Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has emphasized that without the critical reforms introduced by President Bola Tinubu over the past 18 months, Nigeria would have faced a severe economic downturn.
According to Oyedele, the elimination of fuel subsidies and the unification of the foreign exchange rate—though challenging—have been essential in restoring stability and rebuilding investor confidence in Nigeria’s economy.
“These structural changes have provided much-needed market stability and boosted confidence,” Oyedele stated during an economic outlook session organized by The Covenant Nation on Saturday. He pointed to short-term foreign portfolio investment (FPI) as a key indicator of market trust, while noting that foreign direct investment (FDI) represents a deeper, long-term commitment by investors.
Investment Trends Reflect Market Confidence
Data from the National Bureau of Statistics (NBS) revealed that FPI was the largest form of capital inflow in 2024, reaching $1.4 billion in the second quarter before declining by 35.9% to $899.3 million in the third quarter. On the other hand, FDI remained relatively low, with inflows totaling $103.82 million by September 2024, reflecting lingering caution among long-term investors.
Oyedele argued that Nigeria’s pre-reform economic framework was unsustainable, with subsidies consuming a significant portion of government revenue and distorting the true economic picture.
“We were living in an illusion before the reforms. Two years ago, the exchange rate fluctuated between N450 and N750 to a dollar depending on the source, and petrol prices were below N200 per liter. But were those numbers realistic?” he questioned.
The Burden of Subsidies and Fiscal Challenges
He acknowledged that while subsidies can be beneficial if well-managed and sustainable, Nigeria’s reliance on them created an artificial sense of economic stability. He highlighted that, prior to the reforms, the country was using 96% of its revenue solely to service debt, leaving little room for actual debt repayment or development projects.
“All our revenue was going into debt servicing, not repayment. We were only managing to stay afloat,” Oyedele warned, drawing parallels to economic crises in countries like Sri Lanka and Venezuela.
The Hidden Costs of Monetary Policies
The tax policy expert criticized previous government strategies that relied heavily on monetary expansion to finance expenditures, which he said led to inflation and currency depreciation.
“We printed nearly N40 trillion, with interest, and yet we were shocked by inflation. Many Nigerians fail to understand that the invisible forces behind economic policies directly influence what we experience,” he explained.
A Positive Outlook for Nigeria’s Economy
Despite the initial economic pain caused by these reforms, Oyedele remains optimistic about Nigeria’s future. He believes that the worst is over, and if the government stays the course, the economy is well-positioned for growth and resilience.
“I strongly believe, based on available data, that we’ve turned a corner, and things will only improve from here,” he concluded.
