Africa’s Giant Raises Hopes of Fresh Start

Nigeria’s new president, Bola Tinubu, has delighted investors with decisions he’s taken in just two weeks in office. For Bloomberg analysts, the question now is whether he can stay the course.

So far he’s abolished a costly fuel subsidy, suspended the contentious central bank governor and signaled that an exchange rate policy overhaul is imminent.

The stock market has soared to a 15-year high on optimism he has the mettle to implement the difficult political decisions needed to turn Africa’s largest economy around.

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That Nigeria needs a reboot is beyond doubt. Half of adults are under- or unemployed and oil production — the lifeblood of the economy — is at lows last seen in the 1980s. The government spent the vast bulk of revenue it collected last year on servicing its debt and the figure could top 100% this year.

The scrapping of subsidies on gasoline, which consume billions of dollars each year, will go some way toward stabilizing public finances. And the removal of Godwin Emefiele as the central bank governor is the likely precursor to the end of a multiple exchange rate regime that’s underpinned a thriving black market.

But the hard part lies ahead. Government institutions are dysfunctional, corruption is endemic and insecurity remains a perennial problem. Armed bandits and Islamist militants have free rein across large swathes of territory.

Even bigger asks will be to create jobs and tackle poverty in a nation where about 40% of the population of more than 200 million live in poverty.

Question marks also remain over the 71-year-old Tinubu’s commitment to clean governance. He’s been dogged for decades by corruption allegations that’s he’s denied but never completely dispelled.

The early days of the Tinubu administration have been a case of so far, so good. But Nigeria has had many false dawns before — there is a still a long way to go.