by Uchechukwu Okoroafor, Abuja
In 2024, Nigeria faced one of its most challenging economic years, marked by widespread poverty and unprecedented hardship for millions of citizens.
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At the center of this crisis were two landmark economic policies implemented by President Bola Ahmed Tinubu: the removal of the fuel subsidy and the floatation of the Nigerian currency, the Naira, against the United States Dollar and other major currencies.
While these reforms were heralded as necessary steps to stabilize and modernize the Nigerian economy, their execution and subsequent fallout revealed deep systemic vulnerabilities that exacerbated poverty and economic distress.
Fuel subsidy removal was one of the most contentious economic policies enacted by President Tinubu. For decades, fuel subsidies had been a staple of Nigeria’s socio-economic framework, keeping petrol prices artificially low and shielding citizens from the full impact of global oil price volatility.
However, the subsidy programme was also riddled with inefficiencies, corruption, and financial unsustainability, costing the government billions of dollars annually. When President Tinubu announced the end of the subsidy in May 2023, petrol prices skyrocketed almost overnight, rising from about N190 per liter to over N500 and eventually stabilizing at nearly N1200 per liter in 2024. This price hike had a cascading effect on the cost of living.
Transportation costs surged, disproportionately affecting the poor who rely on public transport. The cost of food and essential goods also spiked due to higher logistics expenses, leading to widespread inflation that eroded household purchasing power.
According to the National Bureau of Statistics, inflation reached a record high of 27% in 2024, with food inflation exceeding 40%. These figures translated into tangible hardships for ordinary Nigerians, many of whom struggled to afford basic necessities. Small-scale businesses, already grappling with limited access to credit and erratic power supply, faced higher operating costs, forcing many to shut down or lay off workers. Consequently, unemployment rose sharply, further deepening the cycle of poverty.
In addition to removing the fuel subsidy, President Tinubu’s administration floated the Naira, abandoning the multiple exchange rate regime that had been a hallmark of Nigeria’s monetary policy for years. The move was aimed at attracting foreign investment, reducing currency arbitrage, and aligning the official exchange rate with market realities. However, the immediate outcome was a sharp depreciation of the Naira, which fell from an official rate of around N460 to the dollar in early 2023 to over N1200 by the end of 2024. The depreciation of the Naira had severe implications for an economy heavily reliant on imports. The cost of imported goods, including essential items like food, medicine, and industrial inputs, soared. Businesses that depended on imported raw materials faced steep increases in production costs, leading to higher prices for consumers.
For a country where over 60% of the population lives below the poverty line, this sudden and significant loss of purchasing power was devastating. Moreover, the weaker Naira exacerbated Nigeria’s debt servicing burden. With a significant portion of the country’s external debt denominated in foreign currencies, the cost of debt repayment ballooned, further straining public finances. This left the government with fewer resources to invest in critical sectors like healthcare, education, and infrastructure, which are essential for poverty alleviation and long-term economic growth.
The combined impact of these policies was a sharp increase in poverty levels across the country. According to the World Bank, an additional 10 million Nigerians fell into poverty in 2024, bringing the total number of people living below the poverty line to over 100 million. Rural communities, which are often more vulnerable to economic shocks, were particularly hard-hit. Farmers faced higher costs for transportation and agricultural inputs, reducing their productivity and incomes. In urban areas, middle-class families found themselves slipping into poverty as their earnings were eroded by inflation and stagnant wages. The removal of the fuel subsidy and the floatation of the Naira also widened existing inequalities. Wealthier Nigerians, who had access to foreign currency accounts and investments, were better positioned to weather the economic storm. In contrast, low-income households, informal sector workers, and the unemployed bore the brunt of the economic adjustments. This growing disparity fueled social tensions and protests across the country, with citizens demanding more equitable policies and immediate relief measures.
In response to the widespread outcry, the Tinubu administration introduced a series of palliatives aimed at cushioning the impact of the reforms. These included cash transfers to vulnerable households, the distribution of food items, and plans to invest in public transportation and other social infrastructure. However, these measures were widely criticized as being too little, too late. The cash transfer program, for instance, was marred by logistical challenges and allegations of corruption. Many intended beneficiaries reported not receiving the promised funds, while others argued that the amounts were insufficient to offset the increased cost of living.
Similarly, the distribution of food items was criticized as a stopgap measure that failed to address the underlying economic issues.
While the removal of the fuel subsidy and the floatation of the Naira were aimed at addressing long-standing structural issues in Nigeria’s economy, their implementation highlighted the need for a more nuanced approach to economic reform. Several lessons can be drawn from the events of 2024. Economic reforms of this magnitude should be implemented gradually to allow citizens and businesses time to adapt. A phased approach to subsidy removal, coupled with targeted subsidies for the most vulnerable, could have mitigated the immediate impact of higher fuel prices.
Robust social safety nets are essential to protect vulnerable populations during periods of economic adjustment. The government must invest in scalable and transparent systems for delivering financial and material support to those in need. Nigeria’s over-reliance on oil revenue and imports makes it highly susceptible to external shocks. Diversifying the economy through investments in agriculture, manufacturing, and technology is crucial for long-term stability and resilience.
Public trust is critical for the success of economic reforms. Ensuring transparency in the management of saved funds from subsidy removal and other reforms can help build confidence and support among citizens.
Policymakers must engage with stakeholders, including labour unions, civil society organizations, and the private sector, to design and implement reforms that are inclusive and equitable.
The economic policies of President Bola Ahmed Tinubu in 2024 were a stark reminder of the complexities and trade-offs involved in governance. While the removal of the fuel subsidy and the floatation of the Naira were aimed at addressing systemic inefficiencies, their execution and immediate consequences deepened poverty and hardship for millions of Nigerians. Moving forward, it is imperative for the government to adopt a more holistic and inclusive approach to economic reform, one that prioritizes the welfare of its citizens while laying the groundwork for sustainable growth and development.