Eleven months into President Tinubu’s administration, Nigeria’s economic difficulties have skyrocketed to an alarming height, with some of the policies proving unfavourable to the country’s financial health and the economic wellbeing of many Nigerians. This raises a vital question: Are the acclaimed Bretton Woods neoliberal policies of the Tinubu administration actually working for the country?
Tinubu’s predecessor, Muhammadu Buhari, adopted a rather different welfarist approach that, though difficult in its own ways, brought far fewer difficulties and woes than the current administration, even over eight years. These contrasting policies reveal how political values profoundly impact governance and the country.
Buhari did not pursue the neoliberal policies that are favoured by Tinubu. He was significantly anti-Bretton Woods in his approach, and more welfarist. After assuming power in 2015, he faced pressure from the IMF and World Bank to devalue the naira and remove fuel subsidies, claiming the naira was overvalued and market forces should determine its value.
Proponents of Bretton Woods policies put forward several arguments for the adoption of their neoliberal policies, such as the following: One, unifying exchange rates and allowing naira depreciation would resolve Nigeria’s acute foreign exchange crunch and attract foreign investment. Two, an overvalued naira made Nigerian exports uncompetitive and promoted excessive reliance on imports, undermining local manufacturing and agriculture. Three, the subsidy regime created massive fiscal distortions, costing Nigeria’s government over $11 billion annually, according to the World Bank. Four, subsidies promoted inefficient over-consumption of petroleum products and cross-border smuggling rather than incentivizing investment in refining capacity. Five, Bretton Woods reforms were prescribed to enhance transparency, competitiveness, and remove inefficient subsidies/protections that promoted rent-seeking over productivity.
However, Buhari dealt with these issues dialectically without losing sight of the ultimate goal of people’s welfare. His primary concern was how these policies would affect the standard of living of ordinary Nigerians. For him, governance centered on arrangements that would best cater to the welfare of ordinary Nigerians. This welfarist approach revealed a critical element of pragmatism in economic policy and practice, a component that the current administration has widely overlooked.
To explore this subject adequately, it is pertinent to examine the results of both policies/administrations in several economic areas. Regarding exchange rates, Buhari maintained a fair rate of N460: $1 and fuel prices at N184-N200 at his exit from office. The current administration has struggled with an unprecedented rise in the exchange rates, a devalued and now undervalued naira, and an alarming hike in petrol prices in the country’s history within nine months.
As an import-dependent country, Nigeria reasonably benefited from Buhari’s foreign exchange policy, which protected local industries, especially in terms of importing production materials and keeping costs low for importers. Even at the parallel market rates, manufacturers still fared far better then than at any rates anywhere today. Part of Buhari’s welfarism was to pursue the protection of local industries in Nigeria, which explains policy actions like banning 43 items from accessing forex for importation and closing Nigeria’s borders to curb excessive smuggling activities.
Though these adoptions resulted in a supply drop, leading to price increases and inflationary pressure up to 11.85%, Buhari reduced the smuggling of rice and other items from neighboring countries, inculcating a culture of self-dependency. It also increased investment in local rice production by local and foreign investors and employment opportunities in the agricultural sector. It stemmed the rate of smuggling contraband goods, controlled the proliferation of small arms and light weapons, and reduced the influx of illegal migrants through the land borders.
Another major advantage of the Buhari strategy was the increase in government revenue collected via custom duties. The Comptroller General of the Nigerian Customs then reported that since the border closure, the Nigerian Customs was collecting an average of between ₦4.7 billion and ₦5.8 billion in daily revenue, significantly higher than it ever was. Overall public sector employment grew by 23% during Buhari’s tenure.
In contrast, Tinubu’s Bretton Woods neoliberal policies have proved detrimental to local industries’ growth for the last six months, as records indicate. For instance, since petrol subsidy was removed on his first day in office, petrol prices have tripled in the country, angering unions and causing a spike in transport costs and costs of living. The price increase has badly hit small businesses and millions of households who rely on petrol generators due to intermittent grid supply that have also dropped badly nationwide in the last few months.
The current administration’s currency devaluation further increased basic goods prices, exacerbating mass suffering and impoverishment across the country. This policy has dealt a major blow to businesses, especially manufacturers. According to the Manufacturers Association of Nigeria (MAN), over 50 manufacturing companies have shut down since June 2023 due to rising production costs. MAN’s Director-General stated that “the increase in the price of diesel, spare parts, and other inputs made operating costs unsustainable for many manufacturers.”
The Nigerian Employers Consultative Association (NECA) reported that over 700,000 manufacturing jobs have been lost since the implementation of the current exchange rate regime. Education has not been spared. The naira devaluation has made studying abroad prohibitive for many Nigerian students and families. Data from the Nigerian Universities Commission shows that the number of students granted approval to study overseas dropped by 42% between the 2022/23 and 2023/24 academic years. “With school fees now three times higher due to the exchange rate, many parents can no longer afford to train their children abroad,” stated the commission’s Executive Secretary.
Also, the erosion of purchasing power from the naira’s fall has severely impacted living costs. According to the National Bureau of Statistics, Nigeria’s inflation rate soared from 21.9% in May 2023 to 31.70% in February 2024. A Nigeria Labour Congress study found that basic commodities like rice, bread, cooking oil, and rent have registered price increases of between 60-120% since mid-2023.
