Nigeria’s economy could be turning a corner

Midway into his first term, taming inflation — which climbed to a three-decade high last year — and growing the economy has been at the top of Tinubu’s economic agenda and political calculus for reelection in 2027. A rebase by the statistics bureau to change how it computes inflation data produced a much smaller figure that gives the impression of a crash in inflation.

“Rebasing does not mean reduction but a change in the reference point,” said Amaka Anku, head of Eurasia Group’s Africa practice. But there appears to be a slowdown in prices based on anecdotal data, she added. The latest GDP figures, which have not been rebased and so are comparable to previous years, suggest that “so far, it looks like the economy is recovering,” Anku said, though more data is necessary to make a definitive case.

At a bustling market in Wuse, a district in Nigeria’s capital city Abuja, a wholesale rice trader who gave her name as Madam Eze has no complaints about patronage. Customers are happy to find her prices cheaper than they were this time last year, she said. Aminu Mukhtar, another rice wholesaler selling at lower prices than this time a year ago, said it was a welcome outcome for consumers and marketers though farmers may be feeling some immediate discomfort.

Tinubu’s first full year as president has matched his predecessor’s best year of economic growth, even after what many in the country feared was an undue rush to push through reforms.

The outcome could be taken as vindication by the administration and its international partners — especially the International Monetary Fund — that persisted in demanding an end to the petrol subsidy regime. While the government continues to issue import licenses for petrol, the launch of the Dangote Refinery in Lagos in September 2024 has increased local supply and competition, ensuring that consumers are not entirely priced out of an unsubsidized market.

A growing economy with price stability bodes well for Tinubu’s lofty ambition to create a trillion-dollar economy by 2033, up from about $363 billion in 2023. He wants Nigeria to reclaim its crown as Africa’s largest economy. But Tinubu’s government remains under close scrutiny, analysts warn, especially on whether reform measures will be sustainable. Better policy coordination between the central bank and government agencies to grow exports remains “the key missing thing,” Anku said.

For SBM’s Effiong, there are still concerns as to whether the government’s savings — including from the subsidy removal — are being used to artificially support the naira’s strength. “The economy, at best, is in wait-and-see mode,” he told me.

Retail petrol prices and exchange rates are “still high and strenuous for the average Nigerian and businesses” when assessed against the minimum wage, GDP per capita, and average earnings, said Basil Abia, co-founder of the Abuja-based economic research firm Veriv Africa.

Getting the economy on a growth curve, to a point that will actually feel beneficial to residents, will require significant reductions in consumer prices and a boost in food production, Abia said. Also crucial is the need to increase productivity in the real economy and raise crude oil production to the pre-2015 range of 2 million barrels daily, he added.