For Nigeria, it’s time to don the work boots, not the laurels

Leading economist Bismarck Rewane is not given to easy optimism, which is precisely why his assertion that Nigeria’s economic recovery is now “tangible” demands serious attention.

The numbers, as presented to the Lagos Business School this month, are indeed compelling. Fiscal consolidation is gaining traction after the government’s shock therapy package of fuel subsidy removal and exchange rate liberalisation. The gigantic Dangote refinery is up and running and has transformed Nigeria from a net importer of petroleum products to a net exporter. Exporting petrol from Nigeria to the United States is no small feat.

“Credit is due to the current administration for demonstrating the political spine required to undertake politically painful structural reforms.”

GDP growth is also ticking up. The 4.23 percent expansion in second-quarter GDP is not only the fastest rate in four years but also the first time in the same period that growth has exceeded population growth.

Economic momentum is accelerating, validated by the Purchasing Managers Index (PMI), which has posted a strong, sustained expansion for three consecutive months through September. The index peaked at 54.2 in August, following 52.7 in July, and settled at 53.4 in the final month, a performance that robustly signals a faster pace of economic growth is expected to materialise in the third quarter.

The naira has also found stability, helped by a record trade surplus in the first half of the year ($8.15 billion / N12.64 trillion) and rising external reserves, which are expected to close the year at $44 billion from a current $42 billion. At under N1500 per US dollar, Rewane estimates that the naira is undervalued by 21.86% and the fair value should be N1,430. According to him, the currency is expected to trade toward its fair value within 2–3 years, if there are no distortions.

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The relentless creep of inflation is also slowing its march, cooling to 18.02 percent in September, with food prices easing. Food inflation dropped to 16.87 percent from 21.87 percent in August, following a rapid decline in maize and grain prices.

Credit is due to the current administration for demonstrating the political spine required to undertake politically painful structural reforms.

For a nation long accustomed to false dawns, this moment feels different. It is a shift, as Rewane notes, rooted not just in growth but in changing economic fundamentals. Yet, hope is a notoriously fickle commodity in the corridors of power, and one need only glance at the global historical ledger to see how swiftly such promising trajectories can be undone by familiar, self-inflicted wounds.

The success of this nascent recovery hinges less on market dynamics and more on whether Abuja heeds the three ancient warnings Rewane astutely flags: high governance costs, oil volatility, and the paralysing power deficit. These are not mere risks; they are structural malignancies that have historically brought nations to their knees.

The governance bloat and the Hellenic lesson

The most insidious threat is the ballooning cost of governance and the resulting debt pile, which has expanded exponentially from $28 billion to nearly $100 billion (N152 trillion) in a generation.

Nigeria’s spiralling cost of governance, which has surged from just N27.7 billion in 1998 to an estimated N54.99 trillion today, demonstrates an alarming governmental appetite for consumption. This financial expansion acts as a perpetual drain on national resources, systematically diverting crucial capital away from productive investments needed to sustain the country’s economic recovery.

If we require a cautionary tale, look to Greece before the 2010 financial crisis. The Hellenic Republic’s debt spiral was not simply a factor of global markets; it was the direct result of a political establishment’s systematic failure to curb patronage, civil service bloat, and unsustainable pension liabilities. Every euro of tax revenue was swallowed by a sclerotic bureaucracy designed to serve political ends rather than market efficiency. Greece had a “recovery” period in the early 2000s, but because it could not shrink the state or curtail the cost of its political class, it remained structurally fragile. When the tide went out, the nation was left bankrupt, forcing a decade of humiliating, externally mandated austerity. Nigeria must realise that a government that is too expensive to run is ultimately a government that the nation cannot afford to keep.

The oil windfall trap of Caracas

Rewane rightly cautions against a sharp drop in oil prices. This is not a geopolitical risk; it is a structural dependency. Every Nigerian finance minister has fought the ghost of the “Dutch Disease”, which is the phenomenon where resource revenue strengthens the currency, renders local manufacturing uncompetitive, and makes the state lethargic in its pursuit of non-oil tax revenue.

But for the starkest warning, consider Venezuela. Despite holding the world’s largest oil reserves, its catastrophic economic collapse was engineered by an almost total reliance on crude exports to fund government spending. When oil prices collapsed in 2014, the state had no diversified tax base, no competitive manufacturing sector, and no fiscal buffer. The result was hyperinflation, mass exodus, and the shredding of the social contract. The Naira’s recent stability and rising reserves are excellent, but they are a shield, not an engine. Until Nigeria’s economy is structurally indifferent to the price of Bonny Light crude, its recovery will remain fundamentally fragile.

Nigeria is, however, aggressively restructuring its fiscal foundation, reducing reliance on crude oil revenue. This year, non-oil revenues have already surpassed oil receipts to account for the bulk of government income. Furthermore, forthcoming tax reforms are poised to deliver an estimated N1 trillion to the government’s coffers next year, significantly reinforcing this critical shift toward a more diversified and sustainable revenue base. Efforts to grow non-oil revenues should be sustained with more reforms like privatisation or concession of redundant government assets.

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The South African stranglehold

Finally, there is the power sector deficit. No amount of fiscal prudence or foreign portfolio investment will secure sustainable growth if factories cannot run, logistics chains seize up, and small businesses cannot power their computers.

The most proximate and painful global example is South Africa’s Eskom crisis. Chronic corruption, poor maintenance, and political interference at the state power utility have institutionalised “load shedding”, crippling the continent’s most industrialised economy.

The resulting energy insecurity has directly capped South Africa’s GDP growth potential for over a decade.

In the current Nigerian context, the power deficit is not a regulatory hurdle; it is a hard ceiling on economic ambition. The recommendations for debt forbearance and asset sales in the power sector are critical, as they are the emergency surgery needed to remove this ceiling before it crushes the economy’s new momentum.

The good news, as Rewane notes, is empirically sound. The groundwork has been laid. But the hard work, as the adage goes, begins when the initial applause ends. If this administration fails to aggressively cut the cost of governance and reform the critical infrastructure that empowers the real economy, then the historical precedent is clear: no amount of external reserve growth can outrun internal decay.

Indeed, as more ‘fish’ are netted in the tax dragnet, the reciprocal demand for accountability and prudence will surely become deafening. The Nigerian public, now paying the full cost of the currency and fuel market reforms, will demand a visible return on their sacrifice. If the cost of governance is not slashed to match the renewed fiscal discipline, this recovery will not just be derailed; it will be deemed yet another spectacular failure of stewardship.

The administration has earned its applause, but now is the time to don the work boots, not the laurels.