Reforms of any kind comes with the acceptance that the existing order has become ineffectual and inefficient and needs to be rejigged for greater performance and it is this epiphany that creates the urgency of now for broad-based and inclusive reforms to be activated. Regardless, reforms are expected to produce better outcomes for the people if not, it becomes a deformation or a liability!
When policies are labeled as reformative, they often create an impression of being progressive and beneficial for societal development. However, not all policies that carry the “reform” tag truly generate positive change, making it essential to critically examine and challenge their claims to ensure they deliver the intended outcomes.
The end of the Buhari administration and the arrival of President Bola Ahmed Tinubu’s (PBAT) government in May 2023 were initially seen as a beacon of hope, offering a fresh start after years of economic stagnation. Tinubu’s administration came in with a commitment to revitalize Nigeria’s struggling economy, launching a series of reform initiatives outlined in the “Policy Advocacy Council Report (PACR) of PBAT.” However, 18 months into the administration, Nigerians continue to face severe economic challenges, including rising prices, currency instability, and an escalating debt crisis. These macroeconomic headwinds have contributed to a mixed public perception of the reforms, with varying sentiments across different regions, parties, and demographics.
Source: PBAT Media Centre/ System Strategy and Policy Lab.
Considerably, when policies come with the toga of reformation, it immediately adorns the garb of pristine creating the belief that it is geared towards generating a better structures and platforms for social progress. Evaluating these actions requires analyzing whether they align with a coherent strategy that can guide Nigeria toward its desired economic goals. Tagging all policies as reformatory can therefore be deceptive at times implying that it is our responsibility to query and interrogate some of the arrogations from time to time. Hence, our critical poser: Is this the time for reform reset or should we continue to solder-on on the current trajectory?
Overview of Tinubu-nomic Reforms.
Upon taking office, President Tinubu announced an ambitious plan to grow Nigeria’s economy to US$1 trillion by 2030, a significant leap from the 2022 GDP of US$472.6 billion (World Bank). This vision was built on three key pillars: broad-based reforms, shared prosperity, and inclusive economic transformation. Central to these efforts were the removal of subsidies, securing oil infrastructure, stabilizing the business environment, and reforming monetary policies to boost investor confidence and restore price and currency stability.
The last 18 months of the PBAT dispensation has witnessed a swathe of reforms which could be summed up under the following:
Key Policy Decisions
| Policies |
| 1. Subsidy removal (Electricity, Petroleum, Education) |
| 2. Exchange rate unification |
| 3. Devaluation/Floating of the naira
|
| 4. Overhaul of the Fiscal framework (taxation, royalties, minimum wages etc.)
|
| 5. Public service sector reform |
| 6. Increased debt stock through more borrowings
|
| 7. Business Climate Reforms |
| 8. 2023 macroeconomic indices review |
These are some of the key policies implemented by this government during its first 18 months in office. By examining each of them in detail, the impact on Nigerians—particularly workers, pensioners, the general populace, and the economy—becomes evident
However, despite these efforts, the economic turnaround remains elusive, as current realities show pale progress toward achieving these goals. The slow progress in Nigeria’s economic reforms can be partly attributed to the natural time lag (Lag effect) required for policies to take effect, as well as the negative pass-through impact from the challenging external business environment. However, a significant setback has been the country’s weak institutional capacity and inability to plug public sector leakages to effectively in implementing and sustaining these reforms.
For example, while the immediate economic pain from the removal of petrol and exchange rate subsidies has been widely felt, the government’s ability to mitigate these effects has been hampered by poor institutional structures. This includes an inability to protect economic assets, ensure business stability, enforce the rule of law, and address public sector inefficiencies, all of which are crucial for driving growth and higher revenue. In the ….
- Benefits of Tinubu-nomic Reforms
The believe in some quarters is that PBAT’s economic reforms aim to improve Nigeria’s investment climate across the different sectors. A deep dive into the administration’s trajectory showed that it has implemented positive economic reforms which has bore transformational fruit in certain economic tractions of the nation:
– Increased Government Revenue: Estimated revenue gains from subsidy removal tallied to ₦5-6 trillion is estimated to be saved- based on BDI estimation- saved annually from fuel subsidy elimination. We also envisage that allocation to the state government has increased by an average of 70% in the last oner and half years.
