The Tinubu administration has faced significant criticism since its inception, grappling with a multitude of challenges that have adversely affected the Nigerian economy. Skepticism surrounding its policies and effectiveness linger, leading to aggravated hardship for the populace, especially amidst escalating inflation and living costs.
Economy Recovery Signals Amid Inflation Drops
Nigerian economists and the Centre for the Promotion of Private Enterprise (CPPE) have pointed out that the recent consecutive declines in Nigeria’s inflation rate signal a potential recovery in the economy, despite the significant hardships experienced.
Muda Yusuf, CEO of CPPE; Gbolade Idakolo, CEO of SD & D Capital Management; and Prof. Godwin Oyedokun from Lead City University in Ibadan shared their views on the economy in separate interviews on Monday.
According to the National Bureau of Statistics’ latest Consumer Price Index, Nigeria’s inflation rate fell for the second time to 23.18% in February 2025, down from 24.48% in the previous month. Food inflation also saw a reduction, slipping to 23.51% in February from 26.08% in January. This follows a significant drop to 24.48% in January after CPI rebasing.
While the data suggests a decline in inflation, the cost of living in Nigeria remains stubbornly high, highlighting the gap between statistical improvements and the everyday realities faced by citizens.
Macro Stability Indicating Progress of economy
The CPPE attributed the inflation drop to improved macroeconomic stability. Yusuf noted, “The drop in exchange rate volatility and drop in premium motor spirit prices are contributing factors to the decline in Nigeria’s inflation rate.” Nonetheless, he emphasized that, despite the encouraging trends, inflation remains elevated, calling on the government to implement policies that reduce the prices of essential goods, such as staple foods and pharmaceuticals.
“The further deceleration in inflation in February can be attributed to two factors. First is the base effect. When you relate the 2025 figure to 2024, it is expected to see further narrowing because the inflation rate is mainly year on year. This trend is likely to continue for the larger part of 2025. The second part is due to moderation in macro stability. We are beginning to drop in the volatility in the exchange rate in the last few months. This is a key factor because the exchange rate is a major driver of inflation.”
He also noted that the energy sector, including slight reductions in fuel prices, might have helped alleviate some pressure, adding, “However, the inflation rate of 23.18% is still high. This means that there is a lot of work to be done to ease inflationary pressures on citizens. The government should take some urgent steps to bring down the price of basic products. Foods, pharmaceutical products, cooking gas, and staple foods (bread, noodles, rice) should be top on the agenda of government. Another good news is that there is an increase in food production on account of improved security.”
Signals of Stabilizing Prices in economy
Prof. Oyedokun commented that the recent decline in inflation bodes well for consumers and businesses. He noted that the consecutive drops in both headline and food inflation could signify stabilizing factors behind rising prices, potentially offering some relief.
“Regarding the February inflation drop outside the Consumer Price Index (CPI) rebasing, several factors could contribute. These might include improved supply chain conditions, seasonal factors that affect food production and prices, or government interventions that stabilize markets. Additionally, any recent policy measures aimed at curbing inflation, such as adjustments in interest rates or subsidies for essential goods, could also play a role,” he explained.
Why Prices Aren’t Reflecting Inflation Decrease
On the mismatch between inflation figures and market prices, Idakolo remarked, “The inflation figures are not generally reflecting on the price of goods because certain fundamentals of the economy, like the strength of the Naira, exchange rate, and interest rates, remain high, which have made it difficult for the impact of lower inflation to be felt by the people. However, if the government continues to drive down prices due to targeted policies, it would only be a matter of time before people start feeling the impact of reduced inflation on the economy.”
In summary, while there are signs of recovery as reflected in the declining inflation rates, the persistent economic challenges serve as a reminder that the road to relief for many Nigerians is still fraught with obstacles.
As of my last update in October 2023, President Bola Ahmed Tinubu’s administration has been actively implementing various economic policies aimed at revitalizing Nigeria’s economy, which has faced numerous challenges over the years, including inflation, unemployment, and a reliance on oil revenues. Here are some of the notable efforts and the corresponding gains that have been reported:
Economic Reforms
- Currency Exchange and Forex Policy:
One of Tinubu’s significant initiatives has been the reform of Nigeria’s foreign exchange policy. By adopting a more flexible exchange rate regime, the government has aimed to unify the multiple exchange rates that previously hampered trade and investment. This move has resulted in increased foreign direct investment (FDI) as investors gain more confidence in the stability of the currency. - Diversification of the Economy:
The Tinubu administration has placed a strong emphasis on diversifying Nigeria’s economic base beyond oil. This includes promoting sectors such as agriculture, technology, and manufacturing. The government has implemented policies encouraging agricultural production and processing, leading to improved food security and reduction in import dependency. - Infrastructure Development:
Tinubu’s administration has prioritized the improvement of critical infrastructure, particularly in transportation and energy. Investments in roads, railways, and power supply have begun to yield improvements in logistics and energy accessibility, which are crucial for economic growth. - Tax and Revenue Reforms:
The government has also focused on reforming tax policies to enhance revenue generation without stifling business growth. Efforts to widen the tax net and improve collection efficiency have shown promising early results, contributing to a more robust fiscal environment.
Positive Indicators for the economy
- Economic Growth:
GDP growth figures have shown signs of recovery as sectors such as agriculture and services report improved performance. Early signs of a rebound indicate that the economy is beginning to respond positively to the reforms instituted by the administration. - Foreign Investment:
There has been a noticeable uptick in foreign direct investment, with multinational companies looking to tap into Nigeria’s vast market. This is attributed to the government’s strategies to enhance the business environment and improve investor confidence. - Job Creation:
Initiatives aimed at supporting small and medium enterprises (SMEs) have fostered job creation at the grassroots level. This is crucial in a country where unemployment has been a longstanding issue. Early reports indicated rising employment figures as businesses began to expand operations. - Reduction in Inflation Rates:
While inflation remains a concern, the government’s interventions in agricultural production and supply chain logistics have started to alleviate some of the pressure on food prices, contributing to a slight reduction in overall inflation rates.
Conclusion
While it is essential to maintain a level of cautious optimism, the early signs of economic recovery under President Tinubu’s administration suggest that there are tangible gains from the reforms being implemented. However, the challenges of governance, global economic conditions, and the need for sustained policy implementation remain critical for ensuring long-term stability and growth. Continued efforts to engage stakeholders, increase transparency, and uphold accountability will be vital in maintaining the momentum of recovery in Nigeria’s economy.