Tinubu’s Economic Overhaul: Navigating bitter remedies for Nigeria’s crisis

In the nearly 15 months since Bola Tinubu took office as Nigeria’s president, his administration has imposed significant economic changes that many citizens have found difficult to bear.

Among the most contentious measures was the removal of a substantial fuel subsidy, one of the few benefits that the population received from a government often criticized for inefficiency and corruption.

Additionally, the naira has been allowed to depreciate sharply, contributing to a surge in imported inflation and triggering the worst cost of living crisis in a generation.

These drastic actions have plunged tens of millions of already impoverished Nigerians into deeper hardship.

However, proponents argue that these steps were necessary to address the long-standing economic decline the country has faced.

The fuel subsidy, which consumed nearly a third of the federal budget, was not only financially burdensome but also distorted the economy, incentivizing behaviors like rent-seeking, smuggling, and corruption.

Furthermore, the previous exchange rate regime, which artificially inflated the naira’s value, effectively destroyed all export industries except oil, leading to a reliance on black market transactions for access to hard currency.

As Nigeria grapples with a stagnant economy, where per capita growth has not occurred in a decade and kidnapping has become a lucrative industry, a transition to more orthodox economic policies is vital.

However, the current approach, often dubbed “Tinubunomics,” appears disjointed and may struggle to produce the desired outcomes without crucial adjustments.

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For Tinubu’s government to regain the trust of the Nigerian people, it must present a clear and inclusive path forward.

This requires sacrifices from the political elite, who should forgo extravagant pay raises and lavish perks.

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The situation in Kenya, where civil unrest prompted a government retreat from unpopular tax hikes, serves as a cautionary tale about the consequences of perceived injustice.

To alleviate immediate suffering, some of the savings from the fuel subsidy should be redirected to support the most vulnerable populations.

With hunger levels rising and millions of children skipping meals and school, direct cash payments to citizens’ mobile phones could provide a more effective means of support than traditional handouts.

Currently, the government lacks the capacity and integrity to implement such schemes effectively.

Tinubu’s cabinet, while diverse, contains many members whose positions stem from political patronage rather than expertise. Harnessing available technocratic talent is essential to ensure competent governance.

Addressing corruption is also imperative.

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Tinubu’s own wealth and the recent suspension of his minister for poverty alleviation over alleged fund misappropriation complicate the situation.

Additionally, systemic oil theft is depriving the nation of significant revenue.

Tinubu must use his political acumen to combat these issues.

Critics may argue that Nigeria’s weak state necessitates a reduction in governmental influence.

With the country collecting taxes amounting to just 10 percent of its GDP—among the lowest rates globally—it’s evident that trust between the government and citizens is lacking.

To revive the economy, the state must act as an enabler, providing essential services such as power, infrastructure, security, and healthcare, while also supporting the most disadvantaged.

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Without a cohesive and articulated plan, Tinubu’s tough measures may not resolve Nigeria’s economic woes; they could instead leave citizens with a lingering sense of discontent.

CREDITS : The Financial Times’ Analysis on Nigeria