Nigeria’s Economy After Three Years of Tinubu Reforms: Gains, Strains, and the Road Ahead

Three years after President Bola Ahmed Tinubu assumed office on May 29, 2023, Nigeria’s economy stands at a defining crossroads shaped by some of the boldest and most controversial economic reforms implemented since the country’s return to democratic rule.

The administration inherited an economy weighed down by mounting fiscal deficits, an unsustainable fuel subsidy regime, severe foreign exchange distortions, rising debt pressures, weak investor confidence, declining oil production, and worsening macroeconomic instability.

Since then, the Federal Government, working alongside the Central Bank of Nigeria (CBN), has embarked on an ambitious programme of economic restructuring aimed at restoring macroeconomic stability, rebuilding investor confidence, strengthening public finances, liberalising the foreign exchange market, and repositioning Africa’s largest economy for long-term growth.

The reforms have produced mixed outcomes.

On one hand, Nigeria has recorded stronger GDP growth, improved foreign exchange liquidity, rising external reserves, increased capital inflows, renewed investor confidence, a booming capital market, and significant fiscal restructuring. On the other hand, the reforms triggered the sharpest cost-of-living crisis in decades, with soaring inflation, naira depreciation, rising poverty levels, elevated borrowing costs, and declining purchasing power placing enormous pressure on households and businesses.

As the Tinubu administration marks its third year in office, the Nigerian economy reflects a difficult but transformative transition, one driven by painful reforms, cautious recovery, and persistent socio-economic strain.

From Subsidy Removal to Economic Reset

Perhaps the most defining decision of the administration came within hours of President Tinubu’s inauguration in May 2023, when he announced the removal of petrol subsidy, ending decades of costly government spending on fuel price support.

The policy immediately altered Nigeria’s fiscal direction.

For years, subsidy payments had consumed trillions of naira annually, weakened public finances, encouraged smuggling, and distorted the downstream petroleum sector. The removal of the subsidy significantly reduced fiscal pressures and improved the government’s revenue position. Still, it also triggered an unprecedented rise in fuel prices, transportation costs, and inflation across the economy.

Combined with the liberalisation of the foreign exchange market shortly after, the reforms marked the beginning of a broad economic reset intended to shift Nigeria toward a more market-driven system.

However, the speed and scale of the adjustments exposed deep structural weaknesses within the economy and intensified hardship for millions of Nigerians.

Economic Growth Shows Signs of Resilience

Despite severe macroeconomic pressures over the last three years, Nigeria’s economy remained on a positive growth trajectory.

Gross Domestic Product (GDP) growth strengthened gradually between 2023 and 2026, driven largely by the non-oil sector, especially telecommunications, financial services, trade, transportation, construction, fintech, entertainment, and agriculture.

The services sector remained the largest contributor to national output, accounting for more than half of economic activities, while telecommunications and digital financial services emerged as major drivers of expansion.

Agriculture recorded mixed performance due to insecurity, flooding, climate-related disruptions, and rising input costs, although government intervention programmes and renewed focus on food security supported output recovery in some regions.

The oil sector, historically Nigeria’s economic backbone, continued to underperform relative to its potential despite modest improvements in crude production. Persistent crude theft, pipeline vandalism, underinvestment, and operational inefficiencies remained major obstacles limiting output growth and foreign exchange earnings.

Nonetheless, the economy demonstrated resilience amid global economic uncertainty, tighter global financial conditions, and domestic reform shocks.

Foreign Exchange Reforms Reshape the Naira Market

The foreign exchange market underwent one of the most significant transformations under the Tinubu administration.

The government and the CBN dismantled the multiple exchange-rate regime and moved toward a more liberalised, market-driven foreign exchange system aimed at improving transparency, attracting foreign capital, and reducing distortions.

Initially, the reforms triggered a sharp depreciation of the naira as years of FX backlogs, unmet demand, and speculative pressures surfaced within the market.

The depreciation significantly increased import costs, worsened inflation, and raised operational expenses for businesses dependent on imported raw materials and machinery.

However, over time, the reforms improved liquidity within the official market, narrowed the gap between official and parallel market rates, restored transparency in FX pricing, and encouraged renewed foreign portfolio inflows into Nigeria’s financial markets.

