Nigeria Year Three Under Tinubu: Reform Cohort, Political Economy, and the 2027 Runway

Reform cohort and the Emefiele inheritance #

The Buhari second term left office in May 2023 with a Central Bank balance sheet distorted by 22.7 trillion naira of Ways and Means advances to the federal government, a multi-window FX regime that fragmented price discovery across NAFEX, the Investors and Exporters window, the SMIS auction, and the parallel market, and a petrol subsidy that consumed 4.39 trillion naira in 2022 alone. Governor Godwin Emefiele was suspended on 9 June 2023 and subsequently arraigned. The 2022 to 2023 naira redesign episode compressed currency in circulation by roughly 75 percent before the Supreme Court reversed the policy, and NNPCL ran negative net federation remittances through most of the same period.

Olayemi Cardoso was confirmed as CBN Governor in September 2023 with a mandate to clear the FX backlog estimated by the IMF at roughly 7 billion dollars in trapped portfolio and dividend remittances, recapitalize the deposit money banks, and rebuild the Monetary Policy Committee as a functioning rate-setting body. By March 2024 the FX backlog had been substantially cleared, the MPR had been raised in three successive moves from 18.75 percent to 24.75 percent, and the bank recapitalization circular had set new minimum capital thresholds at 500 billion naira for international banks, 200 billion naira for national banks, and 50 billion naira for regional banks. The cohort that formed around Cardoso, Wale Edun at Finance, Zacch Adedeji at FIRS, Bayo Ojulari at NNPCL, and Doris Uzoka-Anite at Industry, has operated as a coordinated economic management team with a shared sequencing logic: subsidy and FX shocks first, recapitalization and tax reform second, social protection and growth packages third.

Twin shocks and the inflation peak #

The petroleum motor spirit subsidy was removed in the inaugural address on 29 May 2023, with pump prices moving from a regulated 185 naira per liter to a deregulated 537 naira per liter on 1 June 2023, and onward to a peak of approximately 1,050 naira per liter by mid-2024 before stabilizing in a 950 to 1,020 naira band as Dangote refinery output disciplined import parity pricing. The naira float was operationalized on 14 June 2023 through a CBN circular that consolidated all FX windows into the Nigerian Autonomous Foreign Exchange Market. The official rate moved from 463.38 per dollar on 13 June to 750 by month-end and to 1,500 plus by the third quarter of 2024.

Headline CPI accelerated from 22.41 percent year-over-year in May 2023 to a peak of 34.80 percent in June 2024 on the rebased series. Food inflation peaked at 40.87 percent in March 2024 and core inflation at 27.04 percent in May 2024. The NBS rebased the CPI basket in January 2025, which produced an apparent step-down to 24.48 percent that reflected methodology rather than underlying price dynamics. By March 2026 headline inflation printed at 23.8 percent, food inflation at roughly 25.5 percent, and core inflation at 19.7 percent. Real policy rates are now positive on headline and decisively positive on core. The table below traces the inflation and FX trajectory across the reform period.

Oil production recovery and Dangote refinery commissioning #

Crude and condensate production averaged 1.54 million barrels per day in the first quarter of 2026 according to the Nigerian Upstream Petroleum Regulatory Commission, with crude alone at 1.34 million barrels per day. This sits below the 2010s peak above 2.0 million barrels per day, below the OPEC+ allocation of 1.5 million barrels per day, but well above the 2022 trough near 1.0 million barrels per day during the Niger Delta theft crisis. The recovery is the product of a security campaign that reopened the Trans-Niger Pipeline in late 2023, the divestment of onshore assets from Shell, ExxonMobil, and Equinor to indigenous operators including Renaissance Africa Energy and Seplat Energy, and the Pre-Petroleum Industry Act upstream contract conversions that have moved roughly 60 percent of legacy joint venture and production sharing contract acreage onto Petroleum Industry Act 2021 fiscal terms.

The Dangote Petroleum Refinery commissioned its 650,000 barrel per day single train refinery in stages through 2024. First petrol production was achieved in September 2024 and the refinery reached approximately 85 percent of nameplate capacity by the first quarter of 2026. Nigeria has shifted from importing roughly 24 million liters per day of petrol pre-Dangote to importing under 6 million liters per day in early 2026, and Dangote is now exporting jet fuel and gasoil into West African and European markets. Local currency-denominated fuel pricing, introduced in October 2024 under a tripartite arrangement among NNPCL, Dangote, and the Federal Ministry of Finance, has stabilized pump prices and removed a recurring source of FX demand from the parallel market. NNPCL remitted approximately 3.1 trillion naira to the federation account in 2025, the first sustained positive net contribution in five years.

FX backlog clearance, NAFEM, and the dollar bond series #

The CBN cleared roughly 7 billion dollars of verified FX backlog between October 2023 and June 2024, with a forensic audit conducted by Deloitte that disqualified approximately 2.4 billion dollars of unsubstantiated claims. The clearance was financed through swap lines, multilateral disbursements from the World Bank and African Development Bank, and partial monetization of NLNG dividend receipts. The Nigerian Autonomous Foreign Exchange Market replaced the Investors and Exporters window with a willing buyer, willing seller architecture supported by Bloomberg BMatch execution, compressing the bid-ask spread inside the official window to under 50 basis points on most trading days.

The Bureau de Change segment was restructured in 2024 with minimum capital for tier-one operators raised to 2 billion naira, the licensed population reduced from 5,500 to roughly 1,400, and same-day reporting requirements imposed through a CBN circular. The parallel market premium, which had peaked above 60 percent in mid-2023, compressed to under 4 percent by the first quarter of 2026. The Nigerian Exchange Limited launched a domestic dollar-denominated corporate bond series in 2024, with first issuances by Ecobank Nigeria, MTN Nigeria, and Dangote Cement that collectively raised 1.4 billion dollars from local institutional investors holding domiciliary balances. A sovereign domestic dollar bond is under active consideration by the DMO for the second half of 2026.

