Assessing impact of tariff adjustments on Nigerians

The Nigerian Government is set to address calls for the reversal of the hike in electricity tariff for Band A customers following picketing at the offices of the Nigeria Electricity Regulatory Commission and Distribution companies. Eze Onyekpere, Lead Director at the Centre for Social Justice, shared insights on the implications of recent economic reforms in Nigeria during a CNBC Africa interview. The discussion highlighted the need for a thoughtful and well-sequenced approach to economic reforms, emphasizing the importance of considering the impact on livelihoods and economic opportunities for Nigerians. Onyekpere noted that the current reforms, such as the increase in electricity tariffs, have not been properly sequenced or thought through. He mentioned that the reforms have placed additional burdens on Nigerians already facing challenges such as high costs of credit, low purchasing power, and limited access to foreign currencies for importing raw materials. The timing of these reforms, which affect job creators and the economy's value chain, is crucial, and further hikes in electricity tariffs may exacerbate the existing economic difficulties. Moreover, Onyekpere raised concerns about the concept of cost-reflective tariffs, emphasizing that efficient operations by generator, transmission, and distribution companies should be the basis for determining costs. He highlighted the issue of imposing inefficiencies on customers due to high commercial and technical losses in the sector, calling for a comprehensive rethink of the current approach to tariff adjustments. The interview also delved into the recent suspension of the cyber security levy and the need for a coherent understanding of economic policies. Onyekpere criticized the lack of proper planning and communication in implementing reforms, citing examples such as the abrupt removal of fuel subsidies without adequate measures to protect vulnerable groups or industries. He pointed out that the timing and sequencing of reforms, like floating the Nigerian currency and removing petroleum subsidies simultaneously, have contributed to inflation and other economic challenges. Looking ahead, the government's plan to hold a consultative meeting with organized labor and stakeholders was discussed. Onyekpere expressed skepticism about the rushed nature of these consultations, cautioning that a knee-jerk reaction to economic issues may not yield sustainable solutions. He echoed the IMF's recommendation for well-sequenced and communicated reforms, emphasizing the need for proactive measures to mitigate the negative impacts of policy changes on the Nigerian population. In conclusion, the discussion underscored the importance of a well-thought-out, transparent, and inclusive approach to economic reforms in Nigeria. Balancing the need for fiscal discipline with social welfare considerations is crucial to achieving sustainable development and ensuring equitable access to opportunities for all Nigerians.