Tinubu's Economic Reforms: Progress, Pain, and Path Forward

The first two years of President Bola Tinubu's administration have been marked by significant economic reforms aimed at transforming Nigeria's economic landscape and fostering sustainable growth.

- BY NIYI JACOBS

While these reforms have shown some progress, they have also introduced new challenges that have tested the patience and rsilience of Nigerians.

The administration's commitment to fiscal prudence is evident in the removal of fuel subsidies, which has freed up government revenue for essential services and infrastructure development. This bold move, although painful in the short term, signals a commitment to fiscal responsibility after years of ambiguity and lack of transparency.

The fiscal authority's efforts to streamline the tax system, broaden the tax base, and enhance government revenue through comprehensive fiscal and tax reforms are also noteworthy.

The full repayment of a $3.4 billion IMF loan within two years has moderated debt pressures and enhanced fiscal credibility.

This move demonstrates the administration's commitment to reducing its reliance on external debt and improving its fiscal sustainability. However, the socioeconomic fallout from broader economic reforms, particularly naira devaluation, insecurity, and high input costs, continues to be significant deterrents to exports and investment inflow.

The monetary policy liberalization and FX market reforms have brought some level of transparency and stability to the monetary policy administration. The hawkish tilt of the Central Bank of Nigeria (CBN) to curb inflation has increased foreign portfolio investment (FPI) inflow, which rose from $106.8 million in Q2 2023 to approximately $899.3 million in Q3 2024. However, the high-interest-rate environment has limited real sector lending, and the depreciation of the naira by over 70% has reduced the purchasing power of households.