Tax reform, FIRS digital stack, and the revenue trajectory #

The Nigeria Tax Reform Bills, drafted by the Presidential Fiscal Policy and Tax Reform Committee chaired by Taiwo Oyedele and signed into law in late 2025 after a contentious northern governors caucus negotiation, restructured the system on four axes. The value added tax rate path was set to rise from 7.5 percent to 10 percent in 2025, 12.5 percent in 2026, and 15 percent by 2030, with a broadened base and a clearer input credit framework. The corporate income tax rate was harmonized and a development levy consolidated five separate earmarked taxes into a single 4 percent levy. Personal income tax brackets were restructured with a higher zero-tax threshold for low-income earners. The VAT distribution formula between federal, state, and local governments was rebalanced toward derivation, which produced the political fight that delayed passage by approximately nine months.

FIRS under Zacch Adedeji has rebuilt the revenue collection stack on a digital architecture that integrates the corporate affairs commission registry, customs Single Window data, banking transaction reporting under the bank verification number system, and a unified Tax Identification Number. Tax-to-GDP rose from 9.4 percent in 2022 to roughly 13.5 percent in 2025, with a 2026 target of 15 percent. The collection improvement reflects compliance gains rather than rate increases, with non-oil revenue growing approximately 41 percent in 2024 and a further 28 percent in 2025 in nominal terms. The combined effect of subsidy removal, FX revaluation gains, FIRS digital expansion, and NNPCL remittance recovery has narrowed the consolidated federal fiscal deficit from 6.1 percent of GDP in 2022 to roughly 4.2 percent in the 2026 budget framework. Federal government debt service to revenue has fallen from a peak above 96 percent in 2022 to approximately 64 percent in 2026, the first sustainable level in a decade.

Energy access, telecom tariffs, and the Middle Belt food economy #

The Rural Electrification Agency under the Sustainable Energy for All action agenda has expanded the Nigeria Electrification Project mini-grid portfolio to roughly 250 deployed sites serving an estimated 1.4 million people by the first quarter of 2026, with World Bank and African Development Bank financing of 550 million dollars combined. The productive use of energy component has begun to deliver enterprise creation in agricultural processing clusters in Kaduna, Niger, and Cross River states. Grid power remains constrained by transmission and gas supply bottlenecks, with peak generation rarely exceeding 5,200 megawatts against installed capacity of approximately 13,000 megawatts. Telecom tariffs were adjusted in January 2025 by approximately 50 percent, the first regulated increase since 2013, after MTN Nigeria, Airtel Africa Nigeria, Globacom, and 9mobile pressed the Nigerian Communications Commission to reflect naira depreciation against dollar-denominated capex and tower lease obligations.

The Middle Belt food economy remains the most exposed link in the disinflation chain. Banditry in Zamfara, Katsina, Kaduna, Sokoto, and Niger states, and Boko Haram and Islamic State West Africa Province activity in the northeast, displaced an estimated 3.4 million farmers across the 2024 and 2025 planting seasons. The Nigeria Incentive-Based Risk Sharing System for Agricultural Lending Pre-Anchor Borrowers Programme, NIRSAL P-AADS, has financed roughly 1.2 million hectares of dry-season cultivation under a structured input and offtake model since 2024. The fertilizer subsidy regime was overhauled in late 2024 with a shift from blanket producer subsidies to targeted input vouchers delivered through the National Agricultural Land Development Authority. Food inflation rolled over in mid-2025 but remains the principal upside risk to the disinflation path.

2027 election positioning and the reform durability question #

The 2027 general elections will define how much of the reform stack survives. Atiku Abubakar in the Peoples Democratic Party retains a national structure and a northern base but faces the same internal succession contest that has defined the PDP since 2015. Peter Obi, whose Labour Party run in 2023 collected 6.1 million votes and carried Lagos, Abia, and the Federal Capital Territory, is negotiating a third-force coalition vehicle combining Labour, the African Democratic Congress, and rump PDP elements. The All Progressives Congress internal succession is constrained by the zoning convention that points toward a northern candidate after Tinubu's southern term, with Vice President Kashim Shettima, Nasir El-Rufai, and Babagana Zulum each in early positioning.

The reform durability question is structural rather than electoral. The subsidy is not returning at scale because the fiscal arithmetic that enabled it no longer exists. The FX regime is not reversing because the BDC channel has been dismantled. The tax reform is locked in by federal law. The harder questions sit around the 2027 budget framework, pre-election cash transfer expansion, the contingent liability stack at NNPCL, and the political cost of holding the MPR through a campaign that will weaponize cost of living. Sovereign creditors should price the reform cohort as durable through 2027 with a 70 to 75 percent confidence interval, holding Brent above 65 dollars. Engage with us through the Argus and Sisyphus desks for sovereign credit, FX hedging, and 2027 scenario analysis.

Sources #

• Monetary Policy Committee Communiques and FX Market Reports
• 2026 Federal Budget Framework and Medium Term Expenditure Framework
• Consumer Price Index and Inflation Reports (rebased basket from January 2025)
• Nigeria 2025 Article IV Consultation Staff Report
• Nigeria Development Update and Public Finance Review
• Federal Republic of Nigeria Sovereign Rating Reports
• Federal Republic of Nigeria Long-Term Issuer Default Rating Action
• Nigeria Sovereign Credit Opinion and Annual Update
• Nigeria reform coverage on subsidy, FX, and tax bills 2023 to 2026
• Tinubu reform tracker, FIRS, NNPCL, and 2027 politics coverage