Reforms fallouts: Naira falls 85%, revenues surge 142%, masses under pressure – Rewane

Fiscal and monetary reforms embarked upon by the new government of President Bola Ahmed Tinubu is spilling out mixed results, with the naira at the import and export foreign exchange (IEforex) window crashing by 85 per cent, Federal Allocation Account Committee (FAAC) revenue rising by a whopping 142 per cent in May, leaving the masses to take the scorching heat.
This leaves sub-nationals making cool cash from a hot economy
“As expected, kneading the multiple exchange rate system into one dough ball (IEF forex rate) meant a quick devaluation of the naira and more revenue for the government. As of June, the average IEforex rate fell by 85 per cent to a record low of N853/$ from N462/$ in May. Resultantly, FAAC revenue generated rose by 142 per cent to N1.9 trillion”, said Bismarck Rewane, Chief Executive Officer (CEO) of of Financial Derivatives Company (FDC) Limited.
He said, higher salaries, a potential review of general wages, and disbursement of conditional cash transfers are cheery news. However, inflation is still rabid (22.8 per cent as of June), deteriorating living standards and tipping many more into extreme poverty.
“The masses are taking the scorching heat of recent reforms, with no comforting end in sight”, said Rewane.
He however said, increased revenue for state governments points to higher capital expenditure, which could have positive multiplier effects on their states, residents, and the overall economy.
“More importantly, now, it means timely salary payments that should shore up aggregate demand and consumption levels. As of 2021, consumption made up 67 per cent of total Gross Domestic Product )GDP$”, he said.
Nonetheless, he said, Nigerians are getting broke and suffering.
“People need a soft landing, meaning a quick response from the government in effectively disbursing palliatives under its numerous social protection programmes. Any misstep on this front and Nigeria could become the cover girl for Chinua Achebe’s telltale “Things fall apart””.
On the business front, he said,to get ahead of slack demand, rising operating expenses and consumer resistance, Nigerian businesses have stayed innovative.
“But moving the tide with sachetization and miniaturization at this 11th hour seems insufficient for companies, particularly Fast Moving Commodities and Goods(FMCGs), to substantially leverage sales volume and stay afloat.

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