Before assuming office on May 29, 2023, President Bola Ahmed Tinubu promised to pursue monetary policies focused on stabilising the exchange rate, controlling inflation, and maintaining sustainable interest rates to support economic prosperity for Nigerians.
In his campaign document, Tinubu stated that monetary policy must protect the naira, guard against inflation, and reduce excessive exposure to foreign debt unless such loans were tied to projects capable of repaying themselves.
Three years into the administration, the implementation of major economic reforms has produced mixed outcomes — with improvements in macroeconomic indicators on one hand and worsening living conditions for many Nigerians on the other.
CBN’s Tight Monetary Policy
Under the leadership of Central Bank of Nigeria (CBN) Governor Olayemi Cardoso, the apex bank adopted an orthodox monetary policy framework centred on tightening liquidity and controlling inflation.
The CBN relied heavily on instruments such as the Monetary Policy Rate (MPR), Cash Reserve Ratio (CRR), Liquidity Ratio, and Open Market Operations (OMO) to influence money supply, interest rates, and exchange rate stability.
To combat rising inflation, the CBN consistently increased the MPR while also introducing extensive foreign exchange reforms aimed at restoring investor confidence and eliminating distortions in the forex market.
Exchange Rate Reforms and Naira Depreciation
One of the most significant reforms introduced under Tinubu’s administration was the unification of Nigeria’s exchange rates and the adoption of a willing buyer-willing seller framework in the official forex market.
Following the policy, the naira depreciated sharply. In the official market, the exchange rate weakened by about 198 per cent, falling to N1,373.65 per dollar as of May 19, 2026, from N464.67 at the beginning of the administration.
The parallel market also witnessed major depreciation, with the naira dropping by about 80 per cent from N770 per dollar in 2023 to N1,385 per dollar within the same period.
FX Reforms Restore Investor Confidence
Despite the depreciation, the CBN moved to restore confidence in the forex market by clearing approximately $7 billion in outstanding foreign exchange obligations.
Additional reforms, including the introduction of a foreign exchange market code of conduct, helped improve transparency and attract increased foreign inflows into the economy.
As a result, the naira recorded relative stability throughout 2025, remaining below N1,400 per dollar despite global economic pressures, including international tariff tensions and the ongoing conflict involving the United States, Israel, and Iran.
The gap between official and parallel market exchange rates also narrowed significantly to N11.35 in May 2026 from over N305 in 2023.
Improved investor confidence contributed to a rise in foreign capital importation, which climbed to $23.21 billion in 2025 after falling to $3.9 billion in 2023.
Nigeria’s external reserves also strengthened, rising from $33 billion at the end of 2023 to over $50 billion by March 2026 — the country’s highest reserve level in 13 years.
Inflation and Cost of Living Crisis
However, the reforms came with painful consequences for ordinary Nigerians.
The combined effects of fuel subsidy removal and naira depreciation triggered a sharp increase in the prices of goods and services across the country.
Major companies also suffered heavy foreign exchange losses estimated at N2.17 trillion in 2024 due to the weakened naira.
According to data from the National Bureau of Statistics (NBS), the Cost of a Healthy Diet rose by 88 per cent between January 2024 and December 2025.
The cost increased from N858 per adult daily in January 2024 to N1,611 by December 2025.
Inflation climbed steadily and reached 34.8 per cent in December 2024 — its highest level in nearly three decades.
In response, the CBN raised the Monetary Policy Rate six times in 2024, pushing it to 27.5 per cent by November.
The Cash Reserve Ratio for commercial banks was also increased from 32.5 per cent to 50 per cent within the year, while merchant banks experienced similar adjustments.
Although inflation later moderated for 12 consecutive months to 15.06 per cent in February 2026, prices remained significantly high for millions of households.
High Interest Rates Pressure Businesses
The aggressive tightening measures by the CBN pushed lending rates higher, creating fresh pressure on businesses.
Average lending rates increased to 35.17 per cent in March 2026 from 26.62 per cent in December 2023.
The impact was severe for major companies, whose combined finance costs rose by 81 per cent to N1.15 trillion in 2024 despite a decline in bank borrowing.
Affected firms included Nestle Nigeria, Cadbury Nigeria, Nigerian Breweries, Flour Mills Nigeria, Dangote Sugar, BUA Foods, Guinness Nigeria, and several others.
Rising Debt Profile Raises Concerns
Nigeria’s total public debt also rose significantly under the Tinubu administration.
According to the Debt Management Office (DMO), total debt stock increased by 219 per cent to N159.27 trillion at the end of 2025 from N49.85 trillion at the end of 2023.
A major factor behind the increase was the depreciation of the naira, which inflated the value of external debt when converted to local currency.
Nigeria’s foreign debt also increased from $42.67 billion in 2023 to $51.85 billion in 2025, despite earlier promises to limit foreign borrowing.
Debt Sustainability Indicators Improve
Despite the growing debt burden, some debt sustainability indicators improved due to stronger GDP growth and the rebasing of the economy.
Nigeria’s debt-to-GDP ratio declined from 40.57 per cent in 2023 to 36.9 per cent by the end of 2025.
The debt service-to-revenue ratio also improved, dropping from 73.5 per cent to 65 per cent within the same period.
Economic Growth Records Moderate Improvement
Nigeria’s economy recorded moderate growth during the period under review.
Gross Domestic Product (GDP) expanded by 3.38 per cent in 2024 and further increased to 3.87 per cent in 2025.
The improvements reflected gains from reforms, stronger investor confidence, and increased economic activities in some sectors.
Nigerians Face Declining Standard of Living
While macroeconomic indicators showed signs of improvement, the reality for many Nigerians remained difficult.
Analysts estimate that the monthly cost of living now stands at about N505,780 for a single person and over N1.8 million for a family of four, excluding rent.
Before 2023, the estimated monthly cost was around N150,000 for individuals and about N520,000 for a family of four.
The implication is that a large percentage of Nigerians now live below the estimated cost of survival, resulting in a significant decline in living standards.
Although Nigeria continues to maintain a vibrant technology sector, growing luxury estates, and expanding urban development in cities such as Lagos and Abuja, many citizens continue to struggle with rising food prices, transportation costs, and reduced purchasing power.
Economic Welfare and Purchasing Power
Wage vs Inflation Gap:
Nigeria’s minimum wage currently stands at N70,000 monthly, while estimates suggest that an average urban resident requires more than N505,000 monthly to cover basic living expenses excluding rent.
Household Spending Pressure:
Due to rising food prices, many Nigerian households now spend between 60 and 70 per cent of their income on feeding alone, leaving little room for savings, healthcare, or emergencies.
Shrinking Middle Class:
Persistent inflation and economic hardship have pushed many middle-class Nigerians into lower income brackets, fueling increased migration of professionals seeking opportunities abroad.
Tinubu’s Three Years: Reforms Drive Growth but Deepen Nigerians’ Economic Hardship
