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It's the people's welfare, stupid 12 Nov 2026

After three and a half years of implementing its market-oriented economic reforms, the administration of President Bola Ahmed Tinubu wants the reforms to continue. Its principal argument is not that the reforms are improving the welfare of Nigerians. Evidently, they are doing the opposite. The reforms, including the removal of the petrol subsidy, the floatation of the naira, and increases in electricity tariffs, have driven the severe economic hardship Nigerians have experienced since mid-2023. According to the World Bank, the share of Nigerians living below the national poverty line rose from 40.1 per cent in 2019 to 56.2 per cent in 2023 and is projected to reach 63 per cent by 2026.

The administration argues that reversing its policies would undermine foreign investor confidence. According to government officials, a loss of investor confidence would trigger capital flight, weaken the naira, and reignite inflationary pressures.

This argument is flawed, most notably because it subordinates improving the welfare of Nigerians, the constitutionally stipulated raison d'être of government, to the sentiments of foreign investors. In that vein, the reforms exist primarily to reassure investors, while improvements in citizens' welfare are expected only as a secondary outcome.

But do foreign investors truly have confidence in the reforms? If they do, it is only to a very limited extent. Despite recent commitments by some multinational oil companies to develop existing assets, sweetened by offers of extraordinary incentives, Nigeria is not attracting substantial Foreign Direct Investment (FDI). Foreign Portfolio Investment (FPI) remains heavily concentrated in government debt and money market instruments. Foreign investors accounted for just 4.89 per cent of trading activity on the Nigerian Exchange in August, compared with an average of 22 per cent in 2025. For historical perspective, foreign investors accounted for roughly two-thirds of equity market activity in 2011.

The National Bureau of Statistics' Capital Importation Report shows that, in the first quarter of 2026, about 99 per cent of foreign portfolio allocations to Nigeria went to fixed-income securities, while only roughly 1 per cent went to equities. Foreign investors have largely overlooked the stock market, which traditionally reflects confidence in the productive economy and its long-term prospects.

This pattern suggests caution rather than conviction. Investors appear more comfortable financing the Nigerian government than investing in the country’s listed equities. Faced with uncertainty, they have chosen the safest available option. Nigerian Treasury instruments are backed by the sovereign and offer exceptionally high yields. Should economic, social or political risks intensify, bondholders would still enjoy the protection afforded by sovereign obligations.

In other words, foreign investors have taken the safest bet on Nigeria's reform programme and are being well rewarded for it. The Central Bank of Nigeria holds these costly sovereign liabilities as reserves, which undeniably improve foreign exchange liquidity and help to stabilise the naira. Yet the benefits have not meaningfully translated into stronger domestic production, exports or broad-based job creation.

This calls into question the purpose of the economic reforms. Economic policy is not an end in itself. If well-conceived, a reform programme is a means to achieving higher living standards, greater prosperity, and broader opportunity. The true measure of the impact of economic reform is not investor sentiment, foreign reserves, or purchase of government bonds. It is whether ordinary people are better off.

Three and a half years is long enough to discern the direction in which a policy regime is heading. Under the current framework, those with capital to invest in government debt are prospering. In sharp contrast, productive businesses face punishing interest rates, weak consumer demand and shrinking purchasing power. Millions of households confront rising poverty and falling real incomes. The distribution of the reform’s gains and losses is becoming increasingly apparent.

The government's credibility problem is compounded by the perception that its officials are insulated from the hardship ordinary citizens are facing. Public displays of privilege suggest that those imposing economic sacrifices are not sharing in them. Reform without shared sacrifice is difficult to sustain politically and morally.

The economy appears more fragile today than it was in 2023. Rising public debt has increased debt-service obligations and narrowed the fiscal space. While the government has shed the burden of energy subsidies, it has expanded borrowing to a scale that raises questions about the sustainability of the country’s public debt. That reality, more than any supposed success of the reforms, explains why their reversal has become increasingly difficult.

Thus, reintroducing subsidies would heighten the fiscal challenges. Broad reductions in electricity tariffs would also discourage much-needed private investment in the power sector, given the limited scope for public financial intervention in the sector. 

The challenge now is to reorient economic policy around citizens' welfare. Bringing down food prices through targeted logistical support, scaling up affordable housing through existing mortgage institutions and investing in water infrastructure would directly improve living standards while stimulating economic activity and job creation.

Investor confidence matters. Macroeconomic stability also matters. But they are not an end in themselves. A government's ultimate responsibility is not to bondholders, ratings agencies or foreign portfolio managers. It is to the citizens, addressing their struggles to feed their families, run their businesses, pay their children’s school fees and build a better future.

Economic reform is for the people, not people for the reform. It’s the people's welfare, stupid!

Jide Akintunde is the Managing Editor of Financial Nigeria magazine and the author of "Youth Breed: How Generations of Nigerian Youth Impact Their Country".