– Improved Electricity Generation and Distribution: As of September 2024, the Nigeria’s power generation rose to 5,313 M- the highest in three years. This is not unconnected to the recent power segmentation (banding system) strategy where the power distribution arrangement is made on a willing-buyer- willing – seller model.
– Foreign reserves: This has increased to US$37billion dollars as at August, 2023 from the $33.09billion as at the end of 2023, according to the data from CBN
– Minimum Wage: The President on 18 July, 2024 approved a new national minimum wage of #70,000 for Nigerian workers. This represents a marked increase from the previous #30,000 enacted during the Buhari administration in 2019. The agreement of a periodic three-year review, as opposed to the five-year arrangement, is also commendable.
– Oil Production Ramping up: The nation, for a very long time, increased oil production to 1.61million barrel per day- mbpd- (including 220,000 barrel of condensates) as at August, 2024, getting close to the budget benchmark. The Nigerian Upstream Petroleum Regulatory Agency (NUPRC) has claimed the nation boast a proven reserve of 37.5billion barrels and a production capacity of 2.19mbpd.
– Fiscal Stability and Debt Management
FOREX Backlog: On March 20, 2024, the CBN cleared a backlog of $7 billion valid foreign exchange (FX) owed, to build investor confidence in the domestic economy and entrench lasting credibility.
– Ways and Means: The Minister of Finance and Coordinating Minister of the economy avowed that the government is not relying on ways and means for borrowing, and that N7.3 trillion obligation has been defrayed in the one year of the administration.
Other potential benefits of the reforms include noticeable reduction in debt to GDP ratio, successive quarterly GDP growth.
- Costs and Short-term Economic Impact
The 18 months of the reforms have also been accompanied by several downsides triggering a wave of discombobulation and desolate across the ranks and file. Tinubu’s administration, influenced by neoliberal doctrines championed by the World Bank and IMF, roll-out a raft of reforms. These reforms, aimed at fiscal stability, have sparked mixed reactions. The fallout of the reform roll-out include:
- Inflationary Pressure: Spike in inflation following the removal of fuel subsidies (inflation peaked at 34.08% in June 2024). This is further exacerbated by higher transportation and food prices due to rising fuel costs.
- Currency Volatility: Naira depreciation as a result of exchange rate liberalization (naira value dropped from ₦450 to over ₦700 per dollar in mid-2023 then to a high of #1700 in March). This has further aggravated import-dependent industries and general living standards.
- Social Unrest and Public Discontent: Widespread protests and strikes due to rising cost of living and fuel prices. The 10-day protest of August 1-10 cost the nation to the tune of #5 trillion according to industry watchers and experts.
- Fiscal Pressure: Immediate fiscal pressure on the government to provide social safety nets (e.g., cash transfer programs, palliatives for the poor). A hodge-podge of hit-and -miss interventions have been trialed leading to varying degree of successes.
One of the most contentious actions was the swift hike in petrol prices, which deviated from expected reform processes designed to positively impact the economy.
Long-term Economic Prospects
- Sustainable Growth
- Projections for GDP growth post-reform (CBN projected growth rate of 3.75% by 2026).
- Potential for attracting new industries and diversification of the economy.
- Improvement in Global Economic Rankings
- Nigeria’s position in global economic rankings (e.g., World Bank, IMF forecasts).
- Expected changes in credit ratings from global financial institutions especially on the backdrop of recent recapitalization directive.
Looking Forward: The urgency of real, efficient economic reform
The success or failure of Tinubu’s economic policies can be judged based on their impacts on the people. Questions such as whether citizens have greater access to basic needs like food, housing, and healthcare, and whether their quality of life has improved, are essential in evaluating these policies. The real test lies in whether the reforms bring tangible benefits in the short, medium, or long term, or whether they lead to stagnation or deterioration of living conditions.
In conclusion, the PBAT administration’s economic policies present a mixed outcome. While certain measures may attract foreign direct and portfolio investments and offer immediate fiscal relief, others have led to significant socio-economic challenges. The removal of the petrol subsidy, Naira devaluation, and related actions have spurred inflation, diminished purchasing power, and triggered job losses. Although foreign exchange expansion and privatization efforts may benefit select groups, historical patterns cast doubt on their long-term success. Additionally, the cash crunch, whether deliberate or not, has strained citizens. A comprehensive review of these policies is crucial to ensure their effectiveness and sustainability.
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