Economy, security top Tinubu’s agenda says Financial Times

Bola Tinubu will on Monday be inaugurated as Nigeria’s new president, inheriting a bulging in-tray that includes fixing a stagnant economy and tackling the insecurity that blights Africa’s most populous country.

Tinubu takes the reins from Muhammadu Buhari, whose eight years in office are generally viewed as having left Nigeria less secure and poorer than when he took over.

As both men belong to the ruling All Progressives Congress party, Tinubu has little wriggle room for the type of blame game that his predecessor played when he succeeded Goodluck Jonathan of the opposition People’s Democratic Party in 2015.

Tinubu, at 71, is nine years younger than Buhari, who was absent for long periods over his two terms receiving treatment for undisclosed ailments.

But the new president, who has his own health issues, has also spent time abroad to “rest” since his disputed election victory. This has left many Nigerians with a sense they are replacing one ailing leader with another. Afolabi Adekaiyaoja, an analyst at the Centre for Democracy and Development think-tank, said there was a discernible lack of enthusiasm ahead of the inauguration in the capital Abuja.

A call from the presidential spokesman for people to stay away also gave the impression that “this is not a popular president being sworn in”, he said.

Fixing Nigeria’s battered economy should top Tinubu’s agenda. The new president campaigned on his record as governor of Lagos state, where he increased tax revenues and attracted foreign investment. But experts warned that translating the template nationwide would not be plain sailing.

Tunde Leye, a partner at intelligence firm SBM, said taxing businesses in Lagos was more straightforward as most were part of the formal sector, but that was not the case in the wider country where the informal economy was dominant.

“Tax collection is a lot harder, enforcement is more difficult and they’re not structured” in the same way outside Lagos and Abuja, he said. Nigeria’s economy grew 2.3 per cent in the first quarter of 2023, down from 3.5 per cent in the previous quarter and 3.1 per cent in the same period last year, which the statistics agency blamed on the botched rollout of its redesigned currency.

Government data classes 133mn Nigerians, two-thirds of the population, as “multidimensionally poor”, while one in three are out of work. Oil production, the source of most of Nigeria’s foreign earnings and state revenues, has fallen sharply. A Senate report last year found that roughly a third of Nigeria’s oil was affected by theft and lost production, amounting to a $2bn loss in the first eight months of 2022.

Nigeria spent 96 per cent of government revenues last year servicing its debt obligations. Tinubu’s government could move to cut fuel subsidies that are set to cost the country $7.2bn in the first half of the year.

But Bismarck Rewane, head of Lagos-based consultancy Financial Derivatives, questioned whether Tinubu would take the tough decisions that previous leaders shied away from, given that doing so might affect his chance of a second term.

Jonathan backed down from a plan to cut fuel subsidies in 2012 after huge protests paralysed the country for more than a week. Tinubu is also under pressure to reform Nigeria’s messy exchange rate system that has frustrated businesses and fed a shortage of hard currency.

The central bank, under governor Godwin Emefiele, has propped up the naira against the dollar, vastly inflating its value against the US currency. Ahead of the inauguration, Nigerian senators over the weekend lifted a limit on how much the government can borrow from the central bank, indicating it is likely to continue to rely on such financing to plug shortfalls.

Read also: Are the new fiscal policy measures a way out for the Nigerian economy?

Charlie Robertson, global chief economist at investment bank Renaissance Capital, said it was crucial for the naira to reflect its real value if Nigeria was to attract the investment it needed. Foreign direct investment into the country fell to $468mn in 2022 from $698mn in the previous year. FDI was $3bn when Buhari took office in 2015. “If the currency doesn’t move, we won’t see FDI or foreign portfolio flows into Nigeria,” Robertson said.

Improving the rampant insecurity that spread under Buhari is another huge issue. While the outgoing president made progress against Boko Haram, the jihadi group that has terrorised north-east Nigeria for years, the wider issue of security is worse than ever. Kidnapping has become a lucrative industry, with armed gangs raiding villages and taking people for ransom, including children.

Separatists in south-east Nigeria, intercommunal clashes and long-running battles between nomadic cattle herders and farmers in central areas have also made the country more dangerous. Adekaiyaoja at the Centre for Democracy and Development said the new president still had his work cut out to convince Nigerians he could deliver improvements. “There is . . . apprehension and anxiety about whether there will be change, or more of the same,” he said.