Tinubu's Economic Reforms Two Years On: Between Bold Promises and Bitter Realities

When President Bola Ahmed Tinubu declared during his inaugural address on May 29, 2024, that "subsidy is gone," the reverberations were felt across every stratum of Nigerian society. Two years later, the administration's reform agenda has become the most consequential economic policy shift in Nigeria since the structural adjustment programmes of the 1980s — and perhaps the most polarising.

The reforms, broadly encompassing the removal of the petrol subsidy, the unification of the foreign exchange windows, the introduction of a series of tax reforms, and the easing of business registration requirements, were designed to correct decades of fiscal distortions. The question now, as economists and ordinary Nigerians assess the trajectory, is whether the medicine has begun to work — or whether the patient is still convalescing.

The Numbers Tell a Complex Story

On paper, the macroeconomic picture has improved in measurable ways. Nigeria's foreign exchange reserves climbed to approximately $38.5 billion by March 2026, up from $33.2 billion at the start of the Tinubu administration. The Central Bank of Nigeria, under the leadership of Governor Olayemi Cardoso, has maintained a relatively unified exchange rate, with the naira trading at around 1,520 to the dollar at the parallel market — a far cry from the wild differentials that characterised the multiple exchange rate regime before June 2023.

The federal government's fiscal deficit narrowed from 6.1 percent of GDP in 2023 to an estimated 4.3 percent in the 2025 fiscal year, according to data from the Budget Office of the Federation. Savings from the petrol subsidy removal were partially redirected into infrastructure projects, with the administration allocating approximately 2.4 trillion naira to road construction and rehabilitation across the six geopolitical zones in the 2026 budget.

"The reforms were necessary, and they are beginning to yield the kind of macroeconomic stability that investors have long demanded," said Dr. Biodun Adedipe, chief economist at Lagos-based advisory firm B. Adedipe Associates. "What we are seeing is the painful but inevitable correction of a system that was fundamentally unsustainable."

Inflation, however, remains the Achilles' heel. After peaking at 34.8 percent year-on-year in December 2024, the National Bureau of Statistics reported that headline inflation had moderated to 26.2 percent by March 2026. While the downward trend has been welcomed, food inflation has proved stubborn, remaining above 30 percent in most months as the pass-through effects of higher fuel and transport costs continue to squeeze household budgets.

Petrol Prices and the Cost of Living

The most visible and politically sensitive element of the reform programme has been the increase in petrol prices. From approximately 195 naira per litre before the subsidy removal, pump prices rose sharply before settling in a range of 880 to 1,050 naira per litre depending on the region and marketer. The government argues that the price reflects market realities, given that Nigeria had been spending roughly 4.39 trillion naira annually on petrol subsidies — funds that it says were disproportionately benefiting smugglers and wealthy Nigerians.

For ordinary citizens, however, the arithmetic is unforgiving. A 2025 survey by the National Bureau of Statistics found that 63 percent of Nigerian households reported a significant reduction in disposable income since the subsidy removal. Transport costs in Lagos surged by an average of 85 percent, while the cost of transporting food from northern production hubs to southern markets increased by 70 to 120 percent, depending on distance.

In Mushin, a densely populated suburb of Lagos, 42-year-old trader Adewale Ogundimu encapsulated the mood of many when he spoke to reporters earlier this month. "They tell us the economy is improving, but I used to fill my tank with 5,000 naira. Now I need almost 30,000 naira for the same tank. My children's school fees have gone up twice. My wife has started selling boiled eggs on the roadside just so we can eat three meals a day."

The federal government introduced several palliative measures in response, including a conditional cash transfer programme that reached approximately 4 million households by early 2026, as well as compressed natural gas-powered mass transit buses deployed in Lagos, Abuja, Port Harcourt, and Kano. Critics, however, argue that the palliatives have been inadequate in scale and poorly targeted.

