Nigeria’s reforms delivers stability but tests public patience, says CPPE 

Nigeria’s bold economic reforms have succeeded in pulling the country back from the brink of a macroeconomic crisis, but the benefits have yet to reach millions of households grappling with high living costs, according to the Centre for the Promotion of Private Enterprise (CPPE).

Assessing the first three years of President Bola Tinubu’s administration, the private sector think tank said the government inherited an economy burdened by severe foreign exchange shortages, unsustainable fiscal practices, widespread market distortions and weakening investor confidence.

According to the CPPE, the administration’s decision to remove fuel subsidies and unify exchange rates represented the most significant economic reforms undertaken in decades, helping to restore macroeconomic stability after years of mounting vulnerabilities.

“When the administration took office, the economy was approaching a tipping point as the fiscal, monetary and structural foundations of the prevailing model became increasingly unsustainable,” said Muda Yusuf, chief executive officer of CPPE.

The organization noted that the foreign exchange market at the time was characterized by acute illiquidity, multiple exchange rates and extensive arbitrage opportunities that undermined transparency and discouraged investment.

Fiscal conditions were equally fragile. Ways and Means financing had become deeply entrenched, effectively allowing monetary financing of government deficits, while the fuel subsidy regime had evolved into a major source of fiscal leakage, corruption and economic distortions.

In response, the government embarked on a reform agenda centered on fuel subsidy removal and exchange-rate liberalisation.

According to the CPPE, eliminating the fuel subsidy halted a major drain on public finances, reduced opportunities for smuggling and rent-seeking, and laid the foundation for a more transparent downstream petroleum sector.

Similarly, exchange-rate unification addressed long-standing distortions in the foreign exchange market by improving price discovery, reducing arbitrage opportunities and helping restore confidence in the exchange rate framework.

However, the reforms came at a significant cost.

The immediate impact was a sharp inflationary shock as energy prices surged, transportation costs climbed and businesses faced higher production expenses. The depreciation of the naira also amplified imported inflation, worsening pressure on consumers.

The welfare consequences were severe, with declining real incomes, worsening poverty conditions and an escalating cost-of-living crisis emerging as some of the most visible outcomes of the adjustment process.

Despite these hardships, the CPPE argued that the reforms have begun to deliver measurable stabilisation gains.

Nigeria’s external reserves have rebounded significantly and are approaching the $50 billion mark, while the country has maintained a trade surplus and recorded stronger investor confidence.

Exchange rate volatility has moderated considerably since 2025, reflecting improved conditions in the foreign exchange market.

The economy also recorded eleven consecutive months of disinflation from early 2025 through February 2026, although that trend was interrupted by renewed inflationary pressures following the outbreak of the Iran-U.S.-Israel conflict in March 2026, which triggered higher global crude oil prices and increased domestic energy and transportation costs.

The capital market has been one of the clearest beneficiaries of improved investor sentiment.

According to the CPPE, the Nigerian Exchange All Share Index rose from about 55,700 points in 2023 to more than 254,000 points in 2026, representing growth of over 350 percent. Market capitalisation increased from roughly N30 trillion to more than N160 trillion over the same period.

The think tank also cited the discontinuation of Ways and Means financing as an important contributor to improved monetary discipline and macroeconomic stability.

Another significant development has been the emergence of domestic refining capacity, led by the Dangote Refinery, which has reduced dependence on imported petroleum products, strengthened energy security and helped conserve foreign exchange.

“An economy that produces more of what it consumes is inherently more resilient than one that depends excessively on imports,” Yusuf said.

Yet, despite the progress, CPPE warned that the administration faces a more difficult challenge: translating macroeconomic stabilisation into tangible welfare improvements.

Inflation remains elevated, purchasing power remains weak and consumer confidence continues to be fragile, the group said.

“The challenge before the administration is no longer merely one of economic stabilisation; it is the imperative of converting reform gains into jobs, higher incomes, lower poverty and a better quality of life for Nigerians,” Yusuf stated.

The think tank identified insecurity as one of the most serious threats to the country’s recovery prospects, citing its impact on agriculture, food production, rural livelihoods and investment.

Persistent insecurity continues to undermine productivity, worsen food inflation and weaken economic confidence, it said.

Beyond security concerns, businesses continue to contend with high energy costs, logistics bottlenecks, weak infrastructure, policy inconsistency and elevated interest rates, all of which constrain competitiveness and job creation.

The power sector remains one of the most significant barriers to economic growth, according to the CPPE.

Fiscal sustainability also remains a concern.

Although the government has curtailed Ways and Means financing, revenue growth has yet to fully offset financing pressures. Public debt rose to N159.3 trillion as of December 2025, reflecting both the sharp depreciation of the naira, which increased the domestic value of external debt, and the securitisation of legacy Ways and Means liabilities.

The implementation of tax reforms could strengthen government revenues and ease fiscal pressures, the organization said.

CPPE further argued that sustaining public support for economic reforms will require stronger governance, greater transparency and improved fiscal discipline.

As households continue to absorb the costs of adjustment, expectations for accountability and prudent management of public resources have risen, it said.

“The long-term sustainability of economic reforms rests on the principle of shared sacrifice,” Yusuf said. “Public confidence is strengthened when citizens perceive that the costs of adjustment are borne not only by households and businesses, but also by the political and governing elite.”

Looking ahead, the organization said the first phase of the administration’s economic agenda was primarily about rescuing the economy from crisis and restoring stability.

The next phase, it argued, must focus on accelerating investment, boosting productivity, strengthening energy and food security, improving industrial competitiveness and reducing poverty.

Ultimately, CPPE said, the success of the reform agenda will not be measured by reserve accumulation, exchange rate stability or stock market gains alone, but by its impact on jobs, incomes and living standards.

“Macroeconomic stability may rescue an economy from the brink, but inclusive prosperity is what secures public confidence, strengthens social cohesion and sustains the reform journey,” Yusuf said.