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2023 as year of policy instability in Nigeria 22 Jan 2024

The year 2023 was a rollercoaster ride in policymaking in Nigeria. Several policies were introduced, postponed, adjusted, extended, relaxed, cancelled, or reversed. From the controversial naira redesign policy going into effect, to the unexpected removal of fuel subsidies, navigating the economic terrain was a difficult task. And the overall impacts of the changes have been negative in the short term.

Some of the shifts in policy include changes to the visa-on-arrival programme, postponement of the scheduled national population census, delay to tariff increase for sugar importation, reopening of the country’s land borders with the Benin Republic, the eventual exclusion of university lecturers from the Integrated Payroll and Personnel Information System (IPPIS), and the removal of the foreign exchange prohibition on the importation of some 43 items by the Central Bank of Nigeria (CBN). These and other alterations to economic policies raise questions about the government’s ability to make long-term plans. They also highlight the risk of policy uncertainties arising from inter-governmental transitions.
 
Of the policy changes, the one that has grabbed the most attention and had the strongest impact on the economy and the people is the removal of fuel subsidies. The change in policy transferred the financial burden of petrol subsidies from the treasury of the government to the balance sheets of businesses and the pockets of the people. Nevertheless, the policy itself has arguably been reversed. Facing mounting pressures from the rising cost of transportation, the government started to implement targeted fuel price adjustment no sooner than it had announced the end of the subsidy programme. Apart from the suggestion of a miscalculation by the government that was all too eager to end fuel subsidy in the country, the ensuing adjustment highlights the need to maintain a delicate balance between economic reforms and their negative impacts which if ignored could make their implementation unsustainable.

The new naira notes were introduced to ostensibly curb the currency’s counterfeiting, promote cashless economy, and address security concerns. But the policy was plagued by logistical challenges and cash shortages, leading to long queues at banks and widespread frustration among citizens. The deadline for the old naira notes exchange, originally set for December 2023, has been extended. Nevertheless, the policy remains a complex issue whose practical challenges seem to have outweighed its benefits.

The university lecturers’ body, Academic Staff Union of Universities (ASUU), was at loggerheads with the past administration over the inclusion of its members on the IPPIS platform for processing the salaries of public sector workers. The row contributed to months of strikers by the lecturers, who effectively shut down the public universities.

The planned increase in the tariffs on sugar was postponed from July 2023 to an unspecified date. Also, the ban on wheat importation through the land borders was reversed in October 2023 due to supply shortages and price hikes. Rice import quotas were increased in April but later reduced in October 2023 due to concerns about local production. Still in the food sector, cassava flour inclusion percentages were reduced, and the livestock import ban was partially reversed in August 2023 to address specific supply chain concerns and food security needs.

Adjustments in the visa-on-arrival policy was initially restricted to a limited number of countries but was later expanded to include additional nationalities, reflecting the government’s efforts to attract tourism and investments. The re-opening of land borders with the Benin Republic after three years of closure to boost trade and regional integration also qualifies as a key shift in the country’s external relations.

The deadline for linking phone numbers to national identification numbers (NIN) was extended multiple times throughout the year to allow more people to register. In December 2023, the CBN changed its stance on cryptocurrencies and digital assets and instructed banks and other financial institutions to disregard its earlier ban on crypto transactions in the banks.

In January of last year, the government lifted its ban on Twitter (now known as X) in Nigeria, saying that the social media platform had agreed to its conditions on management of unlawful content and to register in Nigeria.

The national population census, which was originally scheduled for May 2023, was shifted to July, and eventually postponed to 2024 due to concerns about logistics and data accuracy. Similarly, the National Health Insurance Scheme (NHIS) mandatory enrollment for government employees was temporarily postponed after concerns about affordability and administrative challenges. The national malaria treatment guidelines were also revised in July 2023 to include new and more effective drugs after consultation with medical experts.

This volatility in policymaking cannot be fully explained by the need to pivot in order to meet macroeconomic targets. It suggests some inadequacies in the formulation of the original policies which may also affect the changes made. Policies and their updates need to be carefully thought through before their introduction and implementation because of their potential impact on businesses, investor confidence, and the economy. Unfortunately, some of the recent policy changes have also had serious impacts on the welfare of the people. When policies change too frequently, it becomes difficult for investors to commit to even the incentives they offer for investments as they could soon be rolled back.

However, the policy changes since June 2023 reflect a new economic thinking by the new administration. This offers new opportunities for investment. The policies align with the market ideology and their long-term impacts can be quite positive despite their negative effects in the immediate term.

Policies must be based on a vision, clear economic thinking, and the legitimate interests of various stakeholders. Some of the potentially impactful policies are best introduced quite early in the life of an administration for sustained implementation. This is the basis for optimism that the policy changes in the first few months of the administration of President Bola Tinubu will yield dividends.

Olusola Dahunsi, PhD, who is a chartered accountant, is a lecturer and researcher.