How President Tinubu Has Addressed Nigeria's Economic Challenges in Three Years

I believe that President Bola Ahmed Tinubu has tackled more than half of Nigeria's economic issues. Let's explore how he has done this.

To understand Nigeria’s economic troubles, we need to look at the past. Anyone who ignores our history is not serious about finding solutions. I am not interested in those who seek power for its own sake rather than truly helping our people.

Nigeria is a key player in Africa and the world. We have the largest population of black people and manage a diverse society. Like many countries, Nigeria was formed through colonialism, which mixed various groups together. It is okay to want to make the best of our situation. I see Nigeria as a complex challenge that we need to solve. Giving up is not an option because we have not tried hard enough. Splitting Nigeria would cause more problems than it would solve, as shown in past attempts.

In October 1960, Nigerians took on self-governance. Since then, we have made and changed many rules. We received help from our British colonizers, but we have gradually taken control of our economy. In Africa, Nigerians are more in charge of their economy than any other nation. Other countries still have colonial powers influencing them. However, Nigeria has largely been left to manage its own affairs. Although outside powers still try to meddle, Nigerians are bold and often show their talent in leadership, business, technology, and more. When you travel around Africa, this is clear. Many countries seem to apologize for their culture, but not Nigeria. This is why a lot of successful black people come from Nigeria.

History teaches us where we come from, why we are where we are now, and where we need to go. Understanding our history helps us know how to move towards our future and who we should work with. Solving our economic challenges requires understanding our history, culture, and the global economy.

Before Tinubu's Era

Many analysts criticize the Muhammadu Buhari administration as one of Nigeria’s worst. But blaming a former leader is easy. The Buhari government struggled with decision-making and dealt with the COVID-19 pandemic. However, Nigeria's economy was already in trouble before Buhari took office. I do not recall any government in Nigeria that did not face complaints about mismanagement or corruption, even military governments. Every administration has its winners and losers. No society is perfect, and some people make poor life choices, which keeps poverty alive, even in rich countries.

Nigeria's economy has been broken for a long time. The question was who would try to fix it. During the Obasanjo era, I was a banker and ran a small business. I remember every six months, Obasanjo would raise fuel prices. Labor unions would protest, shutting down the economy. It took months for businesses to recover. The Jonathan administration was not much different. An AI search shows that under Jonathan, small businesses faced high costs, low productivity, and many other challenges. I do not blame Nigerians for feeling frustrated. People easily forget the past.

This look back at history is important. We tend to forget the past and focus only on the future. Many believe that the past was always better. In reality, we should recognize the recent gains.

During the Buhari era, the government’s revenue was already broken. Twenty-seven states owed salaries, up from 20 under Jonathan. Pensioners often protested in the streets, and fuel scarcity led to children selling petrol by the roadsides, just like during previous administrations. The Buhari government responded by relying on the Central Bank of Nigeria through Ways and Means. By the end of that administration, the account balance had reached over ₦30 trillion, when it should have been around ₦300 billion. This limit was not breached only under Buhari; there was ₦590 billion in that account at the end of 2014, before he took over.

The Rising Demand on Federal Resources

While the Federal Government appears to get 52 percent of funds from the Federal Accounts Allocation Committee (FAAC), the responsibilities and needs of the Federal Government have surpassed this formula. The Coordinating Minister for the Economy, Mr. Taiwo Oyedele, has pointed this out. The Nigerian Federal Government is possibly the only one in the world without a dedicated source of financing apart from what it receives from the general pot. Most federal spending supports the states. This is why the Federal Government carries 97 percent of Nigeria’s total debts, while states hold only 3 percent.

With a 97:3 ratio, states have room to dream big and create transformative projects. But few states are willing to borrow due to high interest rates and their public’s lack of understanding about the need for loans. Nigerians often discuss a rail project that connects the country. Such initiatives would fall on the Federal Government, adding to its debt. The system is failing at this level.

Necessary Reforms

Two urgent discussions need to happen about Nigeria’s finances. First, we need to rethink the 52:28:20 sharing formula between the Federal, State, and Local Governments. This formula is outdated given the increased responsibilities of the Federal Government. Second, we must consider the debt skew, which holds the potential for Nigeria’s economic growth if states could find good financing sources for their projects. States should collaborate with the Federal Government to access global funds like Islamic Financing, Green Bonds, and Blue Bonds. The Nigerian Capital Market has also complained about being ignored by the states. Dr. Emomotimi Agama, the director general of the Securities and Exchange Commission, said the Capital Market is ready to help finance the infrastructure needs of states, many of which are waiting for bond yields to drop. But development takes time and should not be delayed.

