Few Nigerians expected Bola Tinubu to drive reform in Nigeria. The 71-year-old has helped to shape Nigeria’s politics since even before the advent of democracy in 1999, when he was elected as Governor of Lagos – the commercial capital. As co-founder of the ruling All Progressives Congress (APC) party, which brought his predecessor Muhammadu Buhari to power in 2015, Tinubu was widely regarded as a continuity candidate, and Nigerians responded accordingly. Of the 93 million voters registered to vote in February’s elections, fewer than 9 million turned out to vote for Tinubu.
However, Tinubu has defied popular expectations, liberalising monetary policy, enabling investors to repatriate stranded profits, and abolishing unaffordable subsidies.
Apex bank overhaul
Barely a week into office, Tinubu suspended the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, and eliminated the multiple exchange rates, which had facilitated currency arbitrage. This enabled Nigerian banks to bid freely for dollars, which had been in short supply and resulted in international payment delays. While the liberalisation of the foreign exchange market was immediately lauded by international businesses, the CBN’s removal from the process resulted in an abrupt free float, with the Nigerian naira losing roughly 40% of its value.
Monetary policy reform enabled Tinubu to deliver on another inauguration promise: “We shall ensure that investors and foreign businesses repatriate their hard-earned dividends and profits.” Improved access to hard currency is already resulting in major improvements to the investment climate, steps which we expect the newly appointed finance minister, Olawale Edun, to deepen through tax harmonisation. Trusted confidant Edun played a pivotal role in convincing Tinubu to forestall the implementation of fiscal policy measures he inherited from the statist Buhari, indicative of major shifts in policy-making.
Central to restoring fiscal stability was the abolition of a 50-year-old fuel subsidy, which had underpinned the social contract in Nigeria, enabling citizens to derive tangible benefits from a government that has failed to harness its enviable natural resource wealth to deliver quality public services. To some extent, Tinubu’s hand was forced when the outgoing government declined to make provisions for the subsidy in the federal budget beyond June 2023, but it was Tinubu who confronted the issue head-on.
Normalising the situation resulted in pump prices tripling and strike threats from trade unions, but to alleviate the pressure, Tinubu has dismantled national oil company NNPC’s monopoly on fuel imports, licensing other firms to procure petroleum products. The president now appears to be wavering over intervening in the sector, with his spokesman Ajuri Ngelale stating, on 15 August, that Nigeria can stabilise pump prices irrespective of global shifts in crude markets. This marks a risk of a return to the interventionism of the Buhari administration, whether it be through direct subsidies, or via prioritising fuel importers over other industries.
In a nod to his predecessor, Tinubu appears to have retained oversight of the petroleum ministry for himself. However, he appointed former Bayelsa State senator Heineken Lokpobiri to serve as minister of state for petroleum resources, and Ekperipe Ekpo as Nigeria’s first minister of state gas resources. Mele Kyari, head of the national oil company, NNPC Limited, who had earlier been rumoured to be on his way out, remains at the helm of affairs at the corporation.
All three men face an urgent task to restore declining oil production, which fell to 1.26 million barrels per day in July 2023 – well short of Nigeria’s OPEC quota of 1.8 million bpd. Declining output was the result of years of neglect under Buhari, whose regime turned a blind eye to pipeline vandalism, crude theft and violence in oil-producing areas.
Tinubu has reached across the aisle, appointing People’s Democratic Party (PDP) member Nyesom Wike as the Minister for the Federal Capital Territory (FCT) in the hope that he will use his connections to contain militancy in the crude-rich Niger Delta. NNPC is also seeking to address crude oil tap lines, and a new joint taskforce including members of the police, army and navy are moving against Niger Delta militants. These include a mix of criminal elements who profit from stolen crude and individuals who vandalise facilities based on long-held grievances against the state.
Step on the gas
The appointment of Ekpo as the country’s first minister of state gas resources displays the president’s eagerness to monetise gas reserves. At present, Nigeria flares circa 700 million cubic feet per day – enough to generate up to 5GW of electricity, comparable to approximately 40% of the total installed electricity generation capacity. Tinubu’s monetary policy reforms have boosted interest in gas-to-power, by eliminating the currency losses project developers faced under Governor Emefiele’s tenure.
Sector regulator, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), will likely come under pressure to revisit its pricing structure, which currently prioritises commercial offtakers at the expense of gas power plants, thereby discouraging investment in new facilities. Having promised to drive down electricity prices on the campaign trail, the Tinubu administration will need to carefully manage tariffs if it wishes to avoid pushback from ordinary Nigerians, who have seen living costs soar as a result of currency devaluation and fuel subsidy removal.
Tinubu and his team are also supporting the development of new export solutions, especially where this creates opportunities for indigenous companies. On 20 July, Tinubu oversaw the signing of a heads of terms agreement between NNPC and local firm UTM Offshore, which plans to construct Nigeria’s first floating liquified natural gas (FLNG) project. NNPC has taken a 20% stake in the development, which would consist of a 1.2-1.5 million tonne per year facility, fed by gas from ExxonMobil’s Yoho field in the OML 104 licence.
As Bola Tinubu approaches one hundred days in office, he can take stock with a track record of sustained reform, resilience and transformation. Tinubu’s introduction of bold shifts in monetary policy and the dismantling of longstanding subsidies defy conventional expectations of Nigerian politics. These actions reflect not only a desire for change but also a recognition of the intricate web that connects technical innovation, political strategy, and sustainable growth.
However, as the clock continues to tick forward, Tinubu will need to confront the socio-economic realities, competing political interests and extant institutions benefitting from the status quo, and which stand to forestall the administration’s reform agenda. Thus, the road yet travelled is fraught with challenges. Tinubu will need to demonstrate astute and visionary leadership, clear policy directives and the unyielding commitment to navigate these complexities.
Forging ahead with his “Renewed Hope” agenda will demand not only a steadfast resolve but also the capacity to build consensus among diverse stakeholders. Clear, concise and innovative policy directives will be the blueprint for attaining tangible process. In this intricate tapestry of change, inclusivity, adaptability and a deep understanding of the techno-political landscape will serve as the lodestar, guiding President Tinubu’s administration towards delivering on its promise of renewed hope.
About the Authors
Agwu Ojowu is a Senior Consultant splitting his time between Abuja and Lagos, with a special focus on political economy and climate markets across sub-Saharan Africa. He can be reached at [email protected].
Nick Branson is an Associate Director based in London, where he leads work on the energy transition, and advises investors in renewables, green hydrogen, LNG and critical minerals.
An earlier version of this article was published by Petroleum Economist. It has been shortened and amended to reflect developments since publication.