Other noteworthy areas include electricity tariffs, which have surged after the fuel subsidy removal, with the electricity company passing higher operating costs to consumers. The Nigerian Electricity Regulatory Commission approved a 63.7% tariff increase for distribution companies in August 2023. According to market analytics firm SBM Intelligence, over 7 million Nigerian households were pushed below the electricity poverty line due to these tariff hikes.
The transportation sector was also among the hardest hit by the fuel subsidy removal. The Road Transport Employers Association of Nigeria reported that over 30% of commercial transport companies ceased operations due to skyrocketing fuel prices. Fares for road travel have quadrupled, according to the Nigerian Urban Reproductive Health Initiative, with many urban commuters struggling to afford transportation to workplaces. Air travel has also become increasingly unaffordable for most Nigerians, with airline operators increasing airfares by over 120% since June 2023.
Furthermore, another component of the Bretton Woods policy that raises questions about its strength is the privatization of public-owned enterprises. Under President Olusegun Obasanjo from 1999-2007, Nigeria embarked on an aggressive privatization programme of public enterprises as prescribed by the Bretton Woods institutions. Over 100 government-owned companies across sectors like telecommunications, power, petroleum refineries, and aluminum smelters were privatized or commercialized.
However, the results were largely disappointing. In many cases, the privatized entities struggled due to issues like underpriced asset valuations, lack of regulatory oversight, and private monopoly abuses, etc. For example, the privatization of the Power Holding Company of Nigeria (PHCN) in 2013 failed to improve electricity access, with generation stagnating at around 4,000MW through 2023. The Bureau of Public Enterprises reported that only 40% of the privatized companies were still operational by 2019. These assets were sold off in non-transparent ways that benefited connected insiders over ordinary Nigerians.
In contrast, President Buhari’s administration from 2015-2023 took a more welfarist and commercialization approach. “Rather than selling off national assets, we are making them work better for the people through transparency and accountability,” stated Buhari in 2021. The Petroleum Industry Act critically overhauled the NNPC and has made it a thriving oil company still largely owned by the Nigerian people.
During Obasanjo’s privatization era, the Ajaokuta Steel Mill – described as Nigeria’s largest industrial white elephant – was concessioned to private investors in 2003. However, the concession was terminated in 2008 amid disputes over operational management and funding commitments. Under Buhari’s tenure, the administration invested over $2 billion to resuscitate and finally complete Ajaokuta’s construction after decades of stalled progress. Buhari stated “We cannot keep allowing this great asset to waste” as a push was made to finally make the steel mill ready for operations. The Ajaokuta Steel Mill is a major project bequeathed by Buhari to the Tinubu administration.
As for the refineries, Obasanjo’s government privatized them in 2007, selling majority stakes to consortiums like Transcorp/Oando and Bluestar. But the new private investors struggled to revamp and operate the ailing facilities. Under Buhari, the refineries were renationalized in 2020 through NNPC at a cost of $800 million paid to the former private investors. Hundreds of millions of dollars more were spent on rehabilitation efforts to restore and boost their capacity utilization. The refineries are expected to start working again this year and this is so because of the investments made in them by the Buhari administration. The bills were paid by the Buhari administration. Buhari may not have remained in office to witness the coming to fruition of some of his works, but the fact of these achievements cannot be mistaken by those who truthfully watch and study the progression of Nigeria’s political economy.
ALSO READ: NESG, ACF partner to boost Nigeria’s energy transition plan
So, while Obasanjo’s Bretton Woods-guided privatizations provided a cash injection for government coffers, they failed to sustainably revive productivity in those assets. Buhari’s welfarist approach kept assets under state control and achieved greater results in improving their operational efficiency and commercial viability.
Buhari’s welfarist economic policies also proved enduring and resilient. Upon inheriting Nigeria’s recession-hit economy in 2015, the former president opted for expansionary fiscal policies, bolstering social spending to stabilize consumption amid the oil price crash and later during the COVID-19 pandemic. Despite criticism over ballooning deficits, initiatives like TraderMoni and the N-Power jobs programme helped mitigate the recession’s impact, with GDP rebounding by 2017. Notably, Buhari’s government negotiated a significant increase in the national minimum wage and managed debt through strategic borrowing and revenue-boosting measures, earning praise for shielding ordinary Nigerians from severe economic shocks.
In contrast, Tinubu’s administration, starting in 2023, embraced swift and disruptive economic reforms, including ending fuel subsidies and allowing market-driven pricing on energy and forex transactions, resulting in short-term hardships such as surging inflation and the loss of businesses and jobs.
Ultimately, the Bretton Woods neoliberal policies may not be working for Nigeria, and we have to deal very cautiously and decisively with the World Bank and the IMF prescriptions for us. For eight years under Buhari, there was not a single national strike in Nigeria by the Nigeria Labour Congress, in spite of the challenges of the time. Labour had no reason to go on strike because the government was welfarist. A question to ask is: Shouldn’t President Tinubu look at the values in the policies of his predecessor and see how to build on them, albeit pragmatically, rather than reinventing the wheel and creating unprecedented challenges and difficulties which, like the effects of the Bretton Woods Structural Adjustment Programme (SAP) on Nigeria’s economy in the late 1980s, may not go away anytime soon?
Rabiu Yau Ahmed is Coordinator of The Buhari Truth Collective and can be reached via email at: rabiuyau.ahmed@gmail.com
and then