Tinubu’s reforms could take 20 years to benefit Nigerians, economists warn

Economic experts suggest that Nigerians should anticipate a waiting period of 12 to 20 years before fully experiencing the advantages of President Bola Tinubu's economic reforms. These experts explain that the reforms are projected to yield steady enhancements in productivity and real incomes, rather than swift relief from soaring prices and reduced purchasing power.

According to Nairametrics, major structural reforms generally necessitate a period of hardship before their benefits manifest, with the rate of improvement largely contingent on factors like policy stability, infrastructure advancements, the rule of law, and investments in economically productive domains. Chief Economist and Partner at SPM Professionals, Dr. Paul Alaje, asserts that structural reforms often take 12 to 20 years before their effects become substantially perceptible, although some nations have witnessed significant outcomes within a timeframe of six to 10 years.

Financial economist at Nnamdi Azikiwe University, Dr. Felix Echekoba, concurs that major economic restructuring frequently entails short-term sacrifices before reaping long-term benefits. Dr. Tayo Bello, a development economist at Adeleke University, notes that Nigeria's scenario aligns with the trend observed in other nations that have undertaken substantial subsidy and exchange rate reforms.

President Tinubu has implemented a range of comprehensive economic reforms since taking office in May 2023, encompassing the eradication of petrol subsidies, liberalization of the foreign exchange market, hike in electricity tariffs, and tax reforms intended to augment government revenue and fiscal stability. These reforms have garnered backing from international financial entities, yet their immediate ramifications have been eclipsed by soaring food and service prices, elevated interest rates, and diminishing household purchasing power.

Dr. Alaje posits that the lack of essential conditions to facilitate structural reforms is impeding the pace at which Nigerians can gain from the government's policies. He elaborates that countries which have achieved swifter outcomes from reforms usually possess functional institutions, adherence to the rule of law, adequate infrastructure, and a high level of public awareness.

Dr. Alaje emphasizes that Nigeria continues to grapple with substantial deficiencies in these areas, particularly infrastructure and institutional effectiveness. He warns that the poorest Nigerians will bear the brunt during the adjustment phase, stating that reforms alone will not suffice to elevate millions of individuals out of poverty within a few years.

Dr. Bello emphasizes that macroeconomic stability achieved through reforms would only serve as a foundation for comprehensive economic metamorphosis. He adds that countries that successfully transformed their economies integrated fiscal and monetary reforms with vigorous industrialization strategies. Dr. Echekoba reiterates that the government must ensure that the adjustment phase does not extend unnecessarily long, while implementing measures to safeguard vulnerable households.

The economists' appraisal aligns with experiences from countries that embarked on major economic reforms before witnessing broader improvements in living standards. These instances imply that the economic benefits of significant structural reforms may take years to become widely apparent, especially when reforms coincide with substantial increases in the cost of living during the initial adjustment period.

Prior to the removal of petrol subsidies in 2023, the Federal Government allocated approximately N3.36 trillion yearly for fuel subsidy payments. The Tinubu administration contended that ending the subsidy would liberate resources for infrastructure development and social programs aimed at mitigating the policy's impact on households.

However, the economists contend that the degree to which Nigerians ultimately reap the rewards of the reforms will hinge on how effectively the government utilizes the savings and establishes conditions for higher productivity, investment, and real income growth.