When Nigeria’s GDP was rebased in 2014, Nigeria became recognized as the largest economy in Africa with a GDP of approximately $510 billion and a per capita income of about $3,000. The rebasing was a major economic milestone that showcased the results of the economic reforms initiated earlier, when the country returned to civil rule in 1999.
The reforms, initiated by the Obasanjo administration, cut across various sectors of the economy and included major initiatives that transformed the telecoms, banking, insurance, agriculture, pensions, and manufacturing sectors, amongst others, which resulted in Nigeria becoming the fastest-growing economy in Africa at the dawn of the millennium.
An above-average economic growth rate was sustained by the succeeding administrations, and the Nigerian economy continued its rapid growth, which peaked at a GDP of $540 billion in 2015, when the Muhammadu Buhari administration came to power. This administration showed very little interest in sustaining the economic reforms of the previous administrations, nor did it embark on any economic growth initiatives of its own. Rather, it demonstrated a very high level of fiscal indiscipline, which resulted in a fall in the value of the local currency and high inflation rates across the country.
As a result of the poor economic management of the economy under the Buhari administration, the country’s GDP declined steadily from the $540 billion it inherited in 2015 to $364 billion by the time it handed over power in 2023. This contraction in the size of the GDP was heralded by high poverty, unemployment, and inflation rates, which negatively affected the living standards of the country that once prided itself as the “Giant of Africa”.
By 2023, when the Bola Ahmed Tinubu administration assumed power after emerging victorious in the presidential elections in very controversial circumstances that called to question the integrity of the electoral process, it was very clear that something drastic needed to be done to salvage the ailing economy.
Upon resumption of office, the first thing he did was to put a stop to the payment of costly fuel subsidies based on the reality that the government could no longer afford to continue to pay them. However, contrary to the expectations that the money saved would be used to fund more critical issues like infrastructure, education and healthcare, what followed was what many perceived to be a reckless spending spree with the president embarking on the purchase of a new ultra luxurious and unnecessary presidential jet, and new exotic SUVs for legislators while the citizens were made to bear the excruciating pains of the inflation triggered by the fuel price increase.
What followed next was a policy to float the local currency and this led to an over 300% depreciation in the value of the Naira in one swell swoop, and coming on the back of the previous fuel subsidy removal, the economy was sent into a tailspin which it is yet to recover from two years down the line. The power sector was not spared as well, as the administration also implemented reforms that saw electricity tariffs go up by over 200% across the country at a time when people were still struggling to cope with the previous price hikes.
Though the government promised that the pains associated with the reforms were temporary and necessary to restructure the economy for sustainable growth, two years down the line, the economy is yet to show any signs of recovery while the GDP has further contracted from the $364 billion it inherited from the lack lustre Buhari administration to less than $190 billion today with inflation, poverty and unemployment rates at an all-time high.
Even though the Tinubu administration inherited a dilapidated economy with several challenges impeding its growth, the major problem seems to be a lack of sincerity on the part of the administration to fix economic challenges facing the country as the additional revenues generated from the reforms are being channelled to fund more luxurious lifestyles for those in government while the needs of the governed are being ignored.
This is apart from the fact that the administration continues to demonstrate a high level of corruption and lack of transparency as demonstrated by the award of the $11 billion coastal road contract under very opaque circumstances to a company owned by a close associate of the president without any competitive bidding or environmental impact assessment as required by the law.
Another major shortfall of the reforms embarked on by the Tinubu administration is that, though the revenues accruing to the government have increased as a result of the reforms, it has not had a positive impact on the economy, and the increased revenues have in fact been generated at the detriment of the economy. There is also no growth path for the economy, nor are there any policy initiatives to give the necessary support to the productive sector to stimulate growth in the economy. Rather, the administration continues to bleed the economy for the benefit of those in government.
In conclusion, while the economic reforms implemented by the Tinubu administration were necessary, their impact has been limited by various challenges, which range from poor implementation to lack of sincerity by the government. Addressing these challenges and ensuring effective implementation will be crucial to achieving the desired outcomes and improving the lives of Nigerians.
Oshobi, a management consultant, development economist, and author, writes from Lagos, Nigeria.