When President Bola Tinubu assumed office a year ago, the Nigerian economy was in tatters and in search of a new growth path.
One year later, Tinubu has pushed through bold economic reforms that have delivered shock therapy for Nigerians.
The following charts summarise Tinubu’s first year in office:
Nigeria’s headline inflation under the Tinubu-led administration has spiralled to 33.70 percent in April, the highest after a year of inaugurating successive governments since 1999, BusinessDay’s findings show.
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As of May 2023, when Tinubu took over as president, data from the National Bureau of Statistics showed that the country’s inflation rate was 22.41 percent.
Since Tinubu announced the petrol subsidy removal during his inauguration on May 29, pump prices have more than tripled, while the value of the naira has plunged following the floating of the currency, sparking an explosion of headline inflation.
Analysts project that consumer prices may not ease soon owing to low productivity in the agricultural sector, exchange rate fluctuations, and the threefold increase in electricity tariffs for Band A users, BusinessDay earlier reported.
Tajudeen Ibrahim, director of research and strategy at Chapel Hill Denham, said inflation is expected to moderate, adding that its deceleration may not sharply touch the 21 percent forecast by the country’s apex bank.
The average cost of preparing a pot of jollof rice for a Nigerian family of five also rose by 55 percent to N16,955 from N10,882 within a year, largely as a result of the naira depreciation, according to the SBM Intelligence Jollof index.
This equals 53 percent of the N30,000 minimum wage, meaning that a minimum-wage earner can only cook jollof rice once a month.
“The cost of cooking a pot of jollof rice for me and my family would have cost me about N7,000 last year, but now, even N12,000 can’t sufficiently cook the same quantity for my family. I only cook jollof rice during celebrations; other times, I use ground pepper and eggs,” Lola Adio, a mother of five children, told BusinessDay.
The report, titled ‘Crisis at the Table’, by SBM Intelligence, an Africa-focused geopolitical research and strategic communications consulting firm, said that the primary trigger for the increase was the naira depreciation, which moved from a monthly average of N460 to a dollar in May 2023 to a monthly average of over N1,400 in May 2024.
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“This severely affected food affordability, particularly as the country still largely depends on food imports to meet its food demands,” the report said.
NBS data also shows that Nigerians spent N982 on a healthy diet in March, costing 95 percent more than N503 after one year of the Tinubu-led administration.
The CoHD metric assesses the availability, price, and nutritional composition of retail food items to identify the most cost-effective combination meeting the requirements for a healthy diet.
“Animal source foods were the most expensive food group recommendation to meet in March, accounting for 37 percent of the total CoHD and providing 13 percent of the total calories,” the report said.
During his inauguration speech in May 2023, President Bola Tinubu announced the removal of the petrol subsidy, which immediately spiked the prices of petrol, food items, and services. Before this, there was a difference of close to N202 for every litre of PMS imported into the country.
Data gleaned from the NBS shows that the average retail price paid by consumers for petrol in April 2024 was N701.24, a 176.02 percent increase when compared to the value recorded in April 2023, before President Tinubu’s assumption of office, which was N254.06.
BusinessDay, however, reported in February that the fuel subsidy is back in effect and is now greater than what was being paid before Tinubu’s decision to end the practice in May of last year.
Analysis revealed that the country is spending around N907.5 billion monthly on subsidies for gasoline due to a foreign exchange crisis that has pushed the actual cost per litre to N1,203.
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A week before the 2023 presidential election, Mele Kyari, the group chief executive office of the Nigerian National Petroleum Company (NNPC), stated during the final cutover ceremony of a state-owned oil firm from a corporation to a company in Abuja that the country is spending over N400 billion monthly on petrol subsidies.
Although the government still pays subsidies, the price of gasoline has continued to increase in the past year, with only a slight decrease in September 2023 and January 2024.
Compounding the steep prices of gasoline was the fuel scarcity, which hit the country hard at the end of April.
“This equals 53 percent of the N30,000 minimum wage, meaning that a minimum-wage earner can only cook jollof rice once a month.”
Despite assurance from the NNPC that the logistics issue, which had been the cause of the scarcity, was resolved, long queues at petrol stations carried on for months. The scarcity of petrol heightened the already existing difficulties of Nigerians, as workers had to stand at bus stops for hours to get buses with exorbitant fares, and business owners had to face losses in their businesses.
Since Tinubu assumed office, BusinessDay has reported a series of petrol shortages caused by various issues.
Likewise, Nigeria’s daily average crude oil production is yet to surpass the crude oil production quota handed down to it by the Organisation of Petroleum Exporting Countries (OPEC).
