Tinubunomics: An Perception into Nigeria’s Exceptional Financial Consolidation, by Daniel Bwala

President Bola Tinubu will clock two years in workplace by the top of subsequent month. That is maybe one of many longest and most consequential two years in Nigeria’s peacetime historical past. From that fateful day on Might 29, 2023 that President Bola Tinubu launched Tinubunomics on the Eagle Sq., Nigeria has been present process a protracted wanted structural reforms on each side. I’ll try to chronicle a few of these as concisely as potential.

The Nigerian Image pre-Might 29, 2023

Previous to Might 29, 2023, Nigeria, unknown to a lot of its residents, was sitting precariously on the sting of a excessive cliff. A cliff that was regularly constructed because of our reluctance as a rustic to ditch many unsustainable practices and face our stark realities boldly. The Nigerian federation was more and more drowning beneath the yoke of a number of subsidies together with gas subsidy, naira subsidy, electrical energy subsidy and lots of different tangible and intangible subsidies throughout totally different sectors of the financial system.

These subsidies dug a deep gap in our treasury and we frequently needed to borrow to maintain them. This meant that as at June 2023, Nigeria was expending 97% of its income to service money owed. NNPC Ltd was taking enormous losses to proceed subsidising PMS, the CBN was present process continual haemorrhage and had round $7 billion backlog of unsettled FX obligations hanging round its neck whereas struggling to keep up the Naira at a grossly undervalued charge, which inspired rent-seeking.

Nigeria’s Financial Image beneath Tinubunomics

President Bola Tinubu took very unpopular however drastic steps when he affirmed removing of gas subsidy and liberalisation of the international alternate market to permit interaction of market forces to find out the alternate charge. This twin landmark selections expectedly spiked inflation with meals inflation being the foremost driver. Nigerians needed to endure a extreme escalation in the price of dwelling and even some firms together with multinational entities suffered some discomforts. The preliminary financial headwind was extreme however President Bola Tinubu, being a decided captain, stayed the course and braced the storm.

Nature, they are saying, favours the courageous and the resilient. Tinubu’s courageous navigation of the financial turmoil that got here with the subsidy removing and FX liberalisation started to yield simple fruits within the latter a part of 2024. These fruits embody:

1. Drastic improve in home crude refining capability: Following the removing of PMS subsidy, the Dangote Refinery and the government-owned Port Harcourt refinery have been in a position to confidently start PMS manufacturing, realizing that they’d promote their merchandise based mostly on the prevailing market worth. The President facilitated a deal to allow refiners like Dangote receive home crude oil priced in Naira.

Due to the competitors now within the deregulated oil sector, worth of PMS, which was offered at over N1200 per litre in late 2024 has steadily diminished to a mean of N890 per litre and is anticipated to additional cut back if present crude oil costs persist. Petroleum product shortage is now historical past with hoarding or snuggling of merchandise to Nigeria’s neighbouring nations now very unattractive.

2. Stabilisation in value of dwelling: Within the warmth of the financial storm that adopted the gas subsidy removing and the liberalisation of the Naira, costs of products and providers, particularly meals objects have been growing nearly hourly. This drove meals inflation charge to greater than 40% far above the common month-to-month headline inflation which nestled at 34.8% as at December 2024 earlier than a rebasing of the Shopper Value Index (CPI) was carried out by the NBS.

Nonetheless, as PMS worth continued to say no in addition to elevated adoption of the cheaper various CNG, meals inflation started to ease with very important discount within the worth of well-liked staple meals objects observed throughout the nation. The choice of the Tinubu administration to open a 150-day duty-free window in July, 2024 for important meals imports, together with maize, husked brown rice, and wheat, as a part of the Presidential Accelerated Stabilisation Development Plan additionally contributed in stabilising meals costs as soon as the meals objects started to reach in Nigeria’s ports.

It’s instructive to additionally add that improved safety throughout many agrarian communities particularly within the North West the place farmers initially deserted their farms because of pervasive banditry returned to their farms following monumental offensive by the navy in opposition to bandits. Grain Markets in bandit hotbeds like Birnin Gwari reopened with farmers flooding the market with their harvests. Within the first quarter of 2025, nearly all meals stuffs witnessed worth discount.

3. Document Influx of Income to the three tiers of presidency: Following the daring transfer to finish gas subsidy and cease the arbitrary pegging of the Naira, the income out there to the federation account for sharing by the three tiers of presidency greater than doubled with many states seeing their FAAC revenues nearly tripling. This improve is even though a bit of the income accruing into the federation account should not all the time distributed however saved. This income windfall has made many states to scale back their urge for food for business loans. Extra income within the fingers of the three tiers of presidency means extra funding in infrastructure and social providers for the individuals.

4. Nigeria turning into a favorite vacation spot for international buyers: Following a string of financial reforms embarked upon by the Central Financial institution of Nigeria with the complete assist of the President, the financial ecosystem of Nigeria has witnessed a brand new lease of life. The CBN has decluttered the financial swamp hitherto encumbered by many bottlenecks and unwholesome practices, which regularly scared buyers away from Nigeria’s monetary sector. The sanitisation of the international alternate market by the CBN has made naira largely free from damaging hypothesis with restrictions on FX transactions now historical past.