The Tax Reform Conversation

Perhaps the most contentious element of Tinubu's second-year reform push has been the tax reform legislation submitted to the National Assembly in late 2025. The proposed reforms, spearheaded by the Fiscal Policy and Tax Reforms Committee chaired by Taiwo Oyedele, sought to overhaul Nigeria's tax administration by consolidating multiple tax collection agencies, introducing a simplified value-added tax framework, and shifting the derivation formula for VAT distribution among states.

The bill triggered an intense political backlash, particularly from northern governors who argued that the proposed derivation formula would disadvantage states with lower consumption levels. After months of negotiation, a revised version was passed by the National Assembly in March 2026, maintaining a more balanced derivation approach while still centralising tax collection under a newly established Nigeria Revenue Service.

Proponents estimate that the tax reforms could increase government revenue by as much as 15 trillion naira annually within three years of full implementation. "We are moving from a system where the informal sector was essentially untaxed to one where the tax base is broadened in a fair and efficient manner," Oyedele told reporters after the bill's passage. "This is the foundation of sustainable governance."

Sceptics remain unconvinced. "Tax reform without corresponding improvements in public service delivery is simply extracting more from citizens for the same poor outcomes," said Professor Attahiru Jega, former chairman of the Independent National Electoral Commission. "The government must demonstrate that additional revenue translates into tangible improvements in education, healthcare, and infrastructure."

The Investment Climate

One area where the reforms have garnered more consistent praise is in the investment climate. The unification of the exchange rate, long demanded by foreign investors who complained about opaque and multiple pricing, has begun to attract fresh capital. Foreign direct investment inflows increased to approximately $4.8 billion in 2025, up from $2.6 billion in 2023, according to the Nigerian Investment Promotion Commission.

The Nigerian Stock Exchange All-Share Index rose by approximately 38 percent between January 2025 and April 2026, driven largely by banking and telecommunications stocks. The government's decision to concession major highways to private operators under the Highway Development and Management Initiative has also drawn interest from infrastructure funds, with the Lagos-Ibadan and Abuja-Kano corridors attracting bids from consortia involving South African, Chinese, and Middle Eastern investors.

Dangote Industries, which commissioned its 650,000-barrel-per-day refinery in early 2024, has become a symbol of the potential upside of the reform agenda. By early 2026, the refinery was producing at approximately 60 percent capacity, helping to reduce Nigeria's dependence on imported petroleum products and saving an estimated $18 billion annually in foreign exchange outflows.

Political Undercurrents

Despite the macroeconomic gains, Tinubu's approval ratings remain deeply divided along regional and socioeconomic lines. A poll conducted by NOI Polls in February 2026 found that 47 percent of Nigerians approved of the president's handling of the economy, while 41 percent disapproved and 12 percent were undecided. Approval was highest in the South-West (58 percent) and lowest in the North-West (33 percent).

The opposition People's Democratic Party has sought to capitalise on public discontent, organising rallies across major cities under the banner of "Enough is Enough." Former Vice President Atiku Abubakar, a vocal critic of the subsidy removal approach, has called for a more gradualist strategy that would cushion the impact on vulnerable populations.

Within the ruling All Progressives Congress, there are also rumblings of discontent. Several lawmakers from northern states have publicly called for greater fiscal transfers to their constituencies, while governors in the South-South have demanded accelerated action on the cleanup of the Niger Delta and the passage of the Petroleum Industry Act's remaining implementing regulations.

What Lies Ahead

As Tinubu approaches the midpoint of his four-year term, the path forward remains treacherous. The government's ability to maintain fiscal discipline while delivering visible improvements in public services will largely determine whether the reforms are ultimately judged a success or a misadventure.

Key milestones to watch include the full implementation of the tax reforms, scheduled for the first quarter of 2027; the completion of the Lagos-Calabar coastal railway, now projected for late 2027; and the government's response to the recurring security challenges in the North-East and North-West, which continue to displace farming communities and undermine agricultural production.

For now, Nigeria finds itself in a familiar but uncomfortable position — caught between the promise of structural transformation and the pain of transition. Whether Tinubu's reforms will be remembered as a bold and necessary correction or as an austerity programme imposed without adequate safeguards remains an open question, one that history will ultimately answer.