For quite some time now, there appears to be unanimity of opinions that reforms by the Federal Government of Nigeria (FGN) have resulted in the stabilisation of the country’s macroeconomy. The vast majority of stakeholders, including multilateral financial institutions, reputable rating agencies, investors, analysts, and business leaders — all give credit to the President Bola Ahmed Tinubu administration for the general stability of Nigeria’s economy.
These assessments and views however are largely based on the consideration of the state of some macroeconomic barometers vis-à-vis their status at the take-off of the administration on 29 May 2023. Often cited to buttress this viewpoint is the decline in the rate of headline inflation from a peak of almost 35 percent as of end-2024 to 15.43 percent at end-July 2026 (according to National Bureau of Statistics, NBS’ data).
Also, since the third quarter 2023, the gross domestic product (GDP) growth rate (every quarter) has hovered between three and four percent. The exchange rate of the naira against the dollar has for a long while remained below N1400/US$; while capital importation into the country has risen significantly. Stock of external reserves has also recorded substantial accretion, standing at over $50 billion by end-June 2026.
Impressive as these macroeconomic dashboard figures would seem, they largely serve as a veneer beneath which are the excruciating realities of the outcomes of the reforms of the three years-plus President Tinubu administration. Interestingly, as many as have given credit to the FGN for the stabilisation of the macroeconomy have equally flagged the massive impoverishment unleashed on Nigerians by the President Tinubu reforms.
Both the World Bank and the IMF have, without mincing words, warned the FGN on the very high rate at which the reforms were breeding poverty in Nigeria. These multilateral financial institutions have put the number of Nigerians being forced below the poverty line by the impact of the reforms at far above the 130 million multidimensionally poor ‘exposed’ by the NBS’ research a few years ago. Their figures now stand at between 140 million and 160 million Nigerians already forced below poverty level; and more are yet going down by the day.
An attempt at deconstructing the much-hyped macroeconomic stability of the country would show that what is generally known as the ratchet effect in Economics is playing out in Nigeria. It means that the reforms caused sharp and huge increases in the prices of practically all goods and services; and those high prices have remained too sticky coming down, and most have remained above the roof.
Starting with the price of petrol (premium motor spirit, PMS), the subsidy on which was removed by President Tinubu during his inauguration. As of 29 May 2023, the pump price of PMS was below N200 per litre. The price shot up to N1000 per litre; almost hit N1,500 per litre in various locations before dropping to N1250 per litre currently. Worrisomely, the intrigues and ‘price war’ in the PMS business have kept the price of the commodity moving like a yo-yo. Hardly is there any week that prices of PMS and other refined products are not raised or reduced somehow.
The upshot of all these is that a car owner who could fill his 50 litre petrol tank with N10,000 (at N200 per litre) as of May 2023, now spends about N70,000 to buy the same volume (at about N1,400 per litre). Note that N70,000 is the subsisting minimum wage, arrived at after a pyrrhic victory by the Labour movement in Nigeria. In 2023, the minimum wage was N30,000. This means that if the private car (with a 50 litre tank) belonged to a minimum wage earner, his entire income would go into fueling his car. This is unfortunate!
Sequel to this scenario of massive spike in PMS prices is uncertainty and endless distortions in the engagements of all economic agents: individuals, households and businesses. The cost of transportation, prices of all food items, house rents, and all services have all risen significantly—and no appreciable drop has happened over time (owing to the ratchet effect). This has reflected in runaway inflationary trends in the country: a reality till date.
The import and impact of this on all economic agents (individuals, households, businesses and governments) have been very weak consumer purchasing power, and general hardship for a growing chunk of the citizenry. This trend has also been aided by the floatation of the naira about the middle of June 2023—a policy that saw the crash of the local currency vis-a-vis the dollar and other hard currencies. As a largely import-dependent economy, the collapse of the naira led to huge imported inflation into Nigeria, as most businesses and households struggled to keep afloat.
One of the upshots of all these has been marked improvement in the nation’s distributable federation account—shared every month by the Federation Accounts Allocation Committee (FAAC)—to the three tiers of government. However, due to the massive depreciation of the naira and prevailing very high inflation rate, the beneficiaries of the ‘huge’ allocations are hardly better off. In fact, most of the subnational governments are truly worse off.
Specifically, in terms of infrastructural development, let’s use a critical input—cement—as an example. A state government was getting one billion naira (from FAAC) as of 2023 when the price of cement (50kg bag) was about N4,000, and deployed all its monthly allocation to buying cement. It was getting about 250,000 bags. Today, that 50 kg bag of cement goes for about N12,000, and the same state government now gets N10 billion (from FAAC), but it can no longer afford the 250,000 bags. In fact, it can only buy less than one thousand bags!
In another scenario, a state government was buying ten thousand litres of PMS as of 2023 at N200 per litre (which it keeps in the mini filling station at the state house) every month. This amounts to two million naira each month. Today, with the price of PMS at about N1300 per litre, the same ten thousand litres for the fuel station will be costing about thirteen million naira. A little extrapolation will show that most state governments can no longer afford the ‘luxury’ of having and stocking mini filling stations; the same for the local government areas across the country.
It is also in order, in deconstructing Nigeria’s hyped economic stability, to expose the fact that the tight monetary stance of the Central Bank of Nigeria (CBN) for upwards of three years has been crippling businesses. The high interest rates regime engendered by the hiked Monetary Policy Rate (MPR) of the apex bank, plus its high Cash Reserve Ratio (CRR), have constrained the credit creation capacity of deposit money banks (DMBs). It has also, indeed, significantly reduced the affordability and accessibility of credit to a vast majority of deficit spending units (DSUs) in the economy.
All these and many other unwholesome policies are subsumed under the banner of Nigeria’s much-bandied macroeconomy stabilisation. No wonder it has become almost impossible to advance beyond this mere ‘mantra’.
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Marcel Okeke, a practising economist and consultant in Business Strategy & Sustainability based in Lagos, is a former Chief Economist at Zenith Bank Plc. He can be reached at: obioraokeke2000@yahoo.com; +2348033075697
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