Analysis of President Bola Tinubu’s Economic Policies and Their Impact
Teekay Adams
Write for
Adeleke reporters
Tuesday 18th Match, 2025, 5:00pm
The economic policies of President Bola Tinubu’s government, including the removal of fuel subsidies, the advent of the Dangote refinery, the shift towards locally produced petrol, the floating of the naira, as well as transitions in agriculture, transportation, and energy, have generated mixed reactions. Some see them as transformative reforms that could lead to long-term economic growth, while others perceive them as causing immediate hardship. Let’s take a detailed look at these policies, their potential long-term benefits, and how they may impact Nigeria’s economy.
1. Removal of Fuel Subsidy
The removal of the fuel subsidy was one of the most controversial decisions of Tinubu’s administration. Historically, fuel subsidies in Nigeria have been a major drain on the government’s finances, consuming a significant portion of the national budget. According to some estimates, subsidies were costing the country over $10 billion annually. The subsidy also encouraged inefficiencies in the oil sector and led to widespread smuggling, as fuel was sold at artificially low prices, far below international market prices.
Short-Term Impact:
Inflationary Pressures: The immediate consequence of subsidy removal has been an increase in fuel prices, contributing to inflation. Transportation costs have risen, affecting goods and services across the economy.
Public Discontent: Many Nigerians have expressed dissatisfaction with the price hikes, as it has worsened living conditions, especially for the poor and vulnerable.
Long-Term Benefits:
Increased Government Revenues: The government will now redirect funds previously spent on subsidies towards other critical areas, such as infrastructure, healthcare, and education. This could also boost investments in essential sectors that provide long-term benefits.
Market Efficiency: Subsidy removal opens up the market, allowing for competition, efficiency, and innovation in the fuel sector. Over time, this could reduce the need for imports, improve energy access, and foster better market practices.
2. Dangote Refinery and NNPC’s Local Petrol Production
Another key policy is the development of the Dangote refinery, alongside the Nigerian National Petroleum Corporation (NNPC) increasing its production of petrol domestically for the first time in years. For decades, Nigeria has been dependent on importing refined petroleum products due to its underdeveloped local refining capacity.
Short-Term Impact:
Reduced Import Bill: With the Dangote refinery coming online and NNPC increasing local refining capacity, Nigeria can reduce its reliance on costly fuel imports. This can help the country save foreign exchange (forex), which would otherwise be spent on importing refined petroleum products.
Long-Term Benefits:
Job Creation: The refinery project is expected to create thousands of jobs, both directly and indirectly, which can boost employment levels in the economy.
Economic Diversification: By refining oil locally, Nigeria moves closer to becoming a more diversified economy, which reduces vulnerability to oil price fluctuations. The Dangote refinery will help drive Nigeria’s industrialization, processing crude oil into value-added products domestically.
Export Potential: With Dangote’s refinery capable of producing large amounts of fuel, Nigeria could also start exporting refined petroleum products to other African countries and beyond. This creates an opportunity for the country to earn forex and reduce its trade deficit.
3. Floating of the Naira and Forex Impact
Floating the naira against the dollar is a policy designed to allow market forces to determine the exchange rate, moving away from the previous multiple exchange rates and attempts to stabilize the currency artificially.
Short-Term Impact:
Depreciation of the Naira: The immediate consequence of floating the naira was a significant depreciation of the currency. This has contributed to higher costs for imports, including essential goods, and worsened inflation.
Long-Term Benefits:
Market-Driven Exchange Rate: The floating of the naira enables a more efficient foreign exchange market and reduces pressure on the Central Bank of Nigeria (CBN) to maintain unsustainable interventions. It also signals confidence in the economy, attracting foreign direct investment (FDI).
Reduced Forex Outflows: With increased local production of refined products, including petrol, Nigeria can reduce its demand for forex spent on fuel imports. This will strengthen Nigeria’s balance of payments in the long run.
Attraction of Foreign Investment: A market-driven exchange rate improves investor confidence. Over time, this could attract foreign capital, especially in sectors like manufacturing and technology, leading to economic growth and job creation.
4. Agricultural Policies
The Tinubu administration has made efforts to address agriculture through policies aimed at improving food security and reducing reliance on imports. This includes promoting local production of key agricultural products, offering incentives to farmers, and improving access to financing.
Short-Term Impact:
Increased Food Prices: Due to inflation and some infrastructural issues, food prices may rise in the short term, causing hardship for some Nigerians.
Long-Term Benefits:
Food Security: By prioritizing agriculture and encouraging local production, Nigeria could reduce its reliance on food imports, which would free up forex for other essential imports.
Job Creation and Rural Development: Agriculture is a major employer in Nigeria, particularly in rural areas. By improving the sector, the government can uplift rural communities and reduce rural-urban migration.
Diversification: The long-term goal is to make agriculture a key pillar of Nigeria’s diversified economy, reducing dependency on oil and creating a more resilient economy.
5. Transportation: Transition from Fuel to Compressed Natural Gas (CNG)
The Nigerian government is also pushing for a transition from traditional petrol and diesel vehicles to vehicles powered by compressed natural gas (CNG). This is part of an effort to reduce reliance on imported fuels and cut down on the economic and environmental costs associated with traditional fuels.
Short-Term Impact:
Initial Costs: The transition to CNG involves significant investments in infrastructure, such as gas stations and conversion kits for vehicles. This might lead to higher upfront costs for businesses and consumers.
Long-Term Benefits:
Lower Fuel Costs: CNG is cheaper than petrol and diesel, which can help reduce transportation costs over time and improve the cost structure for businesses.
Environmental Benefits: CNG is more environmentally friendly compared to conventional fuels. By reducing emissions, this policy could contribute to long-term sustainability goals and reduce Nigeria’s carbon footprint.
Energy Independence: Nigeria has abundant natural gas reserves, and leveraging these for domestic transportation could significantly reduce reliance on imported oil, improving energy security.
6. Future Benefits for Nigeria and the 2027 Elections
The reforms being implemented are designed to address structural issues in the Nigerian economy and promote sustainable growth. While the short-term effects, such as inflation and economic hardship, have been felt, these reforms are intended to bear fruit in the medium-to-long term.
If these reforms begin to show positive results before the 2027 elections, they could enhance President Tinubu’s political chances. A stabilizing currency, growth in domestic industries, job creation, and improved energy infrastructure could lead to more favorable public opinion. Nigerians may start to see the long-term benefits, particularly in areas like job creation, more affordable energy, and reduced dependence on imports.
Political Consequences:
Public Support: If the reforms begin to show tangible results in improving living standards, Tinubu’s political capital will likely increase. Conversely, if the economic hardship continues without visible improvement, his administration may face increasing public dissatisfaction.
Economic Growth as a Voting Factor: Economic growth and improved quality of life, particularly in the wake of subsidy removal, will be significant in determining the president’s chances in the 2027 elections. If economic indicators such as GDP growth, job creation, and lower inflation are positive, Tinubu’s chances of re-election will be bolstered.
Conclusion
President Tinubu’s policies are undoubtedly designed to address Nigeria’s deep-rooted economic challenges, even if their immediate impact is painful for many citizens. The removal of fuel subsidies, the Dangote refinery project, the transition to CNG, the floating of the naira, and other economic reforms are aimed at creating a more diversified, competitive, and sustainable economy in the long term. While these policies have their short-term challenges, their success will likely depend on the government’s ability to manage inflation, provide support to vulnerable populations, and maintain political stability. If these reforms lead to improved economic performance before the 2027 elections, they could significantly boost Tinubu’s chances of securing a second term.
