Economic reform does not end with prices – It begins there

For much of the past three years, Nigeria’s economic debate has revolved around prices. The price of petrol. The value of the naira. Electricity tariffs. Interest rates. Since 2023, government reforms have reshaped each of them, ending fuel subsidies, liberalising the foreign exchange market, adjusting electricity tariffs and pursuing one of the most aggressive monetary tightening cycles in recent history.

These reforms were necessary. Artificial prices had become fiscally unsustainable and economically distortive, encouraging waste, discouraging investment and weakening public finances. Restoring market signals was an essential first step. But it was only that: a first step.

Changing prices does not automatically change an economy. This distinction is increasingly important because many of Nigeria’s structural challenges remain. Manufacturers still struggle with unreliable electricity and high production costs. Farmers continue to face insecurity, poor logistics and limited access to finance. Non-oil exports remain modest, while productive job creation has been slower than many expected. Prices have changed, but production has not expanded at the pace required to transform the economy.

Markets perform an important role. They signal scarcity, reward efficiency and influence investment decisions. What they cannot do is build power plants, modernise farms, develop transport networks, educate skilled workers or strengthen public institutions. Those outcomes require sustained investment, effective governance and a deliberate commitment to raising productivity.

This is where the next phase of Nigeria’s reforms must begin. A higher petrol price will not create domestic refining capacity. A market-determined exchange rate will not automatically make

Nigerian exporters globally competitive. Cost-reflective electricity tariffs cannot guarantee reliable power if generation, transmission and distribution remain weak. High interest rates may help stabilise inflation, but they can also discourage businesses from borrowing to expand production. Price reforms improve incentives. They do not create productive capacity.

History offers a clear lesson. China, Vietnam and Indonesia all embraced market reforms, but they matched them with decades of investment in infrastructure, manufacturing, education and export industries. Market signals encouraged investment, while strong institutions and productive capacity turned that investment into sustained growth. Their success came not from liberalising prices alone but from expanding what their economies could produce.

Nigeria’s greatest economic constraint today is no longer distorted prices but weak productivity. According to the International Labour Organisation, the average Nigerian worker generated about 5.6 US dollars of output per hour in 2025, compared with 8.3 dollars in Côte d’Ivoire, 11.6 dollars in Ghana and more than 20 dollars in China and Botswana. These differences reflect stronger infrastructure, better skills, more efficient institutions and higher value production.

Productivity is ultimately what raises living standards. Workers who produce more earn more. Farms that generate higher yields increase incomes without expanding farmland. Manufacturers that operate efficiently compete more successfully in domestic and export markets. Sustainable prosperity comes from producing more value, not simply changing prices.

This is why reform must now shift from correcting market distortions to expanding productive capacity. Reliable electricity matters more than higher tariffs. Efficient transport networks matter more than fuel prices alone. Competitive industries require affordable long-term finance, predictable regulations and skilled workers. Agriculture needs stronger value chains that connect production to processing, storage and export markets, rather than focusing solely on increasing output.

Institutional quality is equally important. Investors respond not only to market prices but also to policy consistency, efficient public administration and confidence that contracts will be honoured.

Without these foundations, favourable price signals alone cannot sustain investment or industrial growth.

Ultimately, economic reform should be judged not by the prices government changes but by the opportunities citizens gain. Do businesses produce more? Are exports becoming more competitive?

Are productive jobs expanding? Are household incomes rising? These are the outcomes that define successful reform.

Nigeria has taken the politically difficult step of correcting prices. The more demanding task now is building an economy capable of responding to those new market signals. Until productivity, infrastructure, institutions and human capital become equal priorities, price reforms will remain an important beginning but an incomplete transformation.