The jury continues to be divided on the place the Nigerian economic system is headed underneath President Bola Tinubu and the ruling All Progressives Congress (APC) occasion. For the federal government and its supporters, the bitter drugs of the previous two years has labored its magic. The affected person, as soon as taken for useless, is now rousing, they insist.
“I’m glad to inform you as we speak that the economic system is stabilised,” Tinubu stated whereas giving his private verdict on the presidency in Abuja on September 3. “The bleeding has stopped, haemorrhage is gone; the affected person is alive.”
For his opponents in the meantime, the affected person is on life assist, mendacity prostrate and near-death. Tinubu is accused of constructing worse what was already a nasty state of affairs underneath his predecessor, the late Muhammadu Buhari.
What nobody seems to doubt is that Tinubu took a sequence of daring and brave choice, which his predecessors thought-about deadly to their political careers, when he determined to finish many years of gas subsidies and float the alternate charge on taking workplace in 2023. With the subsidies accounting for a 3rd of the finances underneath his predecessor amid dwindling oil income, Tinubu noticed the necessity for radical motion to revive credibility to Nigeria.
“By that time, all of the poor decisions made by previous governments had come to a head and tangled state funds,” says Eric Orji, a Lagos-based economist and market analyst. “The one manner out was to finish the burden of artificially sustaining cheaper gas costs and alternate charges.”
The controversy was about how greatest to do it: whether or not to undertake a gradual method or instant implementation. Tinubu selected the latter. Critics say there was an absence of palliatives to melt the impression of the tough measures. The federal government has additionally been criticised for extravagance within the face of nationwide distress. For Taminu Yakubu, a professor of economics and director of Nigeria’s Price range Workplace, Tinubu’s essential coverage choices are already yielding the anticipated outcomes. Although some bemoaned the devaluation of an “artificially sturdy naira” by the federal government, the foreign money has since clawed again greater than 15% of its worth, he stated in a latest assertion. Devaluation additionally resulted in a surge of Nigeria’s non-oil exports, aiding the administration’s income drive and efforts to diversify the economic system away from oil dependence.
“A floating foreign money is just not an indication of weak point, it’s a software for nationwide competitiveness,” says Yakubu. “By refusing to prop up the naira with scarce reserves and as an alternative letting market forces work, the Tinubu administration has set the stage for a sustainable, export-driven development path.”
Nigeria’s re-based gross home product (GDP) figures, launched in August, revealed a nonetheless shrunken economic system valued at 373 trillion naira ($248bn), right down to quantity 4 in Africa – a fall partly because of the devaluation of the naira. However the economic system seems to be shaking off its post-pandemic sluggishness eventually, rising 3.38% final 12 months and including one other 3.13% within the first quarter, in accordance with the Nationwide Bureau of Statistics.
Financial actions are at present dominated by the companies sector, with a share of 53%. It’s adopted by agriculture, with a 26% share; industrial manufacturing comes third with a share of 21.08% of the GDP.
Agriculture stays constrained by a worsening battle over grazing rights within the wealthy lands of central Nigeria and by the actions of jihadist insurgents in components of the northeast and northwest of the nation. The insecurity in these areas has contributed to excessive meals worth will increase, which drove total inflation to the best stage in 28 years, in accordance with knowledge from the Nationwide Bureau of Statistics (NBS).
Oil in retreat
An growing shift away from oil is obvious within the financial knowledge. Petroleum contributed simply 5.85% of GDP in 2024, regardless of Nigeria’s place as one in all Africa’s high oil producers. This left oil lagging behind crop manufacturing, commerce, actual property and telecommunications. A big share of financial exercise stays casual, accounting for as a lot as 42.5% Nigeria’s GDP.
Oil exports, which was the supply of most authorities income and overseas alternate earnings, have continued to battle, stricken by persevering with unrest, sabotage and large-scale theft in the principle oil-producing Niger Delta.
Although the 2025 finances was based mostly on exports of two.06m barrels day by day at $75 per barrel, neither the amount nor worth targets had been met. That pressured the federal government to rely extra on borrowing and elevated taxation. Within the first quarter, oil manufacturing grew just one.87%, with a nonetheless dwindling 3.97% share of the GDP.
International oil costs stay subdued amid a tricky international economic system outlined by commerce tariffs imposed by the US. Brent crude is buying and selling at round $67 a barrel. Nonetheless, Nigeria met its income goal for the 12 months in August from primarily non-oil sources, President Tinubu declared at a 2 September assembly with high officers of the ruling APC in Abuja. With the economic system now secure and protected from exterior shocks “we now have no worry of no matter Trump is doing,” he insisted.
Nigerian exports to the US are topic to a 15% tariff although oil exports stay exempt.
One apparent beneficiary of Tinubu’s market liberalisation has been the nation’s oil refining sector, which wanted market-determined pricing to thrive. The 650,000-barrels-per-day Dangote Refinery, owned by Africa’s richest man, Aliko Dangote, is approaching full capability, disrupting previous international provide chains and slashing gas imports for home use.
Tinubu additionally resolved the deadlock that held up some onshore divestment transactions by oil majors and improved fiscal phrases for his or her deep offshore investments. Shell has pledged as a lot as $5bn in new deep-water funding, and TotalEnergies lately signed a $1.5bn deal for a production-sharing contract to discover two new offshore fields.
Brazilian oil big Petrobras, which bought off its Nigerian property in 2020, has indicated that it plans to return following Tinubu’s latest state go to to the South American nation. The efforts are aimed toward ramping up Nigeria’s oil-export income, which is vital for stabilising the alternate charge and inflationary pressures.
‘Scorching cash’ or actual investments?
