Tinubu’s 3 Years: Economic Recovery Amid Growing Hardship

By the time President Bola Ahmed Tinubu marks three years in office on June 12, 2026, investors may have reasons to celebrate even as many households continue to struggle.

The administration’s bold reforms, from scrapping fuel subsidies to liberalising the foreign-exchange market, have reshaped Nigeria’s economic landscape, revived investor interest and boosted government finances.
But the same measures have fueled inflation, squeezed incomes and worsened a cost-of-living crisis that continues to test public patience.

The outcome is an economy caught between improving market fundamentals and ongoing social strain.

But the government says it inherited an economy distorted by subsidies, multiple exchange rates, dwindling fiscal revenues and declining investor confidence.

But the question for businesses and investors is whether the economic pain so far is paving the way for sustainable growth, or just postponing deeper structural challenges.

The reform bet

Few presidents have taken such rapid steps toward reform as Tinubu did in his first weeks in office.

His announcement that “fuel subsidy is gone” ended a policy that had been in place for decades and had become one of the biggest drains on public finances. This was followed by foreign exchange reforms that effectively dismantled the country’s multiple exchange rate system, allowing the naira to trade more freely.

The administration said that both policies were needed to fix long-standing distortions, discouraging investment and encouraging arbitrage.

For years, the government spent trillions of naira annually subsidizing petrol consumption. Resources that could have been used for infrastructure, healthcare and education were sucked up by the subsidy regime. Similarly, the multiple exchange rate system created opportunities for rent seeking while discouraging foreign investors who faced difficulties in accessing foreign currency.

The administration hoped to restore market confidence and promote a more efficient allocation of resources throughout the economy by removing these distortions.

The reforms quickly gained the support of multilateral institutions and international investors. Nigeria started to come back on the radar of portfolio investors who largely stayed away from the country during years of foreign exchange restrictions and capital controls.

But the reforms also set off powerful inflationary pressures that rippled through the economy.

Inflation and the cost of living crisis

If there is one metric that best encapsulates the public mood after three years of Tinubu’s presidency, it is inflation.

The removal of fuel subsidies saw a steep rise in the cost of transportation. The depreciation of the naira has also seen a significant rise in the cost of imported goods and industrial inputs. These developments together have driven up consumer prices and reduced household purchasing power.

Food inflation has been particularly severe, reflecting insecurity in agricultural regions, logistics challenges and currency weakness. For many Nigerians the soaring prices of staple foods have become the most visible outcome of economic reforms.

The effect has been a sharp reduction in real earnings. Public and private sector salaries have struggled to keep pace with rising prices, forcing households to cut discretionary spending and making changes to consumption patterns.

Demand has slowed for retail businesses, consumer goods manufacturers and service providers with consumers prioritising expenditure on essentials.

The government has responded with targeted interventions including cash-transfer programmes, wage adjustments and support measures for vulnerable groups. But the size of inflation has often outstripped these efforts.

Growth has returned, but unevenly

Despite inflationary headwinds, Nigeria’s economy has continued to grow.

The National Bureau of Statistics (NBS) has released its Gross Domestic Product (GDP) report which revealed that the country’s real Gross Domestic Product (GDP) grew by 3.89 per cent year-on-year (y/y) in the first quarter (Q1) of 2026 compared to 4.07 per cent y/y in the fourth quarter (Q4) of 2025.

Growth has been supported by improvements in services, telecommunications, financial services and parts of the oil sector. Banking, fintech, digital services and technology related industries have demonstrated resilience despite macroeconomic headwinds.

The services sector has gradually taken on the role of engine of growth, reflecting structural changes in the Nigerian economy. The rising demand for digital services has helped financial technology firms and digital payment platforms and telecommunications operators.

At the same time, higher oil output and efforts to curb crude theft have provided some support to government revenues and foreign exchange earnings.

But the expansion is uneven. Last week, Daily Sun reported that MoneyAfrica stressed that the growth rate in Nigeria is still not enough for the development needs of the country. The firm said growth of around 4 per cent is not enough to create the level of employment and income gains needed to improve household welfare after years of inflation, naira depreciation and economic adjustment.