Going back to the main point, the hard reset Mr. President has initiated with his critical reforms has put the states in a better position than ever before in Nigeria's history. The local governments are also doing better. Cancelling fuel subsidies that cost at least $10 billion yearly, unifying the Naira’s exchange rate, boosting revenue collection, and increasing the tax to GDP ratio from 7 percent to 13 percent are major steps that have addressed many of Nigeria's issues. Compared to the Buhari era, when 27 states owed salaries or the Jonathan era when 20 states struggled, this is a significant change.

The Buhari administration focused on solving the Federal Government’s financing issues through the CBN's W&M facility. In contrast, the Tinubu Government has effectively addressed state and local government challenges, even providing them with more liquidity while managing most of the debt burden. This debt, however, might limit GDP growth moving forward. States must find ways to optimize their funds. Even local governments should look for ways to do this. We must ensure safeguards are in place to avoid falling into a debt trap like in the past. It is unwise for states to rely mainly on federal allocations to build long-term infrastructure. That creates a mismatch. They need to find ways to maximize their funds. Some Nigerians argue that the Naira’s value for states is weaker than before. They ignore the purchasing power advantage. Nigeria does not operate in dollars. We use our currency to boost our economy. The new Naira policy has helped local businesses grow by encouraging people to buy locally produced goods.

The Results Are Showing

Some claim it’s not a big deal for states to pay civil servants. That view is misguided. The civil service is vital for most states. Only Lagos employs over 100,000 people, but salaries form a base for state economies. When civil servants are paid, they spend money in markets, pay rents, school fees, and contribute to the economy. I worked in the private sector from 1992 to 2005 and was never owed a salary. I can’t imagine being owed for months like many states have experienced. Some states owed pensions for up to 20 years, which they are now clearing or have already cleared. I have never owed my staff since I started my business in 2006. Many complaining entrepreneurs often fail to pay fair wages and treat their staff poorly. We need to do better.

Others also question the Naira's value. I believe it is better to be paid fully and consistently in a weak currency than to be owed for months in a strong currency. There is no value in being owed. It is surprising how people survive being owed for so long or receiving half salaries for years, as seen in Osun and other states. Thankfully, those days seem to be behind us, thanks to reforms that have released funds to states and local governments where people live.

We also need to understand the Federal Government's responsibilities to see why it struggles. While Lagos State employs more than 100,000 people, the Federal Government pays at least two million monthly, leading to a wage bill exceeding ₦1 trillion, leaving little for other development. This is a big issue.

Looking Ahead

Nigeria has indeed turned a corner, despite temporary fuel price hikes due to the US-Iran war and the closure of the Straits of Hormuz. There are many programs aimed at easing life for people, but they are scattered across various ministries, making them hard to access. These include the CNG program to reduce transport costs, although some drivers misuse it for profit. We have several training and capacity development programs in place, like iDICE, 3MTT, and SUPA. Nigerians should take advantage of these opportunities and not be misled by those unwilling to improve themselves, who seek to harm the nation instead.

President Tinubu has made significant strides in this country. His policies have helped subnational governments. As Governor Dapo Abiodun stated recently, it is the governors' responsibility to show how subsidy funds were used, not the president’s. Unlike past bailouts with borrowed funds, the last three years have been beneficial for our states. For instance, Akwa Ibom has spent over ₦4 trillion in three years. A local government like Amuwo Odofin in Lagos receives between ₦1 billion and ₦1.8 billion monthly. Larger local governments can get over ₦2 billion. These are the people we should hold accountable for spending. As for the financial improvements, deep thinking, honest negotiations, and legislation will be vital. Nigerians must comply with tax and other government revenue requirements. Luckily, another important action has also helped, the Executive Order 09 signed on February 13. This order has allowed substantial funds to flow back to the subnational governments. Since all Nigerians live in states and local governments, and their liquidity has improved significantly in three years, I believe Mr. President deserves praise. In a few years, even the Federal Government will see a turnaround due to his financial and economic strategies.