Because of these reforms, Nigeria’s sovereign threat unfold has fallen to the bottom stage since January 2020. This enchancment is demonstrated in Nigeria’s newest Eurobond issuance in December the place the $1.7 billion issuance was subscribed 4 occasions greater than the supply Nigeria supposed. The Eurobond issuance, which clocked over $9 billion in orders, clearly exhibits the robust investor confidence in Nigeria’s financial system. To cap it off, Fitch Rankings upgraded Nigeria’s outlook to Steady from Unfavourable and maintained Nigeria’s long-term international foreign money ranking at ‘B’.

5. Nigeria’s financial system witnessing huge commerce surplus: Due to the daring selections of the Tinubu administration, Nigeria is now witnessing a major commerce surplus. In 2024, Nigeria recorded a complete commerce quantity of N138 trillion, the very best in our nation’s historical past. This determine represents a 106% improve in comparison with that of 2023. In greenback phrases, this interprets to $89.9 billion. Regardless of the massive depreciation within the worth of the Naira recorded in 2024 in comparison with 2023, this quantity of commerce exhibits that Nigeria’s commerce quantity surged by 22.1% in 2024 when dollarized.

Nigeria exported items value N77.4 trillion in 2024 in comparison with the N35.96 trillion it exported in 2023. This rise in export following a difficult 2023 signifies that the reforms instituted by President Bola Tinubu is yielding instant fruits particularly within the space of petroleum exports, which shaped 71% of our complete export in 2024. The concerted efforts of the navy with the complete backing of the President to deal with crude oil theft within the Niger Delta led to Nigeria’s common crude oil manufacturing (excluding condensate) rising to over 1.5 million barrels per day.

With an import of N60.6 trillion in 2024, it means Nigeria’s steadiness of commerce stood at N18.86 trillion in 2024, up from the N6.09 trillion recorded in 2023. This can be a signal that the Nigerian financial system is starting to roar again to life.

6. Nigeria’s Internet Reserves surge: Nigeria’s international reserves has additionally witnessed a major consolidation since President Bola Tinubu got here on board. Regardless of clearing no less than greater than $5 billion in verified inherited FX backlog final yr, the CBN was in a position to oversee an accretion in Nigeria’s gross international reserves from $35.09 billion on Might 30, 2023 to over $40.19 billion in December 2024. The distinction is simply $5.1 billion over a span of 18 months. The discount within the gross exterior reserve observed within the first quarter of 2025 is as results of settlement of many debt obligations which can be due together with a $1.1 billion Eurobond reimbursement.

As spectacular as this motion within the gross exterior international reserves is, contemplating what the CBN needed to move by means of to attain that, the above image doesn’t inform the entire story. The Internet Overseas Change Reserves (NFER) tells a greater story of our precarious state of affairs again in 2023. As at finish of 2023, Nigeria’s Internet Overseas Change Reserves was only a mere $3.99 billion. Lower than two later, the NFER has climbed to $23.11 billion. The NFER adjusts gross reserves by accounting for near-term liabilities corresponding to FX swaps and ahead contracts to provide an image of the particular foreign exchange out there to fulfill instant exterior obligations.

7. Lowered Funds Deficit: The fruits of President Tinubu’s many reforms can also be seen on the fiscal aspect with a marked discount in Nigeria’s price range deficit regardless of a historic spike within the complete price range sum. In 2025, price range deficit is 4.17% down from 6.2% recorded in 2023. In truth, the ratio of the 2025 price range deficit to GDP is 3.89%, which is decrease than the common 5% prior to now. What this implies is that, regardless that the price range deficit can be financed by means of borrowing, the quantity authorities would borrow in 2025 is lower than earlier than relative to the GDP. This indicators an intention by the Tinubu administration to be extra financially prudent and regularly transfer away from borrowing over time.

8. Nigeria recording elevated funding inflows and corporations profitability: Over the previous 12 months, Nigeria has been witnessing elevated influx of investments into many sectors of the financial system together with the oil and gasoline sector, monetary sector, manufacturing and strong minerals. Because of the deliberate reforms instituted by the President to take away bottlenecks within the oil and gasoline sector and incentivize funding, Nigeria in 2024 alone has acquired $13.5 billion in Ultimate Funding Choices (FIDs) from international oil and gasoline firms solely. This represents 75% of FIDs introduced throughout the African continent. Past oil and gasoline, the strong mineral sector is all the time witnessing influx of significant funding in worth addition to profitable strong minerals.

Within the manufacturing sector, loads of greenfield investments are additionally flowing into with some current firms asserting enlargement of their operations. Already loads of manufacturing corporations have posted file earnings within the previous monetary yr. Monetary establishments are declaring file gross revenue, with the capital market having a sustained bullish run. All these point out one factor – strong confidence in Nigeria’s financial system, and naturally in Tinubunomics!

— Dr. Daniel Bwala is the Particular Adviser to President Bola Ahmed Tinubu on Media and Coverage Communication