For Nigeria to meaningfully restore consumer purchasing power and deliver broad-based improvements in living standards, the firm said it would need sustained double-digit economic growth.

Elevated energy costs, foreign exchange volatility and high borrowing costs continue to pose significant pressures to manufacturing companies. Small and medium-sized enterprises, which account for large shares of employment, have struggled to absorb rising operating costs.

Historically one of Nigeria’s largest employers, agriculture is still hobbled by insecurity, climate-related disruptions and inadequate infrastructure.

Economic growth has not, therefore, led to widespread gains in living standards. Population growth continues to outpace economic growth, limiting gains in per capita income. This is still one of the biggest challenges for the administration for many analysts: turning macroeconomic stabilisation into inclusive growth.

The challenge for policymakers remains to balance short-term pain with long-term payoffs. Although inflation has eased somewhat from its peaks, price pressures remain one of the biggest risks to the economic recovery.

Government finances and fiscal consolidation

One of the most visible achievements of the Tinubu administration has been the improvement in fiscal revenues.

The elimination of fuel subsidies substantially relieved fiscal pressures and freed up resources that had been used for recurrent expenses. Higher naira-denominated oil revenues from the currency depreciation have also increased government receipts.

Reforms in tax administration have aimed at broadening the revenue base while reducing leakages. The administration has made fiscal discipline a key part of its economic platform, and its officials have argued that healthy public finances are a prerequisite for sustained growth.

These have improved fiscal flexibility and relieved some of the immediate pressure on government borrowing.

Nigeria still has significant debt service obligations. The debt stock of Nigeria increased to N159.28 trillion as at the fourth quarter (Q4) of 2025, the Debt Management Office (DMO) has said, stating that the rising debt load was due to a consistent accumulation of debt amid persistent fiscal deficits and weak revenue performance.

A large share of government revenues continues to be used to service existing debt, constraining the fiscal space for capital investments.

Moreover, federal revenues remain a key source of revenue for state governments, stressing the importance of broad structural reforms to improve subnational fiscal sustainability.

If fully implemented, the administration’s proposed tax reforms could further strengthen revenue mobilisation.

But they also face political resistance from stakeholders worried about the impact on businesses and consumers.

The liberalization of Nigeria’s foreign currency market is arguably the reform that investors have observed the most.

Businesses frequently had trouble obtaining dollars prior to the reforms, and there was a significant discrepancy between the official and parallel market exchange rates. Exchange-rate limitations were often highlighted by foreign investors as a significant barrier to investment.

Some of these distortions have been lessened by the shift to a more market-driven exchange-rate system. Higher yields and better foreign exchange pricing clarity have drawn international portfolio investors back to Nigeria’s debt markets over time. There have been times when external reserves have improved thanks to capital inflows and confidence-boosting governmental initiatives.

The reforms have allayed some worries about foreign currency availability and earnings repatriation for global companies doing business in Nigeria.

Exchange rate volatility is still a problem, though. Since the start of the reforms, the naira has significantly depreciated, making imports more expensive and posing challenges for companies with foreign-currency obligations.

Over the past three years, exchange-rate losses have emerged as a key indicator of financial performance for numerous businesses.

The administration contends that the shift to a more sustainable market-based economy will inevitably result in short-term turbulence. Although confidence is still dependent on regular policy implementation, investors largely support this viewpoint.

Banking industry: A time of remarkable prosperity

The banking industry is the one that has benefited most from Tinubu’s reforms.

Over the past three years, Nigeria’s top banks have posted record profits, mostly due to increased transaction volumes, higher interest rates, and benefits from foreign exchange revaluation.

Institutions with foreign-currency holdings saw significant benefits as a result of the naira’s dramatic fall. Simultaneously, the industry’s interest income increased due to the Central Bank of Nigeria’s vigorous monetary tightening cycle.

As businesses and customers depend more on electronic payments, banks have also profited from rising quantities of digital transactions.

