Can President Tinubu’s twin economic policies save Nigeria amid rising inequality? by Ishaka Shitu

Nigeria has never witnessed the full removal of subsidy and devaluation of the local currency—the naira—in recent years. However, President Bola Ahmed Tinubu implemented both during his inaugural speech on May 29, 2023. Though former President Buhari excluded subsidy provisions from his final budget, causing concern for the incoming administration, Nigerians have seen petrol prices quadruple over the past two years.

In July 2023, or thereabout, President Tinubu floated the naira, ending the previous system of pegging where Nigeria spent nearly $2 billion annually. This led to a uniform exchange rate across all markets, reducing the influence of the bureau de change and eliminating distortions and arbitrage in currency markets—both locally and internationally. While the government continues to inject liquidity at times to stabilize the naira, this reform marks a significant shift.

A critical question remains: why have the four government-owned refineries not operated at full capacity for over two decades? Public records show that billions of dollars have been spent on them since the return of democracy in 1999. Despite different administrations, from President Olusegun Obasanjo to the current government, earmarking funds for Turn Around Maintenance (TAM), wastage has persisted, with ordinary Nigerians bearing the brunt through increased costs of living, unsustainable employment, and high transport costs.

Nigeria is experiencing one of its worst living crises in a generation. The rising cost of petrol, coupled with an inadequate social safety net, is deepening hardship. A review of socio-economic trends and citizen feedback indicates spikes in food prices, transport costs, and rural insecurity—hindering farming activities. Although inflation has recently dropped to 24%, challenges remain.

The Nigerian masses are not accustomed to extravagant lifestyles. Yet, the elite have long indulged in luxuries like private jets, yachts, SUVs, and foreign goods—made easier by previously cheap and accessible dollars. Such lifestyles, however, are now reportedly on the decline.

That a country with four refineries has none functioning efficiently is a systemic issue demanding structural reform. Fuel importation has drained national resources, enabled fraud in subsidy payments, and supported smuggling to neighboring countries. Removing the “cancer” of subsidy is a welcome move, but strategic planning is crucial. Specifically, there must be measures to protect vulnerable populations. Subsidy savings should benefit the people via a transparent national register—not be distributed through politically controlled channels. Independent bodies must be involved.

In a rare publication in The Telegraph (London) on June 7, 2025, Nigeria’s second-richest man, Alhaji Abdul Samad Rabiu, praised the administration’s reforms, saying they are positioning Nigeria on the global economic map. He also called for partnerships from Western allies, citing the improved business environment and positive decisions made in the past 24 months.

As a long-time observer of Nigeria’s socio-economic and political developments, I have noted a shift from the old economic order toward a more market-based system. However, without sufficient production to generate foreign exchange, these reforms have significantly weakened the naira. There is debate about whether the naira was overvalued, and it is said Nigeria spent up to $1.5 billion weekly to defend it—though this remains unconfirmed.

Interestingly, several African countries adopt similar economic policies, raising questions about whether these reforms are adequately tested for Nigeria’s unique environment. Academics must rigorously evaluate how these twin policies—subsidy removal and currency floatation—interact with issues like power shortages, insecurity, banditry, elite corruption, and weak democratic institutions.

Moreover, the exit of foreign companies due to reform-related difficulties is troubling. Addressing this requires alternatives to reduce the impact on Nigerians already facing declining purchasing power parity (PPP).

Strategically, Nigeria must reassess the consequences of these reforms. Crude oil remains the primary source of foreign exchange, yet the sector faces persistent problems: oil theft, pipeline sabotage, lack of a national shipping line, and low global prices. Complicating matters are Western policies promoting electric vehicles, further threatening demand for oil—a major factor in Nigeria’s budget planning.

Nigeria urgently needs leadership by example. Unfortunately, many elected officials are engaged in private business rather than government oversight. True change demands selfless service from the National Assembly to hold the executive accountable at both federal and state levels. Governance should prioritize the Nigerian people over political interests.

In a The Economist article (June 2025), Latin America’s inequality was highlighted, with slums and swimming pools symbolizing the divide—despite wage increases and welfare programs. Like Nigeria, many developing nations share this governance challenge. Reducing inequality is still a work in progress, and political trust remains elusive due to repeated unfulfilled promises.

Ultimately, Nigeria must reform its politics to emphasize selfless service and build a comprehensive social safety net for all vulnerable citizens. Enhanced taxation of elite earnings—similar to systems in developed countries—can boost revenue, especially amid declining oil income. This, in turn, can improve funding for social services like education and healthcare and support power generation for local manufacturing.

Dr. Ishaka Shitu is the founder of Oil Logistics Advisory, a transport and oil logistics expert, university lecturer at Canterbury University in London, and an associate of a London-based port and logistics consultancy. He is the author of Port Performance and Crude Oil Export Logistics System in Nigeria.