In December, during the 36th ministerial meeting of OPEC and non-OPEC producers, the group forecasted that Nigeria could reach an oil production quota of 1.5 million barrels per day (mbpd) in 2024.
This projection followed a week of intense negotiations, resulting in an agreement to increase Nigeria’s production quota for the next year from 1.38 mbpd to 1.5 mbpd by the oil cartel.
The Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) latest oil production status report revealed that crude oil production rose by 4 percent, at 1.28 mbpd.
However, oil production still failed to meet OPEC’s quota and the production target set by the federal government.
In the 2024 budget, the federal government established a daily oil production target of 1.78 mbpd to meet revenue goals. The budget set the benchmark price of crude oil at $77.96 per barrel.
In response to the budget, Mele Kyari, the group chief executive officer of the Nigerian National Petroleum Company (NNPC), assured that Nigeria would achieve 1.785 mbpd in 2024.
He told the Senate Committee on Finance that the projections on crude oil production and the price benchmark for the 2024 budget were realistic and realisable.
Compared to the production figure of 1,335,098 barrels per day (bpd) in December 2023, oil output increased by 91,476 bpd to reach 1,426,574 bpd in January 2024.
However, since the significant increase in January, crude oil production has continued to plunge lower in consecutive months, leaving experts to question whether the proposed target would be met before the year runs out.
Wole Ogunsanya, the chairman of the Petroleum Technology Association of Nigeria, recently stated that the nation was losing a significant amount of money every day as a result of its incapacity to address declining oil production.
Ogunsanya asserted that Nigeria would have a greater chance of ranking among the top 20 economies in the world if it could hold onto between 60 and 70 percent of the oil and gas value chain domestically.
The Trans Niger Pipeline problems and some oil firms’ nationwide maintenance programmes, according to the Federal Government, are to blame for Nigeria’s decline in crude oil production.
The federal government, however, added that work was on to repair the pipeline, which would allow the nation to produce up to 1.7 million barrels of crude oil and condensates per day.
When the current administration commenced operation, credit to the government declined by 37.27 percent from N31.23 million in June 2023 to N27.6 trillion the following month.
It continued to decline until it dropped to a record low of N9.4 trillion in October 2023 from N31.23 trillion in June 2023 when the government securitized the N22 trillion Ways and Means debt.
The Federal Government securitized N22.7 trillion of its overdrafts, known as Ways and Means debt, six months ago.
In December 2023, the National Assembly endorsed the securitization of the remaining debit balance of N7.3 trillion from the Ways and Means Advance, channelling it into the Consolidated Revenue Fund (CRF) of the Federal Government.
In February 2024, Cardoso, governor of the CBN, announced that the apex bank would cease providing Ways and Means advances to the federal government until the outstanding balance is resolved.
Ways and Means is a loan mechanism enabling the Central Bank of Nigeria to cover the federal government’s budget deficits.
Credit to the government dipped to a one-year low in the first quarter of 2024; it declined by 28.8 percent to N19.59 trillion in March 2024, down from N27.53 trillion recorded in the corresponding period of March 2023.
The continued decline in foreign currency reserves last year was caused by low revenue from crude oil sales and increased demand for foreign exchange (FX), among other factors. The FX reserves have declined by 6.8 percent in one year.
Nigeria’s economy heavily relies on oil exports, but oil revenue has been declining due to various factors. Geopolitical events and market conditions can cause oil prices to fluctuate, impacting Nigeria’s revenue.
In addition to demand pressure from the CBN’s interventions on the foreign exchange market, a secondary factor responsible for the marked decrease in coupon payments on Nigeria’s Eurobonds totaled roughly $149 million during the month.
Under this administration, the federal government’s borrowing through FGN bonds has been between N200 and N700 billion until February this year, when the DMO put up a N2.5 trillion bond auction.
The federal government sold $1.49 trillion in that auction; this move was an attempt to front-load its borrowing for the first half of the year. It has since gone back to the status quo of issuing N300–N600 billion worth of bonds.
The naira has been in a race to the bottom in the official foreign exchange market since the CBN allowed the official rate to weaken in June.
The naira has tumbled by 191 percent at the Nigerian Autonomous Foreign Exchange Market (NAFEM), also known as the official market.
The CBN has hiked interest rates by a total of 750 basis points, bringing the monetary policy rate to a total of 26.25 percent in a bid to stabilise the naira and curb inflation.
However, analysts have said that the fiscal authorities must assume discipline to increase productivity and curb inflation.
“The rate hike has a signalling effect on the fiscal authorities. It is now left to the fiscal side to respond to these signals. They need to improve fiscal discipline and prioritise spending to improve growth. I suspect that real GDP will not get to 3.3 percent,” Joseph Nnanna, Chief Economist, Development Bank of Nigeria, said.
