How Macroeconomic Reforms Turned Nigeria’s Economy Around — Oyedele

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has said Nigeria’s unmet foreign exchange (FX) demand would have risen from $7 billion in 2023 to $10 billion by 2025 if the Federal Government had not implemented critical FX and trade reforms.

Oyedele explained that recent reforms across foreign exchange, trade, oil and gas, taxation, and exchange rate management were introduced to reposition the economy for sustainable growth and development.

In a report titled Economic Overview and Highlights of Current Fiscal & Tax Reforms, Oyedele said the reforms have delivered measurable macroeconomic improvements, including a unified FX rate, clearance of FX backlogs, improved trade balance, rising foreign reserves, and the restoration of international usage of naira cards. These outcomes, he noted, show that the difficult but necessary reforms are beginning to yield positive results.

He said the pre-reform period of 2023 was marked by multiple FX windows, rising unmet FX demand, trade deficits, declining foreign reserves, and the inability to use naira cards abroad. On the fiscal side, tax-to-GDP ratio was below 10%, debt service consumed about 97% of government revenue, deficits were high, capital spending was weak, and Ways and Means financing stood at about ₦30 trillion.

Following the reforms, Oyedele said tax-to-GDP has risen to 13.5%, debt service-to-revenue has dropped below 50%, fiscal deficits are declining, infrastructure spending has increased, and Ways and Means financing has moderated. Without these reforms, he warned, tax-to-GDP would have remained below 10%, debt service would have reached 100% of revenue, capital expenditure would have been near zero, and Ways and Means could have ballooned to ₦50 trillion.

On fuel subsidy, inflation, and pricing, Oyedele said the pre-2023 era was characterised by unsustainable petrol subsidies, product scarcity, rising inflation, and escalating interest rates. The reforms led to subsidy removal, improved fuel availability, moderating inflation, and high but easing interest rates. Without the reforms, subsidy collapse, persistent scarcity, hyperinflation, and extremely high interest rates would have followed.

In the oil and gas sector, Oyedele said reforms reversed years of declining crude production, oil theft, and weak investor confidence. He noted that output is now rising, theft has reduced, and investment interest is returning. Without the reforms, production would have remained constrained, investment would have fallen further, and divestments would have increased.

On employment and poverty, Oyedele acknowledged that poverty remains high but said reforms have improved prospects for job creation as businesses recover. Without the reforms, he said, poverty would have worsened and decent job opportunities further reduced.

He also noted that reforms replaced market-unfriendly policies and weak coordination with stronger fiscal management, improved communication, and market-oriented reforms, particularly in the capital markets.

Oyedele said Nigeria’s sovereign credit standing has improved as a result of the reforms, citing upgrades by Fitch, Moody’s, and Standard & Poor’s. Fitch upgraded Nigeria to B (stable), Moody’s raised its rating to B3, and S&P revised its outlook to positive, reflecting stronger reserves, improved fiscal discipline, and enhanced FX transparency.

“These endorsements have translated into improved borrowing terms, increased investment inflows, and stronger credibility,” Oyedele said, noting that Nigeria successfully raised $2.35 billion through a Eurobond issuance that attracted $13 billion in subscriptions—the largest in the country’s history.

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