Osaro Okunbowa: Beyond the pain – What Nigeria’s reform numbers are beginning to show  

Okunbowa

For millions of Nigerians, reforms of the past three years have been experienced less as policy than as pressure. They have been felt in higher petrol prices, rising food costs, more expensive credit and a sharply adjusted naira. For businesses, the transition brought higher operating costs and pricing decisions. For households, it tested stretched incomes. Yet the Federal Government’s Reform Scorecard suggests that beneath these pressures, parts of the economy are beginning to stabilise.

At the center of the adjustment was the removal of the petrol subsidy and the dismantling of a fragmented foreign-exchange system that encouraged arbitrage while placing growing pressure on public finances. Between June 2023 and December 2025, subsidy savings generated ₦15.8 trillion for the Federation. Of this, ₦5.4 trillion accrued to the Federal Government, while states and local governments received a combined ₦10.4 trillion.

That distinction matters because the reforms have altered the fiscal position of subnational governments. In 2023, 27 states could not reliably meet salary obligations. By 2026, the scorecard records none in that position. For civil servants, pensioners and businesses dependent on government activity, stronger cash flow reaches far beyond accounting tables.

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At the federal level, the reforms created additional room for expenditure during considerable economic strain. The government recorded ₦20.4 trillion in incremental resources, comprising ₦5.4 trillion from its share of subsidy savings, ₦3.1 trillion in other incremental revenue and ₦11.9 trillion in borrowing. How that money was deployed is equally important. Of ₦30.64 trillion in incremental expenditure, ₦9.39 trillion went to wage adjustments, minimum-wage increases and allowances, while ₦6.47 trillion was directed to strategic infrastructure. The increased naira cost of servicing external debt absorbed ₦9.37 trillion. Federal wage adjustments alone exceeded the Federal Government’s subsidy savings, while the national minimum wage rose from ₦30,000 to ₦70,000.

Other indicators point to an improving fiscal position. Debt service, equivalent to 100 per cent of revenue in 2022, is projected at 50 per cent in 2026. Ways and Means financing, with a legacy stock of ₦30 trillion, has been curtailed, while Nigeria’s tax-to-GDP ratio has risen from below 10 per cent to around 12.5 per cent.

External buffers have strengthened considerably. Gross foreign reserves rose from approximately $35 billion in May 2023 to $52.5 billion by July 2026, while net reserves increased from about $3 billion to $34.8 billion. The gap between the official and parallel foreign-exchange markets, previously above 60 per cent, has narrowed to less than 5 per cent.

Capital flows are responding. Total capital importation increased from $1.13 billion in the first quarter of 2023 to $10.37 billion in the first quarter of 2026. Foreign direct investment rose from $895 million in 2022 to $4.01 billion in 2025, while stock-market capitalisation expanded from about ₦31 trillion to roughly ₦150 trillion by June 2026.

The productive economy is also showing signs of improvement. Real GDP growth increased from 2.31 per cent in the first quarter of 2023 to 3.89 per cent in the first quarter of 2026. Non-oil growth is projected at about 4 per cent, while manufacturing expanded by 3.29 per cent.

Still, the reform story remains incomplete. Petrol sells for roughly ₦1,100 to ₦1,400 per litre. Monetary policy remains tight, with the policy rate at 26.5 per cent. Poverty remains high and household welfare is classified as a work in progress. Food inflation has eased from 24.82 per cent to 17.52 per cent, but that does not mean food has become cheap; it means prices are rising more slowly.

That distinction defines the next phase of Nigeria’s reform story. The administration points to stronger reserves, improving growth, healthier fiscal ratios, recovering capital flows and a more functional foreign-exchange market. These are foundations. But macroeconomic repair becomes durable only when it changes household circumstances through purchasing power, jobs and lower living costs. The numbers suggest that stabilisation is taking hold. The task now is ensuring Nigerians can feel it in daily life.