Nigeria’s president, Bola Tinubu, is expected to remain in power until at least 2027, when his first term ends, but his time in office will be highly testing. An inescapable problem will be his weak mandate; he won only 36.6% of the popular vote, on a turnout of 27%.
Only 8.8m Nigerians voted for him, out of a population estimated at just over 220m. Despite his low popularity, Mr Tinubu has embarked on the biggest economic shake-up of a generation, rapidly rolling out market reforms and dismantling vehicles for patronage and corruption. In theory these reforms hold the key to bringing Nigeria onto a higher growth path, but in EIU’s view he moved too hard and too fast.
Political and economic outlook
- Nigeria is the joint-largest economy in Sub-Saharan Africa, an oil exporter and an OPEC
- member. Hydrocarbons generate about 50% of government revenue and more than 80% of
- export receipts, but agriculture and services dwarf industry as contributors to GDP.
- Bola Tinubu, the candidate of the ruling party, the All Progressives Congress, won the
- February presidential election with only 36.6% of the vote. His meagre political capital is
- already wearing thin as a daring economic reform agenda clashes with unions, and EIU views
- the momentum for further market reform as being absent.
- Insecurity is chronic in many areas, with the security forces too overstretched to counter
- multiple security crises effectively. High inflation, low economic growth and unpopular market
- reforms present substantial political stability risks in the context. Labour unions are likely to be
- active, with a high risk of industrial action that affects the economy.
- Economic growth will be slow in 2024 as a new bout of inflationary pressure and an
- intensification of monetary tightening lead to a contraction in domestic demand. Growth will
- accelerate to a multi-year high in 2025 as the shock of market reform passes, and will be boosted
- by investment in the recently deregulated power sector.
- Foreign-exchange scarcity will persist in the short term. The Central Bank of Nigeria (CBN) has
- reverted to heavier currency management after having briefly switched to a “managed float” in
- June, and a freely-traded naira is not expected even in the long term.
- Although production is well below the boom years of the early 2010s, Nigeria’s oil and gas
- sector will remain crucial to the prospects of the wider economy, dominating the export profile
- and accounting for about half of government revenue.
- Nigeria is a signatory to the African Continental Free-Trade Area agreement. However, the
- government will take a protectionist approach to regional trade and will do little to encourage
- regional trade, beyond meeting its obligations on tariff cuts.
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