What we’ve learnt from implementing tough economic reforms – Minister

The Minister of Finance and Coordinating Minister of the Economy, Wale Edun, has said that economies like Nigeria and others implementing economic reforms must focus on social safety nets that cushion the impact of such reforms on the vulnerable and the poor.

Mr Edun made this known Tuesday while taking questions from journalists at a G-24 press briefing held at the ongoing World Bank/IMF summit in Washington D.C., USA.

The briefing was held after a meeting of the governors and ministers of the G-24.

The G-24, or Intergovernmental Group of Twenty-Four, is an intergovernmental trade bloc that coordinates the positions of developing countries on international monetary and development issues.

The briefing also had in attendance the Director of G-24 Secretariat, Iyabo Masha; Ralph Recto, the secretary of finance at the Philippines; and Candelaria Moroni, Undersecretary for International Coordination and Management of the Secretariat of International Economic and Financial Affairs at the Ministry of Economy, Argentina.

Mr Edun spoke in response to concerns that G-24 countries are having challenges implementing structural reforms and adjustment programmes.

Key Reforms

The Nigerian government has, in recent months, put in place key reforms to engender growth and restructure the economy.

In May 2023, shortly after being sworn in, President Bola Tinubu announced the removal of fuel subsidy as part of measures to reform the energy sector.

The Central Bank of Nigeria has equally put measures in place to unify the numerous FX windows in the foreign exchange market and bridge the gaps in the official and parallel markets.

There have equally been reforms in the energy sector, with attendant increases in electricity tariffs paid by certain categories of electricity consumers.

The reforms have been hailed as desirable by the World Bank, IMF and other development partners, based on their potential long-term impacts.

But on the domestic front, all of the reforms have had a ripple effect on the purchasing power of Nigerians amid sky-high inflation and elevated interest rates. The results have fueled discontent among Nigerians, who have staged protests amid widespread complaints.

Lessons

On Tuesday, when asked what the Nigerian government has learnt from the implementation of these reforms, Mr Edun said two key lessons are central to the success of such tough reforms.

“The key lesson that I think I would focus on is that in devising these programmes and carrying out the reforms, what is particularly important — because the benefits over the longer term and the costs are frontloaded, it is important that the social safety nets that will help the poor and the vulnerable cope with the up‑front costs with a spike in their cost‑of‑living is adequately planned for and dealt with.

“So, it should not be an issue of ‘it is an afterthought’…. that you decide now that there need to be certain poverty alleviation initiatives. And linked to that, focus on helping the poor and the most vulnerable.”

The minister added that communication is equally important in driving the reform objectives, building trust and fostering public support.

“I think one of the critical things in carrying out these economy reforms that are so fundamental and clearly they are necessary, otherwise they would not be implemented, is that communicating what is being done, what was to be expected.

“And also the timing as much as possible, the timing of the various activities, and then communicating what actually has been done so if it is a programme to give direct benefits, direct transfers of funds to a group of people, then it should be published. There should be a dashboard that people can follow, thereby engendering and building public trust.

“I think those are the two important things that I would say you need to have for all of us at the G‑24 and developing countries in general.”