No amount of spiritual texts or traditional remedies will help solve Nigeria’s economic dilemma. To truly understand the situation, we must rely on empirical analysis and data-driven insights. When a foundation is weak, nothing built upon it can stand.
Nigeria’s economic reforms over the decades are a clear case in point. You can’t build stability on a fractured system.
For over four decades, Nigeria has undertaken ambitious economic reforms—starting with the Structural Adjustment Program (SAP) of the 1980s and culminating more recently in the removal of fuel subsidies and the unification of the naira exchange rate.
“However, poor data on household energy consumption and income distribution left compensatory measures, such as cash transfers, poorly targeted.”
These measures were touted as critical steps toward stabilising the economy and attracting investment. But for all the grand designs, Nigeria’s future remains fragile, teetering on the edge of uncertainty.
The root cause? Weak institutions and a chronic lack of reliable data. These foundational issues have kept economic reforms from achieving their intended goals. Without strong institutions to implement and monitor policies and without reliable data to inform decisions, Nigeria’s efforts resemble building castles on sand.
As Bismarck Rewane aptly put it, “The quality and effectiveness of public policy largely depends on the reliability of public data.”
Take, for instance, the removal of fuel subsidies in 2023—a necessary but controversial reform meant to free up government resources for social investments.
However, poor data on household energy consumption and income distribution left compensatory measures, such as cash transfers, poorly targeted. Consequently, millions of low-income Nigerians were left to shoulder the burden of rising fuel prices without adequate support.
The government’s inability to grasp the needs of its most vulnerable—those in rural areas, low-income families, and marginalised communities—means reform measures consistently miss the mark.
Without accurate data on poverty levels, income distribution, and living standards, even well-intentioned reforms can end up doing more harm than good. Those at the bottom of the economic ladder continue to bear the brunt of inflation, unemployment, and worsening inequality.
The persistent structural weaknesses within Nigeria’s institutions have rendered it nearly impossible to achieve meaningful, inclusive growth.
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Institutional weakness: The saboteur of reform
One of Nigeria’s most pressing challenges is the fragility of its institutions. Regulatory bodies and public agencies are hampered by inefficiency, corruption, and a lack of accountability, making it difficult to implement and sustain meaningful reforms.
Nigeria ranked 145th out of 180 countries and scored 25 out of 100 in the 2023 Corruption Perception Index (CPI), published by Transparency International.
The CPI measures perceived levels of public sector corruption on a scale from 0 to 100, where 0 represents a highly corrupt country and 100 represents a very clean and transparent public sector. Nigeria’s low score of 25 underscores the widespread perception of entrenched corruption in its institutions.
Weak institutions not only enable the mismanagement of resources but also create fertile ground for vested interests to hijack policy initiatives.
This issue extends beyond a single policy failure. It reflects a broader systemic problem, where reforms are crafted in isolation from the real needs of the people they are intended to help. Rather than facilitating progress, Nigeria’s institutions often serve as obstacles, plagued by inefficiency and open to manipulation by powerful elites.
Data deficiency: The blind spot in policy design
Another fundamental weakness in Nigeria’s economic strategy is the lack of reliable data. Policymaking in any country, but especially in a complex, diverse nation like Nigeria, must be data-driven to succeed.
Yet Nigeria’s statistical systems remain underfunded, and data collection is patchy at best, particularly in rural and underserved areas.
According to the National Bureau of Statistics (NBS) and the United Nations Development Programme (UNDP), over 133 million Nigerians, which is more than 60 percent of the population, are considered multidimensionally poor. This means they lack access to basic necessities such as healthcare, education, and sanitation.
“Consequently, millions of low-income Nigerians were left to shoulder the burden of rising fuel prices without adequate support.”
Despite this staggering figure, safety net programs like the National Social Investment Program (NSIP) are woefully underfunded and plagued by corruption. Only a fraction of those in need receive any support.
The conditional cash transfer program, aimed at providing relief to the most vulnerable, serves as a telling example. A 2023 World Bank report noted that just 2.5 million Nigerians benefitted from the program, a tiny fraction of those eligible.
Without comprehensive data on poverty dynamics, the government’s social investment initiatives remain superficial, failing to address the root causes of poverty.
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The impact of economic shocks: Who pays the price?
The consequences of poor data and weak institutions are most evident during times of economic stress. Nigeria’s unification of its exchange rate in mid-2023 is a case in point.
The policy aimed to attract foreign investment and increase government revenues. However, it led to sharp inflation, with food prices surging to 33.93 percent year-on-year in December 2023, a significant jump of 10.18 percentage points from 23.75 percent in December 2022.
For households already living on less than $2 a day, this spike was devastating, pushing millions further into poverty.
Despite the central bank’s efforts to stabilise the naira, the real burden of the policy fell on the poor, who are now grappling with the rising costs of basic goods and services.
Once again, the lack of robust social safety nets left the most vulnerable exposed to the full force of economic reform. Without better data, policies designed to stabilise the economy will continue to exacerbate inequality, disproportionately harming those least able to absorb the shocks.
A path forward: Data-driven policy and institutional reform
If Nigeria is to break free from this cycle of ineffective reform and growing inequality, it must prioritise two key areas: institutional reform and data-driven policy.
Strengthening institutions will require more than just good intentions; it will need political will, transparency, and a crackdown on corruption. Agencies responsible for implementing reforms must be held accountable, and vested interests that profit from the status quo must be confronted.
Equally important is the need for a robust data collection system. Accurate data on income distribution, consumption patterns, and demographic trends is crucial for designing policies that address the needs of the most vulnerable.
Without this information, government programs will continue to be poorly targeted, leaving millions behind.
Time to rethink reform
Nigeria’s path to economic stability and inclusive growth is not without challenges. However, without addressing the twin weaknesses of poor data and fragile institutions, no amount of reform will succeed in lifting the country’s most vulnerable citizens out of poverty.
Policymakers must recognise that the success of any economic agenda depends not just on the policies themselves but on the systems that implement them.
Only by building stronger institutions and embracing data-driven decision-making can Nigeria hope to secure a more prosperous and equitable future for all its people.
Oluwatobi Ojabello, senior economic analyst at BusinessDay, holds a BSc and an MSc in Economics as well as a PhD (in view) in Economics (Covenant, Ota).
Wasiu Alli is a business and finance journalist at BusinessDay who writes about the economy, business trends, and politics. He holds a BA. Ed. and M. Ed. in English Language and Education.
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