Many households may still be struggling, but by the time President Bola Ahmed Tinubu marks three years in office on June 12, 2026, investors may have reason to celebrate.
The administration’s bold reforms, from scrapping fuel subsidies to liberalizing the foreign-exchange market, have reshaped Nigeria’s economic landscape, revived investor interest and boosted government finances.
But the same policies have driven up inflation, squeezed incomes and exacerbated a cost-of-living crisis that continues to test public patience.
The outcome is an economy caught between improving market fundamentals and ongoing social strain.
But the government says it inherited an economy distorted by subsidies, multiple exchange rates, dwindling fiscal revenues and declining investor confidence.
But the question for companies and investors is whether the economic pain so far is laying the groundwork for sustainable growth, or just postponing deeper structural challenges.
The reform bet
Few presidents have moved so quickly on reform as Tinubu in his early weeks in office.
His declaration that “fuel subsidy is gone” brought an end to a policy that had lasted decades and had grown to be one of the biggest drains on public finances. This was followed by foreign exchange reforms that effectively dismantled the country’s multiple exchange rate system, allowing the naira to trade more freely.
The administration said both policies were needed to correct long-standing distortions, discouraging investment and encouraging arbitrage.
For years, the government had been spending trillions of naira yearly on subsidizing petrol consumption. The subsidy regime sucked up resources which could have been used for infrastructure, healthcare and education. Likewise, the multiple exchange rate system provided opportunities for rent seeking, while it also dissuaded foreign investors who had difficulties to access foreign currency.
The administration hoped to remove these distortions and thereby restore market confidence and encourage a more efficient allocation of resources throughout the economy.
The reforms rapidly garnered the backing of multilateral institutions and international investors. Nigeria began to reappear on the radar of portfolio investors who largely stayed away from the country during years of foreign exchange restrictions and capital controls.
But the reforms also set off powerful inflationary pressures that rippled through the economy.
Inflation and the cost of living crisis
If there is one metric that best encapsulates the public mood after three years of Tinubu’s presidency, it is inflation.
The cost of transportation saw a steep rise after the removal of fuel subsidies. The depreciation of the naira has also seen a significant rise in the cost of imported goods and industrial inputs. Together, these developments have pushed up consumer prices and reduced household purchasing power.
Food inflation has been particularly severe, reflecting insecurity in agricultural regions, logistics challenges and currency weakness. Soaring prices of staple foods have become for many Nigerians the most visible outcome of economic reforms.
The effect has been a sharp decline in real earnings. Salaries in the public and private sector have found it difficult to keep up with increasing prices. This has led to households curtailing discretionary expenditure and changing consumption patterns.
Demand has slowed for retail businesses, consumer goods manufacturers and service providers with consumers prioritising expenditure on essentials.
The government has responded with targeted interventions including cash-transfer programmes, wage adjustments and support measures for vulnerable groups. But the extent of inflation has frequently surpassed those efforts.
Growth has returned, but unevenly
Despite inflationary headwinds, Nigeria’s economy has managed to grow.
According to the recently published Gross Domestic Product (GDP) report by the National Bureau of Statistics (NBS), the country’s real GDP grew by 3.89 per cent year-on-year (y/y) in Q1 2026, lower than 4.07 per cent y/y in Q4 2025.
Growth has been driven by improvements in services, telecommunications, financial services and parts of the oil sector. Despite macroeconomic headwinds, banking, fintech, digital services and technology related industries have shown resilience.
The services sector has gradually become the engine of growth reflecting structural changes in the Nigerian economy. The growing demand for digital services has helped financial technology firms, digital payment platforms and telecommunications operators.
Higher oil output and measures to curb crude theft, meanwhile, have also helped support government revenues and foreign exchange earnings to some extent.
But the expansion is lopsided. Last week, Daily Sun reported that MoneyAfrica stressed that the growth rate in Nigeria is still not enough for the development needs of the country. The firm says growth of around 4 per cent is not enough to generate the level of employment and income gains needed to boost household welfare after years of inflation, naira depreciation and economic adjustment.
For Nigeria to meaningfully restore consumer purchasing power and deliver broad-based improvements in living standards, the firm said it would need sustained double-digit economic growth.
Elevated energy costs, foreign exchange volatility and high borrowing costs continue to pose significant pressures to manufacturing companies. Small and medium-sized enterprises, which employ large shares, have struggled to absorb rising operating costs.
One of Nigeria’s biggest employers in the past, agriculture is still hampered by insecurity, climate disruptions and inadequate infrastructure.
So economic growth has not resulted in general improvements in living standards. Population growth continues to outpace economic growth, restricting gains in per capita income. This is still one of the biggest challenges for the administration for many analysts: turning macroeconomic stabilisation into inclusive growth.
The challenge for policymakers is to trade off short-term pain against long-term payoffs. Although inflation has eased somewhat from its peaks, price pressures remain one of the biggest risks to the economic recovery.
Government finances and fiscal consolidation
One of the most visible achievements of the Tinubu administration has been the improvement in fiscal revenues.
The removal of fuel subsidies greatly eased fiscal pressures and released resources that had been absorbed by recurrent expenditures. The currency depreciation has also boosted government receipts through higher naira-denominated oil revenues.
Reforms in tax administration have focused on expansion of the revenue base and reduction of leakages. The administration has made fiscal discipline a cornerstone of its economic platform, and its officials have argued that healthy public finances are a prerequisite for sustained growth.
These have increased fiscal flexibility and alleviated some of the immediate pressure on government borrowing.
Nigeria still faces substantial debt service obligations. The debt stock of Nigeria rose to N159.28 trillion as at the fourth quarter (Q4) of 2025, the Debt Management Office (DMO) has said. The rising debt load was due to a consistent accumulation of debt amid persistent fiscal deficits and weak revenue performance.
A significant portion of government revenues is still being used to service existing debt, limiting the fiscal space for capital investments.
Furthermore, federal revenues are a key source of revenue for state governments, highlighting the importance of broad structural reforms to improve subnational fiscal sustainability.
If fully implemented, the administration’s proposed tax reforms could further strengthen revenue mobilisation.
But they also face political resistance from stakeholders worried about the impact on businesses and consumers.
