Bola Tinubu, the newly elected President of Nigeria, has finally sworn in today. He succeeds President Muhammadu Buhari to lead a country that by 2050 is forecast to become the third most populous nation in the world, tied with the United States after India and China.
In his inaugural speech, the new president of Africa’s largest democracy, Nigeria, made major policy announcements to ease pressure on government finances and restore economic growth in the country after a staunch economic slowdown during the Buhari presidency.
Bola Tinubu said the decades-long subsidy on petroleum products was scrapped. He told a packed crowd that he was ending fuel subsidies. The previous Nigerian governments have tried and failed to end the subsidy that was first introduced in the 1970s. Despite its oil wealth, Nigeria has been unable to refine enough crude oil to meet local demands so it imports petroleum products, which are then sold at a government-set price. Aliko Dangote recently started a refinery to refine Nigeria’s oil. This means that the oil industry, which has been nationalized until last year, is finally going to ready to be privatized and profits will be generated.
But the subsidy is a huge drain on public finances. Last year, it gulped 4.3 trillion naira ($9.3 billion) and for the first half of this year, 3.36 trillion naira was budgeted for it. President Tinubu asserted that the subsidy could no longer be justified and that the funds would instead be spent on public infrastructure and to improve the lives of people.
Indeed, Nigeria has been experiencing economic conundrums since the Buhari presidency. In Nigeria’s capital, Abuja, locals identified economic hardship and insecurity as the biggest challenges they struggled with Buhari’s eight-year rule. “People have really suffered during this period. People have been dying because of a lack of money, and I pray and hope we should not experience this kind of thing again under the new president,” said Princess Taiwo, a fruit seller. Therefore, President Tinubu understands that the economy is a more pressing issue than managing the oil industry.
Oil is the primary source of revenue for the Nigerian economy. Under government control, the oil industry incurred more imports than exports, which significantly increased its trade deficit. President Tinubu believes that leaving the oil market to private ownership rather than the government would increase the industry’s efficiency in transforming crude oil into refined oil products, and be able to reduce its trade deficit.