Tinubu Defends Reforms, Says Naira Stabilising and Subsidy Distortions Ending!

Tinubu Defends Reforms, Says Naira Stabilising and Subsidy Distortions Ending!

Reported by Fasesan Marian opeyemi | Editor-in-Chief | Journalist at Sele Media Africa.

ABUJA, Nigeria — President Bola Ahmed Tinubu has declared that his administration’s controversial economic reforms, including the removal of fuel subsidies and the unification of the foreign exchange market, are beginning to yield results, with the naira showing signs of stabilisation and fiscal distortions receding. Speaking at a presidential media briefing in Abuja on Thursday, Tinubu acknowledged the severe hardship inflicted on Nigerians but insisted the policies were necessary to dismantle decades of economic dysfunction and attract long-term investment. The president’s remarks come amid a national debate over the pace and human cost of the reforms, with inflation and living costs remaining elevated.

Context: The Roots of Nigeria’s Economic Crisis

For over a decade, Nigeria’s economy was hamstrung by a costly fuel subsidy regime that consumed up to 40 percent of national revenue, crowding out spending on infrastructure, health, and education. The subsidy, which kept petrol prices artificially low, also fostered a sprawling corruption network and encouraged smuggling to neighbouring countries. Simultaneously, a multiple exchange rate system created arbitrage opportunities, drained foreign reserves, and deterred foreign investors who could not predict the true cost of doing business in Africa’s largest economy.

Upon assuming office in May 2023, President Tinubu moved swiftly, announcing the immediate removal of the fuel subsidy and the unification of the official and parallel market exchange rates. The decisions triggered an immediate spike in petrol prices and a sharp depreciation of the naira, which lost over 60 percent of its value against the US dollar in the first year. Inflation soared past 30 percent, eroding household purchasing power and pushing millions into poverty.

Key Developments: Signs of Stabilisation Emerge

In his address, Tinubu pointed to recent data showing the naira trading within a narrower band against the dollar over the past three months, suggesting that the market is finding its equilibrium. “We are gradually overcoming the distortions created by fuel subsidies and unstable foreign exchange policies,” Tinubu said. “The naira is stabilising. Investor confidence is returning. These are early signs that our tough decisions are beginning to work.”

The Central Bank of Nigeria (CBN) has also reported a steady increase in foreign exchange inflows, driven by diaspora remittances, portfolio investments, and improved oil production. According to CBN data, net foreign exchange inflows rose by 15 percent in the first quarter of 2026 compared to the same period last year. The bank has also cleared a significant backlog of matured forward contracts, a move analysts say has restored credibility to the currency market.

However, the recovery remains fragile. The naira is still trading at around N1,550 to the dollar in the official market, a far cry from the pre-reform rate of N460. The gap between the official and parallel market rates, while narrower, has not fully closed. The International Monetary Fund (IMF) has cautioned that sustained stability will require continued monetary tightening and fiscal discipline.

Political Analysis: A High-Stakes Gamble for the Administration

President Tinubu’s defence of the reforms is as much a political necessity as an economic argument. The policies have become the defining issue of his presidency, attracting both domestic criticism and international praise. Opposition parties, labour unions, and civil society groups have condemned the reforms as poorly sequenced and disproportionately harmful to the poor.

The Nigeria Labour Congress (NLC) has called for a reversal of the fuel subsidy removal, arguing that the government has failed to provide adequate palliatives or invest in public transportation and social safety nets. “The president is celebrating what he calls stabilisation, but ordinary Nigerians are still struggling to afford food, transport, and medicine,” said NLC President Joe Ajaero during a press conference in Lagos.

Politically, Tinubu is walking a tightrope. His administration faces a general election in 2027, and the economic hardship could erode his support base, particularly in the north and among urban poor populations. By highlighting early successes, Tinubu is attempting to build a narrative of eventual payoff, hoping that voters will reward patience and sacrifice at the ballot box.

The reforms have also reshaped Nigeria’s political economy. The removal of the subsidy has ended the era of cheap petrol, which had become a populist entitlement. Political analysts note that this has weakened the leverage of state governors and local politicians who previously used subsidised fuel as a tool for patronage. “The subsidy removal has fundamentally altered the relationship between the state and the citizenry,” said Dr. Chidi Odinkalu, a political analyst and former chairman of the National Human Rights Commission. “It has forced a reckoning with fiscal reality that no future government can easily reverse.”

