Navigating Nigeria's economic landscape with President Bola Tinubu's reforms

Nigeria, Africa’s most populous and largest economy, has undergone significant changes since President Bola Tinubu took office in May 2023.

Tinubu, a former governor of Lagos state and leader of the ruling All Progressives Congress party, has embarked on a series of reforms aimed at boosting growth, diversifying the economy, and unlocking confidence among domestic and international investors.

Some of the key reforms include scrapping the fuel subsidy regime that distorted the energy market and cost the government almost $10 billion last year; overhauling the foreign exchange regime to unify the multiple exchange rates, increase transparency and attract foreign investments; replacing the central bank governor and appointing a new one to restore trust and credibility; signing into law an electricity act to liberalize the sector and encourage investments; enhancing tax administration to diversify away from oil and increase revenue.

And for tax administration, the Tinubu administration is betting on Taiwo Oyedele who used to be a partner at PWC. Oyedele now leads a presidential committee on taxes and fiscal policy. The Tinubu administration wants him to sort out Nigeria’s conflicting tax laws and fiscal policy. It also wants him to streamline taxes and revenue administration to make doing business easier. This is expected to widen the tax base and boost tax collection.

The International Monetary Fund, along with other global bodies, has lauded these reforms, forecasting that Nigeria’s economy will expand by 3.1% in 2024, up from 2.9% in 2023. But at home they have been met with challenges and criticisms from various groups, including labour unions, opposition parties, businesses and ordinary citizens grappling with a cost-of-living crisis.

To its credit, the Tinubu administration is also balancing economic reforms with increased social programmes. His administration secured $800m from the World Bank to cushion the impact of subsidy removal on prices. This week, he also agreed to boost spending, beyond what the previous president approved, to help speed up the economy’s recovery from the covid-19 pandemic, which caused a recession in 2020. The spending plan includes pay rises for its employees.

Nigeria must contend with rivals such as South Africa on the regional and global stage, as it pushes to bolster its economic fortunes. In its World Economic Outlook, the IMF forecasts that South Africa will briefly edge out Nigeria and Egypt as Africa’s biggest economy in 2024. It expects South Africa’s GDP to reach $401 billion, compared with $395 billion for Nigeria and $358 billion for Egypt.

To prosper, Nigeria—Africa’s top oil producer—must tackle its security and stability challenges, boost and broaden its economy, and spend more on its infrastructure and people. It can also exploit its advantages: a young and growing population, a leading role in the continent, and ties with the wider world.

The work is enormous. President Tinubu has vowed to tackle the daunting task.