Major lenders’ market positions have been improved and investor confidence has been bolstered by the industry’s resiliency. Despite difficult macroeconomic conditions, organizations including Zenith Bank Plc, Guaranty Trust Holding Company Plc, Access Holdings Plc, and United Bank for Africa Plc have recorded strong earnings growth.

The increased profitability of the industry has usually been welcomed by shareholders, and foreign investors are beginning to see Nigerian banks as one of the more appealing sectors of the nation’s capital market.

But there are still risks hidden behind the headlines.

Preparing for a larger economy through recapitalization

The apex bank’s decision to start a fresh banking recapitalization program has been a significant milestone during Tinubu’s government.

The policy acknowledges that Nigeria’s economy needs bigger, more robust financial institutions that can sustain growth in the future, even in the face of present difficulties.

Banks have been set deadlines for raising more money through public offerings, private placements, and rights issues.

It is anticipated that the recapitalization process will improve the sector’s ability to fund major corporate deals, industrial expansion, and infrastructure projects.

Investors view the program as a test as well as an opportunity. Better capital buffers and more competitiveness could lead to stronger banks. However, mergers and acquisitions may put pressure on institutions to consolidate if they are unable to raise enough money.

Over the next few years, the process is probably going to change Nigeria’s banking sector, maybe resulting in fewer but bigger institutions.

Risks to asset quality and financial constraints

Nigerian banks continue to be vulnerable to macroeconomic threats notwithstanding their high profitability.

Borrowers in a number of industries are under more strain due to high inflation, high interest rates, and volatile foreign exchange.

Liquidity issues still plague manufacturers, companies that rely on imports, and smaller firms. Concerns over loan repayment capabilities have grown due to rising finance expenses.

Analysts continue to keep an eye on industries that are more susceptible to economic hardship, even though non-performing loan percentages are still generally acceptable.

Despite increases in production, the oil and gas industry, which has historically been a major source of risk to the banking sector, is nonetheless tightly monitored.

As inflation continues to put strain on household incomes, consumer lending is also facing difficulties. Over the next several years, banks will need to strike a crucial balance between increasing lending and preserving asset quality.

The evolving role of CBN

Under Tinubu, the relationship between monetary and fiscal policy has also changed as the top bank has adopted a more conventional framework of policies centered on market confidence, inflation management, and exchange rate stability.

In an effort to stabilize expectations and control inflation, interest rates have increased dramatically. The approach has boosted monetary credibility and drawn in foreign investment, but it has also made borrowing more expensive for households and businesses. Nevertheless, the MPC decided to maintain rates and other parameters at its most recent meeting.

At the same time, the central bank has worked to boost regulation, increase transparency, and rebuild trust in the financial system.

These actions signify a significant change in policy predictability for investors. However, increased lending rates have put further operational strain on enterprises.

Whether inflation slows down enough to permit progressive easing without jeopardizing financial stability will ultimately determine how successful monetary policy is.

The path to come

Nigeria’s economy is at a crossroads three years into Tinubu’s presidency.

The administration has made significant strides in correcting systemic injustices that have built up over a long period of time. Foreign currency market reforms have progressed, investor confidence has grown, fiscal revenues have risen, and the banking industry is still lucrative and well-capitalized.

However, there has been a substantial social cost to these advantages. Households are still highly burdened by inflation, poverty rates are still high, and businesses are functioning in one of the most difficult circumstances in recent memory. A significant portion of the populace has not yet fully benefited from change.

The banking industry has a cautiously optimistic outlook. Nigerian banks could be positioned for long-term success through recapitalization, digital innovation, and enhanced regulatory supervision. Global uncertainties, economic fragility, and asset-quality risks, however, continue to call for caution.

Summarization

The final assessment of Tinubu’s economic plan may depend less on whether the reforms were required and more on whether they can raise living standards in a noticeable way before the public becomes weary of them.

After three years, the administration has changed the course of economic policy for the most part. Demonstrating that stabilization may lead to prosperity is the next task.

The narrative is becoming more and more about opportunity for investors. For many Nigerians, however, the question of whether the sacrifices required by reform would ultimately result in a more accessible, efficient, and inclusive economy is still easier to answer.