Two years into the presidency of Bola Ahmed Tinubu, Nigeria is showing early signs of economic recovery after years of stagnation, mismanagement, and insecurity. Though the majority of Nigerians are still grappling with the worst cost-of-living crisis in a generation, economic indicators suggest the country may finally be turning a corner.

The World Bank forecasts a 3.7% growth rate for Nigeria in 2025 — the strongest performance since 2014, excluding the post-pandemic rebound. This modest recovery follows a series of bold economic reforms initiated by President Tinubu, whose administration has focused on reversing long-standing structural distortions in the economy.

On his first day in office, Tinubu scrapped the costly fuel subsidy that had drained public finances for years. In a move welcomed by international investors, the Central Bank of Nigeria (CBN) has also restored monetary policy orthodoxy, ending the controversial dual exchange rate system and halting the printing of money to finance government deficits.

The naira, which saw a volatile depreciation earlier in Tinubu’s term, has stabilized, narrowing the gap between official and black-market exchange rates. Investors now have improved access to foreign exchange, easing fears of further devaluation.

In the oil sector, Nigeria’s production has risen from a low of 1 million barrels per day to 1.5 million, thanks to improved security and increased efficiency among local operators. Oil theft has declined, and marginal fields are being more effectively tapped.

While these gains have encouraged investor confidence, ordinary Nigerians have yet to feel the full impact. Inflation remains high at 24%, with food prices being the primary driver. Analysts and observers stress that much more needs to be done to ensure these green shoots translate into inclusive growth.

Economists urge the government to intensify efforts to combat inflation by addressing agricultural bottlenecks, improving rural security, and investing in farm inputs and infrastructure. State governments have a key role to play in boosting food supply and ensuring better market access for farmers.

The federal government has also set an ambitious goal of doubling its tax-to-GDP ratio to 18%. Increased revenue could support long-overdue investments in public services such as education and healthcare — particularly vital amid declining foreign aid. Rebuilding a broken social contract, experts say, is essential to long-term stability.

Security remains one of Nigeria’s most pressing issues. Banditry and terrorism continue to afflict the country, especially in the north. Analysts are calling for a reform of the military, echoing the central bank’s overhaul, to ensure effective and accountable security operations.

Though Tinubu’s administration has been criticized for cronyism, it includes a few capable technocrats who have helped steer the early reforms. Observers say the real test will come as Nigeria heads toward the next election cycle in 2027.

There is growing concern that the pace of reform could slow due to political calculations. Analysts warn that this would be a critical mistake.

For Tinubu, the challenge now is to maintain momentum and shift the focus from macroeconomic stabilization to tangible improvements in the lives of ordinary Nigerians.

As the president marks two years in office this week, one thing is clear: Nigeria’s “shock therapy” has jolted the economy to life — but the road to full recovery remains long and uncertain. /Report adapted from a Financial Times editorial

FINANCIAL TIMES’ EDITORIAL IN FULL: Nigeria’s shock therapy

For years, Nigeria has been not so much a sleeping giant as a comatose one. Home to nearly one in five sub-Saharan Africans, its market of 230mn people should be an engine of continental growth. Instead it has been a drag, stuck in an oil-dependent rut, plagued by banditry and run by a political elite bent on self-enrichment. It is hardly surprising that all but a few investors may have missed the fact that Nigeria has turned a corner.

Halfway through the first presidential term of Bola Tinubu, who completes two years in office this Thursday, Nigeria is in better shape than at any time in the past decade. That may come as a surprise — or even sound like a sick joke — to tens of millions of Nigerians who are suffering the worst cost of living crisis in a generation.

Yet Tinubu, a former governor of Lagos and the country’s wiliest politician in a generation, has stabilised the economy and laid the groundwork for a broader recovery. This year, the World Bank expects growth of 3.7 per cent, in what would be Nigeria’s best performance since 2014 save for a post-Covid rebound. Most ordinary Nigerians won’t feel that yet. But it is a decent performance when oil prices are weak. The tiny green shoots have come because Tinubu’s government has tackled — albeit in often haphazard fashion — debilitating structural distortions.

On day one Tinubu removed a ruinously expensive fuel subsidy. More important still, the central bank has restored monetary policy orthodoxy after a shambolic era in which only cronies with access to cheap dollars benefited. After a dangerous overshoot, the naira has stabilised, with the gap between the official and black market rate shrinking to almost nothing.

The central bank has stopped printing money to pay for government profligacy. Politicians still spend too much, often on fripperies like an extravagant presidential jet, but at least the government has begun to increase tax receipts.

Investors do not live in constant fear of a devaluation and can readily access dollars. That may eventually help Nigeria to diversify, but shorter term it is positive that oil production has recovered from a nadir of 1mn barrels a day to nearly 1.5mn last month. Oil theft has been reduced and local companies are squeezing more out of marginal fields.

That so much has been achieved by a government stuffed with cronies — and, to be fair, one or two competent technocrats — shows how much could be achieved if Nigeria really got its act together. There are plenty of ways for Tinubu to build on a promising start.

First, his government has to tackle inflation — still running at 24 per cent — with more urgency. Food is the biggest driver. State governments need to increase supply by providing farm inputs, security and better access to market.

Second, it must build on tax reform by achieving its stated aim of doubling the ratio of tax collected to 18 per cent of GDP. Some of that should be spent on woefully neglected schools and clinics — even more urgent given foreign aid cuts. That will bring benefits of its own but, just as importantly, will also help to establish a social contract, which has been dangerously lacking.

Third, and perhaps most crucial, the government must confront banditry and terrorism with the same single-mindedness as it did distorted monetary policy. The army needs cleaning up as urgently as did the central bank.

As Nigeria’s election cycle edges towards 2027, Tinubu may be tempted to slow the pace of change. That would be a mistake. He should forge ahead, with the overriding aim of making ordinary Nigerians — not just investors — feel the benefits of shock therapy.