Economic Impact: Winners, Losers, and Long-Term Prospects

The economic impact of the reforms has been deeply uneven. The most visible losers are low- and middle-income households, who have seen their transport and energy costs triple. Food inflation, driven by higher transport costs and currency depreciation, has pushed basic staples beyond the reach of many families. The World Bank estimates that an additional 10 million Nigerians have fallen below the poverty line since the reforms began.

Yet there are also emerging winners. The unification of the exchange rate has attracted foreign portfolio investors who had fled Nigeria’s opaque currency regime. According to data from the Nigerian Exchange (NGX), foreign portfolio inflows into the stock market rose by 40 percent in the first half of 2026. Multinational companies, including Nestlé and Unilever, have reported reduced currency-related losses and improved earnings visibility.

The manufacturing sector, while still struggling with high input costs, has benefited from a more predictable exchange rate, allowing better planning and pricing. “For the first time in years, we can budget with some certainty,” said Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN). “The volatility was killing us. Now we need the government to address the cost of power and logistics to make the recovery sustainable.”

The removal of the fuel subsidy has also freed up significant fiscal resources. The government estimates that it saved over N4 trillion in the first year alone, funds that have been redirected to infrastructure projects, education, and healthcare. The federal government has launched a new student loan scheme and increased funding for public works programmes, though critics say the disbursement has been slow and opaque.

Pan-African and Global Significance

Nigeria’s economic reform experiment is being closely watched across Africa and beyond. As the continent’s largest economy and most populous nation, Nigeria’s policy choices have ripple effects on regional trade, investment flows, and commodity prices. Several African countries, including Ghana, Kenya, and Angola, have undertaken similar subsidy removal and currency reforms, often facing comparable political and social backlash.

The success or failure of Tinubu’s reforms could set a precedent for other resource-dependent economies seeking to break free from subsidy traps and currency distortions. The African Development Bank (AfDB) has commended Nigeria’s efforts, noting that fiscal discipline and exchange rate transparency are essential for attracting the private capital needed to finance the continent’s infrastructure gap.

Globally, Nigeria’s stabilisation is also significant for energy markets. As a major oil producer, a more predictable naira and improved fiscal health could boost Nigeria’s oil and gas output, helping to stabilise global supply. The country is also positioning itself as a destination for critical mineral investments, including lithium and rare earth elements, which require a stable macroeconomic environment.

What Happens Next

Looking ahead, the Tinubu administration faces the challenge of sustaining the reform momentum while addressing the immediate needs of the population. The government has announced plans to expand its social safety net, including cash transfers and subsidised food programmes, but implementation remains a concern.

The Central Bank is expected to maintain a tight monetary policy stance to anchor inflation expectations. Analysts predict that the Monetary Policy Committee will hold the benchmark interest rate at its current level of 27.5 percent when it meets next month, though further hikes cannot be ruled out if inflation does not moderate.

Internationally, Nigeria is seeking to attract more foreign direct investment (FDI) through improved infrastructure and regulatory reforms. The government is also negotiating a new financing arrangement with the World Bank and the IMF, which could provide additional fiscal support tied to continued reform implementation.

For President Tinubu, the next two years will be critical. If the economic indicators continue to improve and the pain begins to ease, his political gamble may pay off. If not, the growing discontent could threaten not only his re-election prospects but also the sustainability of the reforms themselves.

Sources

• President Bola Ahmed Tinubu, Presidential Media Briefing, Abuja, May 24, 2026.
• Central Bank of Nigeria, Foreign Exchange Market Report, Q1 2026.
• Nigeria Labour Congress, Press Conference, Lagos, May 23, 2026.
• Manufacturers Association of Nigeria, Quarterly Economic Review, May 2026.
• World Bank, Nigeria Development Update, April 2026.
• International Monetary Fund, Article IV Consultation with Nigeria, March 2026.
• African Development Bank, Economic Outlook for Nigeria, 2026.
• Dr. Chidi Odinkalu, Political Analyst, Interview with Sele Media Africa, May 22, 2026.