The CBN also implemented several measures to clear FX backlogs, tighten market regulations, enhance electronic trading systems, and rebuild confidence among foreign investors and international financial institutions.

Although volatility persists, the foreign exchange market is considerably more transparent today than it was before the reforms began.

Monetary Tightening and Inflationary Pressures

One of the central pillars of economic management during the last three years has been aggressive monetary tightening by the CBN.

Faced with surging inflation following subsidy removal and naira devaluation, the apex bank raised interest rates repeatedly in an effort to stabilise prices, curb speculative demand, and restore investor confidence.

The high-interest-rate environment strengthened fixed-income yields and supported capital inflows into the domestic financial market. It also helped moderate excessive pressure on the naira and signalled stronger policy coordination between fiscal and monetary authorities.

However, the tightening cycle significantly increased borrowing costs across the economy.

Manufacturers, small businesses, and households faced elevated lending rates that constrained expansion, investment, and consumer spending. Many businesses struggled with rising operational expenses, weakened demand, and limited access to affordable financing.

Inflation remained one of the biggest challenges confronting the economy throughout the three years.

Food prices surged sharply following subsidy removal, exchange-rate depreciation, insecurity in farming communities, logistics constraints, and higher energy costs. Transportation fares, electricity tariffs, rents, healthcare costs, and basic household expenses also rose substantially.

Although inflation began showing signs of gradual moderation following policy tightening and relative exchange-rate stability, real incomes and purchasing power remained severely pressured.

For millions of Nigerians, the reform period translated into a difficult economic adjustment marked by declining living standards and rising financial strain.

Fiscal Reforms and Revenue Expansion

The Tinubu administration also pursued wide-ranging fiscal reforms aimed at strengthening public finances and reducing dependence on oil revenue.

The government intensified efforts to improve tax administration, expand the non-oil revenue base, digitise revenue collection systems, reform customs operations, and increase remittances from government-owned enterprises.

Efforts were also made to enhance fiscal transparency, attract investment, and improve coordination among revenue-generating agencies.

The reforms contributed to stronger federally generated revenues and improved fiscal sustainability compared with previous years dominated by subsidy payments and foreign exchange distortions.

However, public debt servicing remained a major challenge.

A significant portion of government revenue continued to be allocated to debt repayment obligations, limiting fiscal space for infrastructure development, healthcare, education, power projects, and social intervention programmes.

The government’s broader challenge remains balancing fiscal discipline with the urgent need for inclusive economic growth and social protection.

Capital Market Records Historic Expansion

One of the strongest beneficiaries of the reform era has been the Nigerian capital market.

The Nigerian Exchange Group (NGX) recorded historic growth over the three years as domestic and foreign investors responded positively to policy reforms, improved corporate earnings, banking sector recapitalisation, and renewed macroeconomic optimism.

Banking stocks, telecommunications companies, industrial goods firms, consumer goods manufacturers, and energy-related companies drove market expansion.

The banking recapitalisation programme introduced by the CBN became a major catalyst for capital market activity as banks approached the market through rights issues, public offers, and private placements to meet new capital requirements.

Market capitalisation expanded significantly, reflecting stronger investor participation and improved confidence in the long-term outlook of Nigeria’s financial system.

The equities market also benefited from increased participation by domestic institutional investors, pension fund administrators, and retail investors seeking protection against inflation.

Financial Services and Banking Sector Transformation

The banking industry experienced one of its most transformative periods under the current administration.

The CBN’s recapitalisation directive compelled financial institutions to strengthen their capital base ahead of new regulatory thresholds designed to position Nigerian banks for larger financing capacity and stronger resilience against external shocks.

Digital banking, fintech innovation, and electronic payment systems expanded rapidly during the period, reinforcing Nigeria’s status as one of Africa’s leading digital financial markets.

Financial technology firms deepened financial inclusion by expanding access to digital payments, agency banking, online lending, and mobile transactions across urban and rural communities.

The financial services sector consequently remained one of the fastest-growing contributors to GDP, supported by rising transaction volumes, increased digital adoption, and expanding electronic payment infrastructure.

