As Cost of Living Drowns Gains of Economic Reforms

The relentless rise in the cost of living has cast a long shadow over the Tinubu administration’s economic reforms, muting their impact and deepening public discontent, writes Festus Akanbi

Activities marking the second anniversary of the current administration gained momentum last week amid the presentation of scorecards by some ministers and heads of parastatals after going through the ritual of vettings by the Hadiza Bala-Usman-led Central Results Delivery and Coordination Unit, which is tasked to evaluate ministerial performance.

Expectedly, most of the officials of the government who participated in the exercise painted a picture of economic revival, which they attributed to some reforms undertaken by President Bola Tinubu in the past two years.

To kick-start what has turned out to be a season of praise singing, President Tinubu emphatically said that his economic reform is working, and as if explaining the growing discontent with the pains caused by his programmes, he clarified that nothing good comes easy in life.

On his part, the Minister of Budget and Economic Planning, Atiku Bagudu, believed that Nigeria’s economy was witnessing a significant turnaround under President Bola Tinubu. He said this was driven by bold reforms, improved coordination, and a renewed focus on national priorities in the past two years.

“This is two years well spent,” Bagudu stated in a feature interview for a TV documentary marking President Tinubu’s second anniversary on May 29, 2025.

“Mr President confronted Nigeria’s economic realities with bold and necessary choices—tough as they might be—and those measures are now yielding results,” the minister declared, saying the government’s Renewed Hope Agenda is working and winning over investors at home and abroad.

Bagudu noted that the reform-driven economy has seen four consecutive quarters of GDP growth, exchange rate stability, and a resurgence in private sector confidence.

Rising Debt Profile

However, in a dramatic twist, the chest-beating about economic reforms last week, coincided with a fresh request by the President for the approval of the National Assembly to secure a new wave of multi-currency loans amounting to approximately $23.5 billion, €2.265 billion, ¥15 billion, and N757.9 billion (totaling about N45 trillion when converted to Nigeria’s currency).

The borrowing plan spanning multiple international lenders and development institutions marks one of the most ambitious external financing proposals of his administration to date, but financial experts said the exercise will further expose Nigeria’s underbelly as a debtor nation.

Naira Devaluation

Closely linked with the Nigerian rising debt profile is the issue of the sharp devaluation of the naira, which has sent shockwaves through the Nigerian economy, driving up the cost of imported goods, fuelling inflation, and severely weakening the purchasing power of ordinary citizens. For most of the year, the naira traded between N1,600 and N1,650 against the dollar.

Businesses, especially those reliant on foreign inputs, are struggling to stay afloat, while salaries remain stagnant amid rising operational costs. The ripple effect has deepened poverty, discouraged investment, and heightened economic uncertainty, leaving millions grappling with shrinking livelihoods in an increasingly unstable financial climate.

Banks’ Recapitalisation

One issue that Nigerians will be monitoring is the ongoing banking sector recapitalisation initiative, which is anticipated to fortify Nigeria’s financial sector, aiming to bolster economic resilience and support the nation’s ambition of achieving a $1 trillion economy by 2030.

The new capital threshold is expected to enhance banks’ capacity to absorb economic shocks, increase lending to critical sectors, and improve financial stability. However, challenges such as high inflation and currency devaluation have raised concerns about the potential strain on smaller banks and the broader economy. Stakeholders are closely monitoring the recapitalisation process, hopeful that it will lead to a more robust banking system capable of driving sustainable economic growth.

Rising Cost of Living

Interestingly, as members of President Tinubu’s team continue to flaunt their testimonials, Nigerians are saying that the real measure of success is not found in official reports but in the grim reality they endure daily.

Speaking on the state of the economy, the Founder and Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, said the bigger issue is about the cost of living.

“That is, for me, the bigger issue of how the cost of living has been so badly impacted by the reforms because the reform has triggered very serious inflationary pressure, and inflationary pressure typically erodes purchasing power.

“It erodes real income. That is why we have so much poverty. And again, we have seen a lot of elevated levels of income inequality.

“So these are the things that we need to calibrate our fiscal and monetary policies and possibly even trade policies to address. That, for me, is a bigger issue than the issue of the GDP. We need to calibrate all the calibrators of fiscal policy.”

Yusuf, a former Director General of the Lagos Chamber of Commerce and Industry (LCCI), argues that our general economic policy is to improve the standard of living, reduce the cost of living, and improve the access of the majority of citizens to basic needs.

The policy, according to him, should improve access to basic needs and affordability of basic items like food, pharmaceutical products, and transportation.

Drawing attention to the growing poverty in the land, the economist said, “We had an aggravated situation of poverty as a result of spiking inflation. But the good news is that some progress has been made in terms of stabilising the economy following the reforms.”

Amidst the grand proclamations of economic reengineering by the Tinubu administration, the reality on Nigeria’s streets tells a grimmer tale, one of sagging roofs, empty pots, and children with dreams traded for survival.

While officials tout reforms and fiscal overhauls from air-conditioned chambers, the masses wade through a daily swamp of despair, their purchasing power eroded like shoreline sand under unrelenting waves.

Unwieldy Cabinet

To have a more impactful administration going forward,  there is an urgent need to trim the size of the government. This is because the current cabinet is one of the largest in Nigeria’s history, comprising 48 substantive ministers and a host of senior special advisers. This expansion has made the government unwieldy. Notably, the creation of the Ministry of Livestock Development, despite the existence of the Ministry of Agriculture, is widely viewed as redundant and unnecessary.

Analysts also stressed the need for President Tinubu to relinquish the office of the Minister of Petroleum so that Nigeria can maximise the gains of the petroleum sector. So far, Tinubu’s most consequential decision as Minister of Petroleum was the abrupt removal of the fuel subsidy on his Inauguration Day. This move triggered a dramatic rise in the price of petrol, from N185 per litre to over N1,000, even if it eliminated long-standing petrol queues.

The ripple effects have been severe. Transportation fares, food prices, and the cost of goods and services have soared, inflicting hardship on millions. While supply bottlenecks have eased, prices remain stubbornly high because fuel imports continue as local refiners struggle to meet demand.

Poor Living Wage

To tackle the pervading poverty, it was suggested that the government should consider an increase in the minimum wage. The new minimum wage of N70,000, which many states have yet to implement, is woefully inadequate. For context, Egypt’s monthly minimum wage is E£7,000 (about N209,000), and South Africa’s is R4,737.11 (over N393,000), which is five times higher than Nigeria’s minimum wage.

With inflation projected at 26.5 per cent this year, the economic outlook for ordinary Nigerians is grim.

Growing Threat to Farming

Despite the vast agricultural potential, Nigeria spends $10 billion annually on food imports, reflecting the failure to modernise agricultural production and develop robust value chains.

Added to this is the fact that the unabated threats to farmers are turning agricultural practices into suicide as terrorist groups raid communities and farms, especially in the food-producing regions of Benue, Plateau, Taraba, and Bornu states, leaving Nigerians with the alternative of spending hard-earned foreign currencies on food importation.

 Two weeks ago, the Bornu State Governor, Babagana Zulum, sounded an alarm that only one of the over 300 towns and villages in his Marte Local Government Area (LGA) remains under government control.

He pointed out that several other of the 27 LGAs of the state have also been attacked this year, especially since March. The attackers? A resurgent Boko Haram and its splinter, the Islamic State of West Africa Province (ISWAP).

It is hoped that as the current administration marches ahead, the President and his team will alleviate the growing poverty in the land and indeed restore the hope promised when Nigerians voted him to power two years ago.