Opponents argue that the outcomes touted by Tinubu’s reforms had been achieved at a big price to society and the economic system.
With the tip of gas subsidies and the floating of the alternate charge, Nigeria’s annual inflation charge surged to the best in nearly three many years. It has, in accordance with the Central Financial institution of Nigeria (CBN), fallen considerably to twenty.33% in August, the final month for which numbers had been accessible. However tighter cash provide can also be a difficulty. Tinubu’s appointee on the CBN, Olayemi Cardoso, led financial coverage right into a tightening cycle. A sequence of interest-rate hikes left the benchmark charge at a file 27.5% by the tip of 2024.
Whereas banks, institutional and different cash market buyers gained from the excessive charges, different sectors comparable to manufacturing and agriculture have struggled to entry capital on the prevailing excessive rates of interest. Nigeria as an alternative noticed a surge of overseas capital chasing excessive yields in its cash market. Capital imported into the nation rose 67% year-on-year within the first quarter of this 12 months to $5.64bn, in accordance with official knowledge. A breakdown reveals that greater than 92% of the inflows went into portfolio investments. Certainly, an amazing $4.2bn or 80.9% was invested in high-yielding Open Market Operations (OMO) payments and in Treasury payments. Solely 16.8% or $877.41m was invested in bonds, whereas a paltry $117.33m (2.3%) went into the inventory market.
Investments in OMO and Treasury payments jumped 162% from the earlier 12 months, whereas investments in bonds elevated twofold.
Shares recorded a 138% enhance. Overseas direct funding flows noticed year-on-year development of 5.97% to $126m, which represents a 70% decline from the fourth quarter of 2024.
In different phrases, whereas Tinubu’s reforms have drawn an inflow of short-term funds chasing fast positive factors, fewer buyers are prepared to decide to longer-term overseas direct investments, indicating shaky ranges of investor confidence.
Distinguished opposition chief Peter Obi, who challenged Tinubu within the 2023 elections, stated Nigeria’s share of overseas direct funding was paltry in a 12 months Africa obtained greater than $100bn in such long-term funding flows.
“With such a excessive proportion of capital importation flowing into speculative investments, the impression on industrial development or job creation is very insignificant and elusive, given the convenience with which such ‘sizzling cash’ can exit the economic system,” Obi stated. “There isn’t a higher affirmation of the dearth of belief on this authorities, whose reforms stay uncoordinated and largely reactive.”
The impression of Tinubu’s reforms on job creation stays to be absolutely ascertained. Three years in the past, Nigeria’s unemployment charge was formally at 33%. Figures launched by the Nationwide Bureau of Statistics (NBS) in November 2024 confirmed the speed of unemployment plummeting to 4.3% – after a change of components by the statistics workplace.
Up to now, the NBS counted solely individuals aged between 15 and 64 years who labored a minimum of 20 hours per week as employed. Now anybody 15 years and above who works “for pay or revenue” is taken into account employed – with the statistics workplace making use of Worldwide Labour Group pointers.
Money for native authorities
An apparent good thing about ending subsidies and devaluing the naira was that it freed up money each on the federal and regional ranges. In lots of states throughout the nation, new infrastructure tasks have sprung up, particularly highway and concrete renewal tasks.
On the similar time, there have allegations of presidency extravagance, whilst a spike in inflation has pushed poorer Nigerians additional into poverty. Ministers, state governors and lawmakers have been accused of undue opulence in a rustic not often identified for private restraint.
The USA diplomatic mission in Nigeria waded into the discourse by highlighting separate studies about expenditures at authorities lodges on the expense of well being, schooling and different necessities whereas persons are being requested to endure austerity.
“Such alleged lack of fiscal duty fuels inequality and erodes public belief,” the Embassy commented.
The opposition seized on the feedback to pile on extra criticism of profligacy in opposition to the Tinubu administration. Former vp Atiku Abubakar, the runner-up within the final election, has stated the reforms had been an train in “trial and error” with unrealistic expectations.
Abubakar stated the minimize in gas subsidies was too abrupt, and that he would have fought the corruption within the subsidies system whereas retaining needed spending.
There have additionally been issues on the authorities’s borrowing habits. From the time he took workplace in 2023 to the tip of the primary quarter of 2025, Nigeria’s public debt rose 23% to 149.39 trillion naira ($100bn) from 121.7 trillion naira ($81.4bn). Whereas native debt accounted for 53%, overseas debt accounted for 47%, with the debt-to-GDP ratio reaching 52% and exceeding the official restrict of 40% set by the fiscal duty regulation.
“This breach of our debt restrict alerts the pressure on fiscal sustainability,” Tajudeen Abbas, the speaker of the Home of Representatives, stated lately. “It highlights the pressing want for stronger oversight [and] clear borrowing practices.”
Cautious optimism
The Worldwide Financial Fund (IMF) counseled the Tinubu administration for his reforms on the finish of its newest Article IV Session with Nigeria, a daily well being test on the nation’s economic system. It stated that the reforms “have improved macroeconomic stability and enhanced resilience”. The report famous that the modifications “have but to learn all Nigerians” and referred to as for extra prudent use of assets.
World Commerce Group director basic Ngozi Okonjo-Iweala, a former Nigerian finance minister, additionally counseled Tinubu for his daring reset of the economic system throughout a latest courtesy go to – however famous the necessity for a social security web for probably the most weak.
Whereas the federal government has taken these as endorsements, critics are highlighting what they are saying is worsening poverty and difficult the federal government to point out the advantages of its reforms on the odd individuals.
“As Tinubu begins to gear up for re-election in early 2027, there’s one essential query that may seemingly confront him from voters,” says Orji, the financial analyst. “And that shall be to point out them how the reforms have benefited them.”