Dangote Refinery and Industrial Expectations

Another major economic development during the Tinubu era has been the operational emergence of the Dangote Refinery.

The refinery represents one of the largest industrial investments in Africa and is widely expected to reshape Nigeria’s downstream petroleum industry.

Its gradual increase in refining operations reduced dependence on imported petroleum products, eased pressure on foreign exchange demand, supported local supply chains, and strengthened expectations for improved energy security.

Analysts believe the refinery could become a major catalyst for industrialisation, petrochemical development, export growth, and manufacturing expansion over the medium term.

The Federal Government also intensified efforts to increase crude oil production, improve energy sector reforms, and attract fresh investment into upstream and midstream operations.

Digital Economy Becomes Growth Engine

Nigeria’s digital economy emerged as one of the brightest areas of economic growth over the last three years.

Telecommunications, fintech, e-commerce, digital content creation, and technology-driven services expanded significantly despite broader macroeconomic pressures.

Broadband penetration improved steadily as telecommunications operators expanded infrastructure investments and network coverage.

The rapid adoption of digital banking, mobile payments, online commerce, and financial technology solutions accelerated financial inclusion and increased efficiency within the economy.

Nigeria’s youthful population, rising smartphone penetration, and growing digital entrepreneurship ecosystem continued to position the technology sector as a major long-term growth driver.

Investor Confidence and External Position Improve

Three years into the reform programme, investor sentiment toward Nigeria has improved considerably compared with the pre-reform era.

International investors and financial institutions responded positively to fiscal restructuring, FX reforms, tighter monetary policy, and efforts to improve macroeconomic management.

Nigeria witnessed gradual improvements in external reserves, capital inflows, and participation in both the equities and fixed-income markets.

Credit rating agencies also revised Nigeria’s outlook positively at different periods, citing stronger policy coordination, fiscal reforms, improved FX transparency, and commitment to macroeconomic stabilisation.

Nonetheless, investor confidence remains highly sensitive to inflation trends, exchange-rate stability, oil production levels, and policy consistency.

Economic Hardship and Social Pressures Persist

Despite improvements in several macroeconomic indicators, economic hardship remains the biggest criticism of the reform process.

The last three years have seen a sharp increase in living costs across virtually all sectors of the economy.

Food inflation, transportation costs, electricity tariffs, housing expenses, and healthcare costs rose significantly, worsening poverty pressures for low- and middle-income households.

Many small businesses faced declining consumer demand and rising production costs, while unemployment and underemployment remained major socio-economic concerns.

Although the government introduced palliative measures, wage adjustments, student support schemes, and social intervention programmes, the scale of economic hardship continued to overshadow many of the macroeconomic gains recorded during the reform period.

The widening gap between headline economic indicators and everyday living conditions remains one of the administration’s greatest political and economic challenges.

The Road Ahead

Three years into President Tinubu’s administration, Nigeria’s economy reflects both painful adjustment and cautious recovery.

The reforms implemented since 2023 have fundamentally altered the country’s macroeconomic structure. Fuel subsidy removal, FX liberalisation, tighter monetary policy, banking recapitalisation, fiscal reforms, and industrial expansion initiatives have improved transparency, strengthened investor confidence, boosted capital market performance, and repositioned the economy toward a more market-oriented framework.

However, the social cost of the reforms has been substantial.

Inflation, poverty, unemployment, weak purchasing power, and high business operating costs continue to affect millions of Nigerians and threaten the pace of inclusive growth.

The next phase of economic management will therefore require a delicate balancing act — sustaining macroeconomic stability while delivering measurable improvements in living standards.

Going forward, Nigeria’s long-term economic success will depend on deepening structural reforms, boosting local production, improving electricity supply, increasing oil output, expanding infrastructure investment, strengthening agriculture and manufacturing, enhancing social safety nets, and maintaining policy consistency.

Ultimately, the true test of the Tinubu administration’s economic reforms will not only be measured by stronger GDP figures, rising reserves, or bullish financial markets, but by the ability of the reforms to create jobs, reduce poverty, stabilise prices, and improve the quality of life for ordinary Nigerians.