UNHERD
Five years ago, economists prophesied a prosperous future for Nigeria, and the rest of the continent. Yet today, the country is facing what one leading Nigerian academic recently told me is its “biggest crisis since independence”. The devaluation of the Nigerian naira by 230% over the past year, along with a huge rise in inflation, has sparked an economic crisis unequalled in its modern history. With meat, eggs and milk now a luxury, there have been reports of people in the north of the country being forced to eat poor-grade rice usually used as fish food.
Nigerians have responded with a wave of “hardship protests”. Since February, demonstrations have rocked many large cities including Lagos, Ibadan and Kano. In Lagos, police responded with sympathy, handing out biscuits and water to the protesters to prevent them fainting from hunger. After ration sizes in Nigerian prisons were cut, protests broke out in the prison of the central city of Jos at the end of February.
Many have blamed the crisis on President Bola Ahmed Tinubu, who was elected in controversial circumstances last year. The powerful emir of Kano, Aminu Ado Bayero, said in February that Nigerians faced “economic hardships, hunger and starvation” and called on President Tinubu to take action. Later that month, Tinubu agreed to release 102,000 tonnes of a strategic grain reserve at subsidised prices, but such is the hardship faced by most Nigerians that when this happened there was a stampede at the depot.
On the face of it, President Tinubu’s economic policies are to blame. In May 2023, he removed fuel subsidies, which the World Bank estimated could save the Nigerian government $5 billion a year. It was part of a wider strategy to increase foreign investment. Yet, in spite of the pain this catastrophic strategy has already caused, global investors warned last week that the Central Bank had to “tighten” monetary policy further to attract investment — even after a 4% increase in Nigeria’s interest rate, to 22.75%.
This tightening of the screws will only worsen the crisis. The call from investors runs counter to what financial leaders said last year: that scrapping fuel subsidies was already giving markets “everything they hoped for”. Even the Financial Times reported last week that, in retrospect, “many are questioning the wisdom of abruptly removing the subsidies without a shock-absorbing plan”.
But Tinubu can’t be blamed for everything. When he was elected…
