MONDAY EDITORIAL
There is an uncomfortable question Nigeria must confront as President Bola Tinubu’s administration presses ahead with its economic reforms:
Can an economy truly be said to be recovering when millions of its citizens can no longer afford the basic necessities of life?
President Bola Tinubu came into office with a clear economic philosophy. His administration argued that Nigeria could no longer sustain the petrol subsidy regime or continue defending an artificially managed exchange rate. The subsidy was described as an enormous drain on public finances, while the multiple exchange-rate system was blamed for encouraging distortions, arbitrage and corruption.
In theory, the argument was compelling.
The government wanted to stop what it considered economic haemorrhage, allow market forces to determine prices, strengthen government revenues and create the conditions for investment and eventually increased domestic production.
But economics is not merely about balance sheets, foreign reserves and fiscal deficits.
Economics is also about whether a father can feed his family, whether a student can get to school, whether a small business can remain open and whether a worker’s salary can survive until the end of the month.
And this is where the Tinubu reforms have encountered their greatest difficulty.
The Shock Was Immediate; The Cushion Was Not
The removal of the petrol subsidy produced an immediate and dramatic increase in fuel prices. Transport fares rose. The cost of moving farm produce to markets increased. Businesses passed higher logistics and energy costs to consumers.
Then came the naira’s sharp depreciation following the foreign-exchange reforms.
For an economy heavily dependent on imports, currency depreciation does not operate in isolation. It affects the cost of machinery, raw materials, medicines, food inputs, spare parts and other goods whose prices are ultimately linked to foreign exchange.
The result was a painful chain reaction.
Fuel became more expensive. Transport became more expensive. Production became more expensive. Food became more expensive. Household purchasing power collapsed.
The government may have been trying to correct long-standing distortions, but ordinary Nigerians experienced the reforms first as a dramatic increase in the cost of survival.
That is the central contradiction of the Tinubu economic experiment.
A Good Theory Can Still Produce Painful Results
There is merit in the argument that Nigeria could not continue indefinitely subsidising consumption while neglecting production.
There is also merit in the argument that maintaining an unrealistic exchange rate can create opportunities for arbitrage while discouraging investment and damaging the credibility of the foreign-exchange market.
But economic reforms cannot be judged only by the logic behind them.
They must also be judged by timing, sequencing and protection of the vulnerable.
It is one thing to tell Nigerians that today’s sacrifice will produce tomorrow’s prosperity.
It is another to ask a family whose food budget has been destroyed by inflation to wait indefinitely for that prosperity.
This is where the administration’s economic programme has appeared weakest: the macroeconomic medicine came before the microeconomic protection.
The Missing Safety Net
When a government removes a subsidy that affects virtually every sector of the economy, it must have a credible mechanism for protecting the poorest citizens from the initial shock.
That safety net must be visible, transparent and sufficiently broad.
But the government’s palliatives and relief measures have been widely criticised as inadequate compared with the scale of the hardship confronting households.
The question is not whether government has done something.
The question is whether it has done enough to prevent millions of Nigerians from falling through the cracks.
A nation cannot simply tell its citizens that the economy is being restructured while leaving them to absorb the full cost of the restructuring.
Nigeria’s Biggest Problem Is Production
Perhaps the most important weakness in the reform strategy is that market reforms cannot magically create production.
Floating the naira does not manufacture tractors.
Removing petrol subsidies does not build refineries.
Devaluing the currency does not automatically produce more food.
And raising government revenue does not, by itself, put food on a family’s table.
Nigeria’s fundamental problem remains its weak productive base.
For decades, the country has consumed more than it produces in several critical areas. It has depended heavily on imported machinery, industrial inputs and refined petroleum products, while its agricultural potential remains constrained by insecurity, inadequate infrastructure, poor storage and transportation challenges.
That creates a dangerous situation.
When the currency loses value in an import-dependent economy, the cost of production rises before local production has had enough time to respond.
The result is inflation before industrialisation.
And Then There Is Insecurity
No serious conversation about food inflation in Nigeria can ignore insecurity.
Farmers cannot produce at full capacity when farming communities are threatened by banditry, terrorism, communal violence or displacement.
A farmer who cannot safely reach his farm cannot produce enough food.
And when food production falls while transportation and energy costs rise, the consumer ultimately pays the price.
This is why economic reform cannot be separated from security reform.
You cannot sustainably bring down food prices without making it possible for farmers to produce, transport and sell food safely.
The SME Sector Is Also Paying the Price
Nigeria’s small and medium-sized businesses are another casualty of the current economic environment.
Many businesses are battling simultaneously with high energy costs, expensive credit, rising transportation expenses, costly imported inputs and declining consumer purchasing power.
The small business owner therefore faces a terrible equation:
Costs are rising while customers are buying less.
Some businesses have responded by reducing staff, cutting operating hours, shrinking production or shutting down altogether.
That creates another vicious cycle.
Higher costs reduce business activity.
Reduced business activity means fewer jobs.
Fewer jobs mean weaker consumer purchasing power.
Weaker purchasing power means fewer customers.
And fewer customers make it even harder for businesses to survive.
The Government May Be Right About the Numbers—But Numbers Are Not Enough
The Tinubu administration deserves credit for confronting economic problems that previous governments repeatedly postponed.
But the government must also understand that macro-economic improvement and household economic improvement are not the same thing.
Government revenue can rise while household income falls.
Foreign reserves can improve while the price of food remains unbearable.
The fiscal deficit can narrow while millions of families struggle to pay rent.
The government can report improved economic indicators while the ordinary citizen sees only higher prices at the market.
Both realities can exist at the same time.
And that is why government communication must go beyond telling Nigerians that the reforms are working.
It must demonstrate when and how ordinary Nigerians will begin to feel the benefits.
The Real Test Is Not Abuja—It Is The Market
The ultimate test of economic policy is not the language of economic conferences.
It is the market woman in Jos.
It is the civil servant whose salary disappears faster than before.
It is the farmer who cannot safely reach his farm.
It is the manufacturer paying more for energy and raw materials.
It is the student whose transport fare has become a burden.
It is the family that has reduced the quantity and quality of food it consumes because income can no longer keep pace with prices.
These are the people who must eventually validate the reforms.
Tinubu Must Now Move From Adjustment to Relief
The first phase of the administration’s economic programme was dominated by painful adjustments.
The next phase must be dominated by production, protection and prosperity.
Nigeria needs an aggressive programme to increase domestic food production, secure farming communities, expand refining capacity, improve electricity supply, reduce the cost of doing business and make affordable credit available to productive enterprises.
The government must also ensure that social intervention programmes are transparent and genuinely targeted at vulnerable Nigerians.
Above all, government must resist the temptation to measure success exclusively through macroeconomic statistics.
The purpose of an economy is not to make government accounts look better.
The purpose of an economy is to improve the quality of life of its people.
President Tinubu may ultimately be proved right that Nigeria needed painful reforms to escape an unsustainable economic path.
But history will not judge the reforms solely by whether they saved government finances.
It will judge them by whether, after the pain, Nigerians actually became more prosperous.
And that is the challenge before the Tinubu administration now:
It is no longer enough to tell Nigerians that the economy is being saved. The government must show Nigerians that their lives are being saved from the economy.
That is the difference between an economic reform that merely stabilises a country and one that genuinely transforms it.
— Headlineswave Editorial
