Nigeria averts labour crisis but falling Naira signals more trouble
Monday October 09 2023
Nigeria’s ruling party candidate Bola Tinubu who has been declared the president-elect following elections held on February 25, 2023. PHOTO | KOLA SULAIMON | AFP
The Nigerian government this week averted a workers’ strike in a deal with the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC) but may have also exposed the economic reforms by the government of President Bola Tinubu to turn around the economy.
This week, the government also agreed to a N35,000 ($46) minimum monthly pay to affiliated workers, pending deliberations of a new taskforce formed to determine a new minimum wage. The government also suspended the collection of value added tax (VAT) on diesel for six months beginning from October; voted N100 billion ($130,000) for the provision of high-capacity buses for mass transit; and to implement various tax incentive measures.
Read: Tinubu’s silent revolution shakes public service
But this isn’t what President Bola Tinubu wanted when he came to power in May. With a series of economic decisions, he expected the economy to pick up and the Naira to stabilise.
Annual inflation
In May, the Naira oscillated between N320 and N400 to the US dollar. Today, it has dropped to between N890 and N930, officially, and between N1,000 and N1,2000 in the black market. This has upended expectations because Tinubu had harmonised exchange rates in a quick-fix approach to tame hoarding and mounting import bills.
Read: Spiralling debt, inflation hit Nigeria’s economy
Tinubu had also rolled out new fiscal measures to curb the annual inflation. The rate has continued to escalate, now at 24.08 percent as at July 2023 data, the highest since 1999 when the nation returned to democracy. There had been multiple exchange rates which experts blamed for the poor performance of the Naira and held accountable for inflation during the administration of President Muhammadu Buhari.
On Tuesday, the government also agreed to look into the outstanding salaries and wages of tertiary education workers in Federal-owned educational institutions which were not paid as a result of eight months’ teachers strike and other workers.
President Tinubu’s monetary reforms followed his sacking of the Central Bank governor, and the new management of the Central Bank of Nigeria (CBN) adopted a clean float foreign exchange administration.