(Bloomberg) -- Bola Tinubu took over as Nigeria’s president and pledged to scrap a costly fuel subsidy, address widening insecurity and revive Africa’s largest economy.
The 71-year-old former state governor was sworn in at a ceremony in the capital, Abuja, on Monday. He succeeds Muhammadu Buhari, who stepped down after two terms, and inherits a daunting list of problems to tackle in the continent’s most-populous nation.
“We have endured hardships that would have made other societies crumble,” Tinubu said after taking the oath of office.
The president said his administration will target an economic growth rate of at least 6% a year through measures including boosting manufacturing and making electricity more accessible and affordable. The government will also continue to invest in the nation’s road, rail and port infrastructure, he said.
After Buhari’s administration extended the deadline several times, Tinubu also vowed to fulfill a pledge by to scrap a gasoline subsidy that cost the government $10 billion last year and dwarfed spending on education and health.
“The fuel subsidy is gone” because its ever-increasing cost can no longer be justified, he said. “We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions.”
It’s unclear what will happen to the pump price from next month onward as phasing out the payments will significantly increase transport costs. Previous attempts to remove them have triggered social unrest.
The incoming administration will seek to end Nigeria’s multiple-currency regime, Tinubu said, as he called on the central bank to lower borrowing costs to boost economic growth.
Nigeria has numerous exchange rates, dominated by a tightly controlled official rate, that cuts off access to many businesses and individuals, which in turn drives demand to the unauthorized black market. Tinubu’s comment on the exchange rate may signal that a devaluation of the official rate is on the cards in the near future, said Joachim MacEbong, senior governance analyst at Lagos-based Stears Insights.
“Unifying exchange rates is another devaluation in all but name,” MacEbong said. “Now that the new president has signaled it in his speech, it could be as little as weeks before we see the Central Bank of Nigeria move to adopt an exchange rate more reflective of market forces.”
Read More: Naira at Growing Risk of Devaluation in Coming Weeks, Absa Says
Tinubu didn’t address Nigeria’s ballooning debt burden in his speech.
Since Buhari, 80, came to power in 2015, Nigeria’s public debt has increased seven-fold to about 77 trillion naira ($166 billion), according to the country’s Debt Management Office. Servicing those obligations consumed 96% of government revenue in 2022 and the figure could top 100% this year. That’s left the government reliant on ever-greater borrowing and widening deficits to run the state.
Inflation that’s at an 18-year high is meanwhile raising the cost of living in a country where 40% of the population live in extreme poverty and one in three people are unemployed.
And though Buhari’s administration made some progress containing jihadist groups in northeastern Nigeria, armed gangs that have been blamed for mass killings and kidnappings have proliferated in other parts of the country.
“We shall defend the nation from terror and all forms of criminality that threaten the peace and stability of our country,” Tinubu said, committing to invest in recruiting more security personnel and better military equipment.
While Tinubu takes the helm after receiving the lowest vote share of any winner in a presidential election since the restoration of democracy 24 years ago, he will have room for maneuver. The ruling All Progressives Congress kept its majorities in the Senate and among state governors, though it no longer commands one in the House of Representatives.
A federal court has yet to rule on petitions filed by the runners-up in February’s presidential election against Tinubu’s victory.
(Updates with analyst comment on exchange rate from ninth paragraph)
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