Nigeria’s Reform Push Yet to Reach the Masses — IMF

 

The International Monetary Fund (IMF) has expressed concern that while Nigeria’s current wave of economic reforms has begun to steady macroeconomic indicators and attract new investor confidence, the positive impacts are yet to be felt by millions of ordinary Nigerians who still struggle daily with high living costs and worsening poverty.

In its latest assessment of the country’s economic performance, the IMF acknowledged that Nigeria has taken bold policy steps in recent months, including removing costly fuel subsidies, liberalising its foreign exchange market, and halting ways in which the central bank previously financed government deficits. These decisions, the Fund noted, have helped restore some stability to Nigeria’s battered economy and sent a positive signal to local and international investors.

However, the Fund warned that these big moves have not translated into tangible relief for the average household. Inflation remains stubbornly high, especially for food and essential goods, while electricity supply remains unreliable for millions of homes and businesses. Unemployment remains widespread, and growth has not yet created enough decent jobs to absorb Nigeria’s young and rapidly growing population.

During its recent meetings with Nigerian officials, IMF Mission Chief Axel Schimmelpfennig said that while the government deserves credit for taking difficult decisions, much more needs to be done to ensure that the benefits reach the people who feel the pinch of economic hardship the most. He pointed out that many Nigerians are worse off than before, with rising costs of living and limited social protection to shield them from the immediate pain caused by reforms.

The IMF’s report shows that the country’s real per capita GDP — a key measure of the average income per person — has been declining for almost a decade, even before the current reforms. Between 2014 and 2023, real per capita GDP fell by an average of 0.7 percent each year, while the poverty rate remained around 42 percent in 2023. These figures, the IMF says, underline the urgent need for policy makers to pair macroeconomic reforms with stronger measures that directly support the most vulnerable groups.

One of the main recommendations in the Fund’s assessment is that the Nigerian government must urgently strengthen its social safety nets. Although there is a cash transfer system in place, many poor households remain unregistered or unable to access the payments due to gaps in data and financial inclusion. The Fund argued that if more Nigerians could receive direct cash support, they would be better able to cope with the sudden removal of fuel subsidies and other price adjustments triggered by reforms.

The IMF also highlighted Nigeria’s chronically low domestic revenue generation as a major constraint. With a tax-to-GDP ratio among the lowest in the world, the government relies heavily on oil revenues, which are volatile and insufficient to meet the country’s huge spending needs. As a result, basic sectors like health care, education, and rural infrastructure remain underfunded, worsening the gap between macroeconomic progress and the reality of daily life for millions.

The Fund called on Nigeria to do more to raise taxes fairly and broaden the tax base while ensuring that public funds are spent wisely and transparently. By reducing leakages and corruption, the government could free up more money for investments in social services and infrastructure that directly improve people’s lives.

Another key point in the report is how savings from subsidy removal should be handled. According to IMF estimates, ending fuel subsidies frees up about two percent of Nigeria’s GDP every year. These funds, the Fund stressed, should not disappear into general spending but must be redirected into visible, impactful projects such as building schools, improving electricity supply, expanding rural roads, and supporting health centres.

Maintaining tight control over monetary policy is also necessary, the IMF said. By keeping interest rates high enough to tackle inflation and ensuring that money supply is properly managed, the Central Bank of Nigeria can help stabilise prices and prevent new shocks that could wipe out the early gains of the reforms.

Despite these challenges, the IMF remains cautiously optimistic about Nigeria’s long-term prospects. Its latest forecast suggests that Nigeria could grow by 3.4 percent in 2025 and by 3.2 percent in 2026 if the current policy direction is maintained. But for this growth to matter, it must result in jobs, income, and better living standards for ordinary Nigerians.

Many local economists agree with the IMF’s position, warning that the country risks repeating past mistakes if it focuses too much on headline reforms without a clear plan to cushion their impacts on households. They point to similar reform programmes in the 1980s and early 2000s, which removed subsidies and opened up markets but failed to tackle deep-seated inequality and poverty.

President Bola Tinubu’s government now faces a difficult balancing act: sticking with reforms that restore investor confidence while taking steps to protect the poor and build trust among citizens who are asked to endure short-term pain for promised future gains.

The coming months will test how well Nigeria can turn macroeconomic gains into everyday relief for millions who continue to live without reliable power, stable food prices, or meaningful job opportunities. The IMF’s message is clear: reform is essential, but it must be inclusive if it is to deliver lasting prosperity.