Nigerians look to president-elect Tinubu for economic turnaround
Ilorin, Nigeria – On Monday, when Nigeria’s president-elect Bola Tinbu is sworn in, Olusegun Badmus will be one of millions watching.
But for the 57-year-old bus driver in the central Nigerian city of Ilorin, there is little excitement after years of disillusionment with the government, including the outgoing government of President Muhammadu Buhari.
Under Buhari, Nigeria overtook India as the world’s capital of poverty, with half of the estimated 200 million people now living in abject poverty. The naira also lost 70 percent of its value to the dollar as Africa’s largest economy suffered two recessions.
“The Buhari government has really disappointed us,” Badmus told Al Jazeera. “He is leaving the country worse than he met it, but I just hope that Tinubu will be able to perform as he promised.”
Tinubu, a former governor of Lagos, the country’s commercial capital, was declared the winner of the February 25 presidential election ahead of Atiku Abubakar and Peter Obi by the Independent National Electoral Commission.
Yet the incoming president is grappling with legitimacy issues after winning the election with just a third of the vote in a poll that saw only a quarter of Nigeria’s 93 million registered voters cast their ballots.
Opposition parties have challenged the election process and results, citing irregularities, electoral fraud and a lack of transparency in the Election Commission’s methods. A hearing on their complaints began on May 8 and is expected to end on June 23.
Some opposition supporters hope the transition process will stall until there is a ruling on these cases, indicating declining trust in government institutions, said Joachim MacEbong, senior government analyst at Lagos-based analytics firm Stears Intelligence.
“A lot of people don’t feel like them [institutions] can be fair and impartial, and that’s actually the real problem here,” he told Al Jazeera.
While some Nigerians await that trial in court, others are already looking to Tinubu for quick economic fixes.
More than a third of the country’s population is currently unemployed, and voters expect the 71-year-old Tinubu to create jobs, restore the economy’s free fall and tighten security in line with his campaign promises.
The president-elect has also discussed plans to revive the agricultural sector, increase electricity generation to fix Nigeria’s notoriously unreliable energy system and cut fuel subsidies.
He is often credited with increasing Lagos’ internally generated revenue from $3.77 million per month at its inauguration in 1999 to an average of $32 million per month in 2006 on the eve of his departure.
Economists are already there to predict that Tinubu, who criticized a recent redesign and currency swap, is expected to devalue the naira by as much as 15 percent to help stabilize the economy.
The most controversial decision the new president has to make may also be the most impactful: cutting fuel subsidies.
Subsidies were introduced in Nigeria in 1973 as a temporary measure to offset an increase in oil prices. They have remained in place and have long been a controversial measure, despite being used to keep fuel prices affordable.
They are widely seen as a path to corruption and waste, benefiting only the wealthy and middle class rather than the working class people they were supposed to help.
From January to September 2022, Nigeria spent 2.91 trillion naira ($7 billion) in fuel subsidies. In the same year it was more than 10 billion dollars obscured in a fuel subsidy scam.
In January 2012, then-President Goodluck Jonathan announced he would end the subsidies, sparking nearly two weeks of nationwide protests by the opposition, organized labor movement, civil society and other Nigerians.
Jonathan reversed his decision and Buhari hesitated on the matter. But Tinubu has already declared his willingness to cut subsidies in his first days in office.
“If you look at the fiscal health of the country, you will see that the subsidy needs to go away sooner rather than later,” he said on the campaign trail. “Nigeria’s debt is partly caused by the fuel subsidies, and the poorer people in society don’t benefit much anyway.”
While that could cost the new president political points, experts say the move is the right one in Africa’s largest oil producer.
Still, serious resistance is expected from many Nigerians, as ending the subsidies will also increase the cost of living.
“What I want Tinubu to do is find a way to lower the price of fuel and other goods and services,” Badmus said. “We buy gasoline with all our profits. We barely have any money left to take home.”
If Tinubu’s administration passes this test, MacEbong said, the money it saves could be spent on education and health care for low-income households.
This month, the world’s largest single-train oil refinery with a production capacity of 650,000 barrels per day was commissioned in the outskirts of Lagos. Nigeria’s first private refinery is owned by Africa’s richest man, Aliko Dangote, but state-owned Nigerian National Petroleum Corp holds 20 percent of the shares.
The project is expected to help Tinubu stabilize the economy and reduce inflation, which is currently at 22 percent, economists said.
“The refinery means we will save the central bank between $20 million and $23 million that would have been provided to continue importing PMS [premium motor spirit] to Nigeria,” said Paul Alaje, senior economist at SPM professionals, a Lagos-based management consultancy.
“So that’s big news for us,” he said. “We are going to see significant growth in our foreign reserve and that means we are going to see a big increase in the value of the naira in the near future.”
A rising market?
After Nigeria’s Election Commission announced Tinubu’s victory, Nigerian bonds rose. Investment banker Morgan Stanley entered the market optimistically, based on hopes that the president-elect would prioritize fiscal and financial market improvements.
But that shouldn’t be cause for early celebrations, analysts warned, pointing to similar gains in 2015 before a turnaround triggered by a series of policy missteps by Buhari.
“The market will always try to be optimistic about the new president, but whether that will continue remains to be seen,” MacEbong said. “It depends on the reforms and how quickly they are implemented so that the market gets the necessary signals.”
Back in Ilorin, Badmus is skeptical of any economic growth, but hopes that Tinubu’s time as governor of Lagos State can turn things around.
“Right now I have my faith in God and not in politicians,” he said as he parked his bus and finished his workday. “I hope that Tinubu will change the situation in the country and be a balm for our suffering.”