Economic reforms: Experts weigh gains, costs, prospects

Three years into the administration of President Bola Tinubu, economists and policy experts have offered mixed assessments of his economic reforms, acknowledging that the policies have changed the direction of the Nigerian economy, while warning that the social costs remain high.

The experts commenting on the Capital Markets Academics of Nigeria’s platform agree that the reforms have addressed some long-standing problems, including fuel subsidies, multiple exchange rates, weak government revenue and inadequate capital in the banking sector.

However, they argue that the real test is whether the changes will eventually improve the living standards of ordinary Nigerians.

In an analysis titled: “Tinubu’s Impact: What Changed, What It Cost and How History May Judge It,” economist, lawyer and public policy scholar, S. A. Ndanusa, said Tinubu confronted problems that previous governments had identified, but were reluctant to tackle.

The petrol subsidy was removed on May 29, 2023, while the foreign exchange market was liberalised shortly afterwards. The Central Bank of Nigeria also moved away from some forms of development financing, while the government introduced a major bank recapitalisation programme and advanced tax reforms. The Nigerian Education Loan Fund was also established to provide financing for students.

Ndanusa said the President acted decisively because the subsidy had become expensive and vulnerable to abuse, while multiple exchange rates encouraged arbitrage and government revenue was inadequate.

However, he noted that the reforms came with significant costs. Subsidy removal and exchange-rate liberalisation created a major shock for an economy heavily dependent on imports. Transport, food, production and household expenses increased, while social protection and public transport…