By Angel Garba

Since assuming office in May 2023, President Bola Ahmed Tinubu fundamentally re-engineered Nigeria’s political economy through a sequence of aggressive reforms. Central to this economic agenda are the removal of the petrol subsidy, the floating and unification of the Naira, and a comprehensive legislative tax overhaul. While the presidency frames these policies as long-overdue, courageous acts of local statecraft necessary to rescue Nigeria from imminent bankruptcy, a critical political economy analysis reveals a deeper, more complex dynamic. Viewed through the analytical lenses of dependency theory and neoliberal principles, these policy packages bear the structural signature of externally driven dictates engineered by Bretton Woods institutions—specifically the International Monetary Fund (IMF) and the World Bank.

This trajectory is not entirely novel in Nigeria’s fourth republic; rather, it represents an aggressive escalation of a historical pattern. Following the 1999 return to democracy, the Olusegun Obasanjo administration implemented the National Economic Empowerment and Development Strategy (NEEDS). While framed as a home-grown blueprint, NEEDS closely aligned with Washington Consensus principles to secure a landmark $18 billion debt relief package from the Paris Club. Similarly, the subsequent integration of market-driven reforms under various administrations demonstrated a persistent vulnerability to external economic orthodoxies.

This paper provides a critical analysis of the Tinubu administration’s core fiscal and monetary policies, arguing that while the institutional rhetoric prioritizes domestic revenue mobilization and efficiency, the actual trajectory has locked Nigeria into an externally driven cycle of currency devaluation, hyperinflation, and socio-economic precarity.

The Neoliberal Convergence: Unification and the Floating of the Naira

The most disruptive policy manoeuvre of the administration occurred in June 2023, when the Central Bank of Nigeria (CBN) abandoned its multi-tiered foreign exchange system and initiated a “willing buyer, willing seller” market framework. This policy directly mirrored long-standing orthodox structural benchmarks frequently stipulated by the IMF. The explicit objective was to eliminate arbitrage, enhance economic transparency, and attract foreign direct investment (FDI).

However, letting the local currency float within an economy plagued by acute structural supply-side deficits—namely heavy dependence on oil exports, widespread local refining shortages, and low manufacturing output—produced severe volatility. Rather than stabilizing at an equilibrium point, the Naira experienced a historic and precipitous decline, plunging from approximately ₦460 per dollar to over ₦1,300–₦1,700.

From a critical political economy perspective, this brand of shock therapy treats the exchange rate as a purely nominal variable, failing to account for its foundational relationship with local survival. Because Nigeria remains a highly import-dependent nation, floating the currency immediately triggered imported cost-push inflation. The policy has exposed a structural contradiction: while the IMF officially commends the unification for placing Nigeria on a resilient long-term path, the immediate local consequence has been a massive compression of domestic purchasing power, pushing over 60 percent of the populace below the poverty line.

Tax Overhauls and the Search for Fiscal Space

In tandem with currency liberalization, the administration turned its focus toward aggressive domestic revenue mobilization. This culminated in the signing of four landmark tax legislations—the Nigeria Tax Act, the Tax Administration Act, the Nigeria Revenue Service Act, and the Joint Revenue Board Act—which went into full execution on January 1, 2026.

The primary policy architecture, guided by the Presidential Fiscal Policy and Tax Reforms Committee under Taiwo Oyedele, aimed to double Nigeria’s tax-to-GDP ratio from under 10% to an ambitious 18%. Structurally, the reforms aimed to simplify tax administration, curb evasion, eliminate more than 50 nuisance taxes, and exempt micro-enterprises and low-income earners making below ₦800,000 annually.

Despite these progressive domestic design elements, the timing and structural underpinnings of the tax overhaul align closely with international financial institutions’ demands for fiscal consolidation. The World Bank and IMF have continuously pressured sub-Saharan African governments to broaden tax bases as a precondition for debt restructuring and sovereign credit access.

When implemented amidst a sharp currency devaluation, tougher tax enforcement mechanisms risk aggravating economic anxieties. For medium-sized firms already struggling with skyrocketing operational overheads driven by expensive energy and devalued capital, intensified tax scrutiny threatens basic commercial survival. This dynamic highlights a distinct policy misalignment: Western-backed revenue models presume an economically stable, formal corporate environment, whereas the reality on the ground in Nigeria is an informal market currently absorbing severe macroeconomic shocks.

The Devaluation Trap and Sovereign Debt Escalation

The critical link between externally driven liberalization and domestic strain lies within the sovereign debt mechanics. The administration defended both the tax reforms and subsidy removals by stating they freed up over ₦15.8 trillion for the federation between 2023 and late 2025 to avoid imminent national insolvency. However, the parallel policy of floating the currency undermined these fiscal gains through what economists term the “devaluation trap.”

Because a substantial portion of Nigeria’s public debt is dollar-denominated, the steep depreciation of the Naira automatically bloated the nation’s external debt burden when calculated in local currency. For example, even if nominal borrowing remained controlled, the book-value of foreign liabilities inflated heavily simply because more Naira was required to service each dollar of debt.

Consequently, a substantial share of the revenue recovered from local subsidy cuts and new tax collection models must now be channelled directly into servicing international loans. This structural loop functions precisely as dependency theorists describe: Domestic resources are aggressively mobilized from the local populace through regressive inflation and taxation, only to be exported upward to satisfy external global financial obligations.

Historical Parallels and Structural Failures

The current economic trajectory shares striking structural parallels with the Structural Adjustment Program (SAP) imposed on Nigeria by the World Bank and IMF under General Ibrahim Babangida in 1986. The core tenets remain virtually unchanged: massive deregulation, trade liberalization, subsidy removal, and currency devaluation.

Historically, SAP failed to generate sustainable development because it relied on abstract macroeconomic indices while ignoring microeconomic realities, ultimately leading to hyperinflation and a degraded industrial sector. Forty years later, the current administration’s reliance on orthodox monetary tightening—using high Monetary Policy Rates to combat inflation—faces similar structural bottlenecks. High interest rates have raised the cost of credit, further stifling local manufacturing and preventing the country from expanding the domestic production base required to break the cycle of import-dependent currency depreciation.

Conclusion

A critical analysis indicates that the Tinubu administration’s economic blueprint operates as a dual-natured project. On the domestic stage, it is presented as an autonomous, forward-looking effort to build a competitive and transparent fiscal foundation. On the international stage, however, it functions as a highly compliant adoption of Western-sponsored neoliberal orthodoxy.

By prioritizing currency floating and rapid fiscal consolidation without first securing structural energy independence or domestic manufacturing capacity, the state has exposed its population to severe economic vulnerability. For these reforms to transcend the destructive legacy of previous structural adjustment programs, the administration must shift its focus away from abstract macroeconomic indicators favored by international lenders. True economic stabilization requires turning toward deliberate, state-led industrial policies, real sector protection, and tangible social safety nets that shield the domestic economy from the volatility of externally driven devaluation.