, if any, have not been impacted negatively by the economic reforms of the Federal Government of Nigeria. This has been particularly so when the new measures run a full year.

This uncertainty has been heightened by the events of the last few days in which the nation harvested lots of deaths of our compatriots. Many of them died in Anambra and Abuja in search of palliatives to help them assuage the pains of the reforms. Their demise in such unfortunate circumstances has caused pain to all, from President Bola Tinubu to the state governors, down to ordinary Nigerians.

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This is the trouble with reforms. Economic reforms are difficult to embark on, and governments know why. Sometimes governments postpone or defer the decision to engage in reforms. They do so because of the fear of unsettling some interest groups. This could be mere postponing the evil day.

These challenges arise because reforms come with gains and benefits. So, the challenge is not just the pain they bring. Even the gains they generate are part of the difficulty in designing economic policies. Reforms are all about the redistribution of benefits and costs. How to distribute both gains and pains across the board is often the headache of policymakers.

There are no economic reforms that do not disturb the apple cart. That’s their purpose, and it is also the major source of problems to reforms. Resistance often comes from those whose established interests are threatened by the changes introduced through reforms.   Indeed, this is the reason for every economic change. It is designed to disrupt established patterns that, while serving the interests of a few, are ultimately injurious to the long-term health of the economy.

President Tinubu explained this again on Monday during his media chat. He was emphatic on the vexatious issue of fuel subsidy removal. Nigerians have faulted his approach to the solution. While many agree that the price of petrol needed to be adjusted, they would have preferred a “gradual” approach.

We will not forget in a hurry his now famous statement: “Subsidy is gone” while he was still at Eagle Square in Abuja, during his inauguration. That set in motion a chain reaction. Petrol station attendants in a jiffy adjusted their pump prices. Deregulation, which had been delayed, finally took off!

However, when the journalists asked him on Monday if the subsidy removal could have been phased, his response was clear: we as a nation were spending the fortunes of our future generations. He said that the country, in spending those future fortunes, had failed to invest. Instead, according to him: “We were just deceiving ourselves”.

He emphasised yet again that the reform was just necessary. “Why should you have expenditures that you don’t have revenues for?” he asked. The president in the media chat ordered a review of our training/teaching curriculum. “We should teach management in all our programmes. It is necessary. We have to manage our resources,” he admonished Nigerians.

It is also in this context that the contentious tax bills must be viewed. They form part of the reforms, and speaking on Monday, President Tinubu said the tax reforms have come to stay, although he did not foreclose negotiations. We know that taxes are instruments of redistribution of wealth, but are often resisted. The fiscal reforms, according to him, are pro-poor. “The hallmark of a good leader is the ability to do what you have to do at the time you ought to do it.”

In this sense, the bills, taken together, aim to reduce leakages in the public purse through tax evasion. He spoke in a language that Nigerians connect with: “All we are asking for is to widen the tax net, make the cake larger, and let us share a larger meal. They will still ask for this computation, no matter how long I delay it.”

Death through stampedes at food/palliative collection centres is an unintended consequence of the reforms. It is a pain to us because we are all casualties, to varying degrees. It illustrates the irony of reforms: sometimes those who bore the cost of the inefficient system also fail to gain in the new dispensation, at least in the immediate run. That is an irony indeed.

The current reforms will define the course of the Nigerian economy for a long time. They will determine the fiscal and monetary policies of the government.  So, the challenge for the government is how to minimise these unintended consequences of the new policies as we enter into 2025. That is a test of the efficiency of public policies.