From Reforms To Results: Consolidating the gains of Tinubu’s economic agenda

Two months to President Bola Ahmed Tinubu’s second anniversary in office, the economic indices of the country points to growth, thus validating Mr. President’s decision to remove petrol subsidy and also float the nation’s currency – the Naira. These two policies, which are at the core of the economic reforms by the administration, caused volatility in the economy at the onset, pushing Nigerians to a level of hardship that many argued was unprecedented in the history of the country.

The removal of petrol subsidy on the day the president was inaugurated saw the pump price move steadily from an average of N238/- per litre in May 2023 to an average of N1,190/- per litre in December 2024. On the other hand, the floating of the naira, which means to allow market forces to determine the value of the currency, saw the value of the currency depreciate from an average N462/US$ in May 2023 to N1,535/US$ in December 2024.

The consequence of these disruptions was galloping inflation as manufacturers and traders ultimately transferred every extra cost to consumers. In organisations and homes, planning for the next day, week or month’s spending became extremely difficult. And it seemed the government had no immediate response to the situation other than endless promises that the gains of the reforms would crystallize. In December 2024, Nigeria’s inflation rate hit a near 30-year high of 34.8 per cent, up from 34.6 per cent in the prior month.

In an interview I had with this great newspaper earlier this year, I recall stating that unstable forex was a major challenge for businesses because cost could not be ascertained and one had to be calculating the selling price every time, which was not possible and practical. But I also expressed optimism that things would get better in the near future because I believe the government was going in the right direction.

My words: “Sometimes if you have fever and visit a doctor, he will give you a bitter pill. You take that bitter pill because you hope that after taking it your fever will go. So, I would say that Mr. President doesn’t have any other alternative than to take the hard decisions he has taken and has shown courage to implement. My commendations and kudos to him for taking those difficult and hard decisions. I am confident that these decisions will fetch the desired benefits though a little later. We do not know how soon but benefits will definitely come. I would like to advise one and all to have confidence in the current leadership of the country.”
From every indication, the benefits of the reforms are beginning to come gradually if the latest Consumer Price Index (CPI) released by the National Bureau of Statistics (NBS) is anything to go by.

According to the report, Nigeria’s annual inflation rate eased to 23.18 per cent in February from 24.48 per cent in January 2025. The NBS said the February 2025 headline inflation rate showed a decrease of 1.30 per cent compared to the January 2025 headline inflation rate.

On a year-on-year basis, the headline inflation rate was 8.52 per cent lower than the rate recorded in February 2024 (31.70 per cent).  This, it said, shows that the headline inflation rate (year-on-year basis) decreased in February 2025 compared to the same month in the preceding year (i.e., February 2024), though with a different base year, November 2009 =100.
The Central Bank of Nigeria (CBN) has also brought new hopes in the management of the financial system and economy. Its current macroeconomic stabilisation efforts support Nigeria’s ability to attract foreign investors to its markets.

The floatation of the naira and the clearing of over $7 billion forex backlog improved the country’s outlook with foreign investors as well as multilateral organisations like the World Bank, which described the reforms as a bold intervention to improve the economy’s sustainability in the long run.

For instance, at the end of 2024, Nigeria leveraged its improved economic fundamentals to re-enter the Eurobond market, seeking to address its fiscal deficit. The move marked the country’s return to the international debt market in November after a two-year absence. In a dual-tranche Eurobond issuance, investor demand surged, with subscriptions exceeding $9 billion.

Despite the strong interest, the government chose to raise $2.2 billion. The issuance included $700 million in 6.5-year bonds set to mature in 2031, carrying a 9.625 per cent coupon rate, and $1.5 billion in 10-year bonds with a coupon rate of 10.375 per cent.

The high-interest rate environment also attracted higher foreign portfolio investment inflows, which totalled $3.48 billion in the first half of 2024 compared to $756.1 million during the same period in 2023. This trend reflects growing investor confidence in the country’s ability to manage its external debt burden, a positive signal for Nigeria’s Eurobonds.

The economy has also got positive Fitch Ratings. The Fitch Ratings last year revised upward Nigeria’s long-term Foreign Currency Issuer Default Rating (FCY-IDR) outlook to “Positive” from “Stable” previously. It also affirmed IDR at “B-”.

Fitch Ratings hinged the upward outlook review on ongoing fiscal and monetary policy reforms, notably, the reduction in fuel subsidy burden, the scale back on deficit financing through Ways & Means, the reduction in official versus parallel market FX rate distortion, forex backlog clearance, as well as the notable improvement in crude oil output in first quarter.

Notwithstanding the gains so far, Mr. President’s economic management team still has a lot of work before them. At above 20 per cent, the inflation rate is still high and further steps should be taken to bring it down. With a national monthly minimum wage of N70,000, there is no doubt that many homes are still feeling the inflationary pressure and need to be assuaged.

Also, even though the business community is happy with the current forex policy, which has somewhat stabilised and made the exchange rate predictable, hence allowing room for long term plans, there is no opposition to the fact that a further strengthening of the naira will be all gains for the economy.

Nigeria is an import dependent nation, with basic raw materials for local industries and also household items largely shipped from abroad. A stronger naira will have a positive effect on the inflationary trend to the delight of all.

As I said in that interview, the current economic management team has “taken the most appropriate steps to select and form the right policies and implement them.”
They should take steps to consolidate the gains so far.

*Chief Jain, the Chairperson of the Institute of Chartered Accountants of India – Nigeria Chapter; Chairman, JITO, Nigeria, and President, Rajasthani Samaj of Nigeria, wrote from Lagos.