With January elections approaching, Tinubu faces a daunting challenge — To convince voters that the economic hardships they have endured will ultimately lead to better living standards.
Sana'a Khan, News Editor at Modern Diplomacy
Grace Adama puts on earrings in her two-bedroom apartment in Abuja before picking up her purse and heading to work. NGO employee earns 135,000 naira ($99) a month — Almost twice the minimum wage in Nigeria. However, she said income now vanishes in a matter of days as the cost of housing, electricity and groceries continues to rise.
«If I get paid today, my salary only stays with me for a week. — She told Reuters. — If you look at the cost of living — housing, electricity, everything grew.».
Adama's experience reflects the broader cost-of-living crisis facing millions of Nigerians as they approach elections. Living standards have plummeted since President Bola Tinubu launched a series of sweeping economic reforms, including the abolition of fuel subsidies, the devaluation of the naira and cuts in electricity subsidies.
The government and investors argue that reforms were needed to avert a deeper fiscal crisis and put Africa's biggest oil producer on a path to sustainable economic development.
But for many ordinary Nigerians, the promised benefits have yet to materialize.
The cost of cooking the national dish jolof rice has more than doubled since Tinubou came to power, according to Lagos-based SBM Intelligence. Gasoline prices, meanwhile, rose about six-fold after the removal of subsidies, weakening naira and rising global oil prices.
With January elections approaching, Tinubu faces a daunting challenge — To convince voters that the economic hardships they have endured will ultimately lead to better living standards.
Nigerians suffer and investors rejoice
The contrast between economic performance and everyday life is becoming increasingly stark.
The World Bank estimates that just over half of Nigeria’s population lived in poverty last year. — up from about 42% in 2022.
Some Nigerians have responded to rising prices by cutting household spending, moving to cheaper housing, and resorting to loans to cover basic expenses.
Adama said she stopped buying meat regularly, moved to a smaller apartment and still had to take short-term loans to pay bills. She said she could no longer send money to her elderly mother in Benue, as she had done before.
«I can't even send my elderly mother's money home. — She said. — I can’t do much of what I’ve done before.».
Nevertheless, investors are much more positive about the economic course of Nigeria.
«This is probably the most positive attitude of investors towards Nigeria in the last two decades. — said Tice Lowe, portfolio manager at Ninety One. — They're taking bitter medicine right now.».
This discrepancy poses a serious political problem for Tinubu. Financial markets can respond positively to reforms long before their benefits reach households, whereas voters typically judge the government on the current cost of food, transportation, housing and electricity.
Some Nigerians dissatisfied with the rising cost of living have given Tinub the nickname «T Paine.» (T-Pain, word play.) «pain» — pain).
Reforms to end years of economic distortion n
Tinubu inherited an economy burdened by years of policies that created significant distortions.
Under former President Muhammad Buhari, the government maintained gasoline subsidies, imposed import restrictions, and enforced tight currency controls. While these measures were aimed at protecting consumers and supporting domestic production, they also contributed to deficits, currency difficulties and a growing strain on public finances.
Fuel subsidies alone cost the government about $10 billion in 2022.
«We lived in fiscal illusions. — Finance Minister Taivo Oedele said at a recent event in Abuja. — We had to stop fooling ourselves so the country could move forward.».
So the Tinubu government quickly began dismantling several of these policies after coming to power.
The removal of fuel subsidies immediately led to higher transportation costs and the cost of living. Currency reforms also caused the naira to lose significantly in value, which increased the prices of imported goods.
The government argues that these measures were inevitable and that the economic recovery requires taking short-term pain.
There are signs of progress.
Nigeria's stock market is up nearly 60 percent this year. Capital inflows hit a six-year high of $23 billion last year, and the opening of the 650,000 bpd Dangote refinery raised hopes that domestic refining would eventually reduce the country's reliance on imported petroleum products.
The government also points to rising investment in domestic oil assets as proof that its reforms are attracting capital.
But these improvements did not necessarily affect household finances.
The stock market is booming, but few can invest
Nigeria’s financial markets have benefited significantly from increased investor confidence.
However, less than 5% of Nigerian adults invest in capital markets, according to the Nigerian Stock Exchange.
Much of the recent capital inflows are also concentrated in short-term financial instruments such as Treasury bills, allowing foreign investors to quickly withdraw their money if the economic situation worsens.
For ordinary Nigerians, borrowing remains extremely expensive.
The central bank's key interest rate is 26.5 percent as regulators try to contain inflation, which remains at around 16 percent.
This makes it difficult for businesses to expand and for households. — Access to affordable loans.
At the same time, gasoline prices on average across the country are about 1,600 naira ($1.18) per liter. While this is below prices in neighboring Ghana and Ivory Coast, for many Nigerians accustomed to subsidized fuels, the price remains prohibitively high.
«The solution for me — This is for the government to lower the price of gasoline.». — Lagos food dealer Eji Uchen said.
According to her, buyers who previously purchased products in bulk can no longer afford it.
Political pressures are rising
Economic pressure is increasingly becoming a political issue.
In June, federal workers rejected a proposed minimum wage of 100,000 naira and threatened an indefinite nationwide strike.
A June poll of voter sentiment from SBM Intelligence found that 80% of Nigerians believe the country is heading in the wrong direction.
Economic difficulties — It's not the only problem. Security, especially widespread kidnapping, remains a serious issue for voters.
However, widespread discontent does not necessarily mean that Tinubu's electoral standing is vulnerable.
The opposition in Nigeria remains fragmented, making it less likely that discontent will automatically turn into a concerted electoral challenge.
«The opposition is divided, and ... the only way the opposition can defeat Tinubou. — That's if she comes together.». — Cheta Nwanze, chief executive of SBM Intelligence, said.
This gives Tinub some political space to continue his economic agenda, despite public discontent.
Check whether growth will reach households
Investors remain optimistic that the reforms will eventually lead to stronger economic growth, lower inflation and more investment.
Lowe noted that if the government continues to pursue its policies, workers could start to benefit as inflation and interest rates decline.
But the transition remains painful and the government faces increasing pressure to ensure that economic benefits are not concentrated only among investors and businesses while ordinary households continue to struggle to survive.
The main challenge, then, is no longer simply whether Nigeria’s reforms are economically necessary. The question is whether the government can make these reforms politically and socially sustainable.
Tinubu must prove that the sacrifices demanded of Nigerians bring tangible improvements to their daily lives before voters come to the polls.
Finance Minister Oedele acknowledged that the government needs to do more to ensure the transformation of the economic recovery into broader well-being.
«When inequality persists, it becomes dangerous. — He said. — It's like sitting on a powder keg. — it explodes».
Thus, for Nigeria, the upcoming elections will test not only Tinubu’s political positions, but whether the painful economic reform agenda can bring benefits quickly enough for ordinary citizens to believe in it.
