Tinubu, Buhari, and the Burden of Reform: Fuel Subsidy Removal and the Path to Economic Recovery By RIKWEN R. Jonathan

UPDATE

TINUBU, BUHARI, AND THE BURDEN OF REFORM:

Fuel Subsidy Removal And The Path To Economic Recovery

BY RIKWEN R. JONATHAN 

When President Bola Ahmed Tinubu declared on May 29, 2023, that “fuel subsidy is gone,” it marked a turning point in Nigeria’s economic history. The move, though sudden, was not entirely new. It was former President Muhammadu Buhari who first paved the way, making no fiscal provision for fuel subsidy beyond June 2023. Tinubu simply upheld the decision but with firm conviction and a commitment to drive Nigeria toward long-term sustainability.

Much like President Olusegun Obasanjo’s sweeping reforms before handing over to Umaru Musa Yar’Adua in 2007, Buhari’s late-stage decision placed Tinubu in a similar historical position. However, unlike Yar’Adua, who reversed several reforms, Tinubu embraced continuity even in the face of political risk. This bold stance has positioned him as a leader willing to take tough decisions for the greater good.

Inherited Policy, Courageously Implemented

By the time Tinubu assumed office, the subsidy system was no longer tenable. The Buhari administration had set the groundwork, ending allocations for subsidy payments in the 2023 budget. Tinubu’s action was less about innovation and more about discipline choosing not to retreat from a difficult but necessary path.

His administration acted swiftly to manage the economic consequences, including directing funds toward palliative measures and fiscal support programs. While the rollout of interventions was initially slow, subsequent adjustments and targeted disbursements have begun to stabilize affected sectors and households.

Stabilizing Inflation: A Promising Turnaround

One of the most significant early criticisms of the subsidy removal and FX unification policies was the resultant inflationary pressure. Indeed, Nigeria saw a temporary spike in consumer prices, with food, transport, and energy costs hitting new highs in mid-2023.

However, the economic narrative has started to shift. As of mid-2025, inflation is *gradually easing*, thanks in part to tighter monetary policy, improvements in foreign exchange liquidity, and more competitive pricing in the deregulated oil market.

The Central Bank’s renewed focus on macroeconomic coordination with fiscal authorities has helped strengthen investor confidence, while Tinubu’s reforms are now beginning to bear fruit in real terms. Prices are stabilizing, consumer sentiment is cautiously improving, and long-term indicators point to sustained growth.

Fuel Deregulation: Building a Competitive Energy Market

The deregulation of the downstream oil sector has created space for market competition, ending the NNPC’s near-monopoly on petroleum distribution. Private marketers are now entering the space with renewed confidence, leading to improved supply chains and reducing the risk of chronic scarcity.

This competitive environment is expected to drive down prices in the medium term and improve efficiency across the value chain. In states where independent distributors have taken root, petrol availability has significantly improved and often at prices lower than previous benchmarks under the subsidy regime.

Boost in Revenue Allocation and Infrastructure Investment

Following the subsidy removal, the Federation Accounts Allocation Committee (FAAC) began sharing over ₦1.5 trillion monthly—compared to significantly lower amounts in previous years. These increased allocations are already being used by several states to fund capital projects, pay off debts, and invest in infrastructure.

This fiscal breathing room allows for more targeted social investments and long-term planning. Tinubu’s focus on state-level accountability and fiscal responsibility is encouraging a new era of decentralized development where local governments are empowered to meet the needs of their constituents.

 Foreign Exchange Unification: Restoring Market Confidence

Tinubu’s unification of the foreign exchange (FX) market, though initially disruptive, has improved transparency and market confidence. By eliminating the multiple exchange rate windows, his administration has restored investor clarity and aligned Nigeria more closely with global financial standards.

In recent months, the naira has shown signs of strengthening, while foreign direct investment interest is gradually returning. Portfolio investors and multinational stakeholders have praised the reforms, citing increased ease of doing business and reduced bureaucratic bottlenecks.

Positioning for 2027: A Reformist on a Mission

With general elections looming in 2027, the Tinubu administration is already laying the groundwork for a compelling reelection campaign. His government’s commitment to economic reform—despite initial resistance—has begun to pay off. Inflation is receding, foreign reserves are stabilizing, and Nigeria’s economy is showing signs of resilience.

Moreover, the passage of a suite of new tax reform bills signals a more structured approach to revenue generation, reducing the country’s dependence on oil revenues and broadening the tax net in a fair and sustainable manner.

Public messaging from the presidency now reflects a confident tone: “We’ve done the hard part; now, we harvest the gains.”

Conclusion: Leadership in Transition, Economy in Transformation

History may well remember President Tinubu as a leader who made unpopular decisions for the right reasons. While critics remain, the steady turnaround in economic indicators especially the easing of inflation and growing investor interest suggests that Nigeria is on the road to recovery.

Tinubu’s political gamble on reform appears to be yielding dividends. As his administration continues to prioritize policy stability, infrastructure development, and economic inclusion, the path to 2027 is shaping up as one paved with results and a message of resilience, responsibility, and renewal.