How Tinubu’s Economic Reforms Are Affecting Nigerians

President Bola Ahmed Tinubu has hit the ground running since his inauguration on May 29, implementing a series of economic reforms that have won him praise from foreign investors but also caused hardship for many Nigerians.

Some of the major policies that Tinubu has introduced in his first month in office include:

• Removing the fuel subsidy that kept petrol prices artificially low, leading to a tripling of pump prices and triggering panic-buying and transport chaos.
• Floating the naira, allowing the market to determine the exchange rate, which resulted in a 40% devaluation of the currency and a boost for stocks.
• Suspending the central bank governor, Godwin Emefiele, who was accused of mismanaging the monetary policy and inflating the debt.
• Introducing a 7.5% value added tax (VAT) on diesel, which is widely used by manufacturers and businesses to power their generators.

These policies are aimed at streamlining the country’s foreign exchange system, unifying multiple exchange rates, reducing fiscal deficits, attracting foreign investments, improving transparency and accountability, and enhancing economic growth and development .

However, they also have negative effects on the living standards of Nigerians, who are already facing high inflation, unemployment, poverty and insecurity.

The removal of fuel subsidy and the devaluation of naira have increased the cost of transportation, food, electricity and other essential goods and services. The VAT on diesel has added to the burden of manufacturers and businesses who rely on it for power generation. The suspension of the central bank governor has raised concerns about the independence and credibility of the monetary authority.

Many Nigerians have expressed their dissatisfaction with Tinubu’s economic reforms, saying they are too fast, too much and too harsh. They have called on the government to provide palliatives to cushion the effects of the policies and to consider the welfare of the masses.

Some social media influencers have captured the sentiment of many Nigerians. Kelvin Odanz tweeted: “Fuel subsidy is gone; education subsidy is gone; VAT introduced for diesel, that would drive its price up and affect the cost of goods in the market. Electricity subsidy is about to go off. All these within one month. Too fast. Too much. Nigerians are suffering. We are being suffocated.” Daniel Regha wrote: “Tinubu meeting Bill Gates and Dangote in the presidential villa shouldn’t be news. The visit is making headlines, but what has this administration done that favours the masses? From removing fuel subsidies to reportedly planning an increase in electricity tariffs. It’s never about us.”

Some experts have also advised Tinubu to reconsider some of his policies or to provide alternatives to mitigate their impact. Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers (PwC), suggested that the government should suspend the VAT on diesel to avoid further fuelling inflation and compounding the burden on individuals and businesses6. Idakolo Gbolade, Chief Executive Officer of SD & D Capital Management, said that any other tax on petrol would be insensitive and unacceptable to Nigerians at this point6. Prof Godwin Oyedokun, an accounting and financial development don at Lead City University, Ibadan, said that Tinubu should put in place palliatives such as mass transit buses, housing schemes and social welfare programmes to ease the pain of Nigerians.

Tinubu’s economic reforms are a mixed bag for Nigerians. While they may have long-term benefits for the country’s economy and development, they also have short-term costs for the people’s livelihoods and wellbeing. The challenge for Tinubu is to balance his reform agenda with his social responsibility and to communicate his vision and strategy effectively to Nigerians.

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