Nigerian Economic Reforms: Baba Gana Kingibe’s “Reforms Are Dead” Vs Tinubu’s No Going Back On Reforms

President Bola Tinubu’s inaugural presidential media chat on Monday has sparked mixed reactions among Nigerians. The President’s insistence on continuing economic reforms which many commentators perceived as causing pain and suffering drew the ire of many commentators. They criticised the president’s dismissive tone and perceived lack of empathy towards citizens affected by these economic policy reforms. Predictably, the bulk of the reaction has been negative.

The Nigerian economist Bismarck Rewane said in a recent interview that Nigeria’s “power supply crisis” has come to a head and if nothing is done, the “economy is going to be in dire straits”.   What Bismarck envisages is complete withdrawal of government subsidies and perhaps the privatisation of the Transmission Company of Nigeria (TCN), measures that will stimulate the investment to increase power supply but will also lead to higher tariffs.

A choice has to be made in regards to Nigeria’s power sector between policies that stimulate investment and output and incessant “collapse” of the national grid.

Even Nigeria’s forex policy reforms are far from single-minded or complete. The gap between the parallel or black market and the official CBN rate has re-emerged, a sign that the Central Bank of Nigeria is still herding market participants towards its preferred rate while intervening in the market using a mix of resources including very expensive Eurobond dollars. The latest Fitch Ratings on Nigeria notes that exchange rate policy remained hampered by a lack of transparency in several areas, including the level of net reserves.

On the positive side, a choice has just been made to allow Nigerian telecommunications companies to increase tariffs after more than 10 years during which inflation and thus consumer prices have increased by an average of 14.85% per annum. This choice will stimulate investment in improving patchy voice and data services and enable the productivity, entrepreneurship and investment which the digital economy can create.

Former President Olusegun Obasanjo is recognised for launching a gale of market reforms that established Nigeria as a notable frontier market and hence stimulated inflows into the country’s capital market even if it brought little by the way of direct foreign investment. His handpicked successor in 2007, the late Umar Yaradua decided to throw the reforms in the bin. His Chief of Staff, Ambassador Baba Gana Kingibe announced that economic reforms are dead. The new administration promptly reversed the sale of Nigeria’s state oil refineries.

The cancellation of Nigeria’s refinery privatization in 2007 perpetuated reliance on imported petroleum products, straining foreign exchange reserves and entrenched the economically ruinous practice of meeting domestic demand through subsidised imports. This policy reversal deterred private sector investment by signalling policy inconsistency, while state-owned refineries continued to suffer inefficiencies, low production rates, and frequent shutdowns due to the absence of private capital and expertise.

Between 2008 and 2023, Nigeria’s expenditure of ₦30.27 trillion on fuel subsidies, coupled with declining oil production due to a lack of reforms to incentivise investment in oil production, created a vicious cycle of economic strain. (Roughly 30% of subsidised petroleum was smuggled out to neighbouring countries). To fund the oil subsidy, the government not only depleted foreign exchange reserves, it resorted to expensive foreign loans. This undermined the naira’s value, causing severe depreciation.

Multinational companies faced challenges accessing foreign exchange to import inputs. Meanwhile, the naira’s devaluation made servicing foreign loans significantly more expensive, further burdening businesses. Many companies decided to exit the Nigerian market. The dwindling forex reserves, rising production costs, and distorted market conditions fuelled high inflation, driving up the cost of goods and eroding purchasing power for ordinary Nigerians.

One thing is certain about Nigerian politics: for the foreseeable future, politicians will prioritize a “friends and family” policy. Many Nigerians invest in politics to amass wealth, and political leaders manage regional and national coalitions to facilitate these goal.

However, the economic policies that leaders choose to adopt or abandon significantly impact investment, jobs, inflation, the exchange rate, and, ultimately, the quality of life for Nigerians. The economic challenges Nigerians face today stem largely from past decisions to forsake long-delayed economic reforms in favour of short-term, easy options.

What Nigerians—especially vocal social groups like the media and civil society—should demand is not an end to reforms but more equitable and thoughtfully designed ones. The issue with Tinubu’s economic reforms is not blind faith in market-driven solutions or a stubborn desire to inflict hardship, but their flawed design and implementation. An American investment risk advisor aptly, even if with some exaggeration, described the administration’s forex reform as “Buhari 2.0,” i.e torn between establishing a genuine market-driven exchange rate and appeasing public sentiment on Twitter.

The administration also faces a fundamental contradiction: attempting to reduce inflation and stabilize the naira while avoiding the tough but necessary task of cutting deficit spending. Ironically, the primary beneficiaries of bloated government expenditure, which fuels inflation and raises the cost of transportation, medications, and food, are those in charge of appropriation—not the citizens. These missteps have proven costly for the economy and Nigerians’ well-being.

However, rolling back these reforms, à la Kingibe, would be a recipe for certain economic disaster. Nigeria can no longer afford the ruinous option of abandoning reforms; instead, the focus must be on implementing them more effectively and equitably.