Nigeria’s inflation warning exposes the challenge of turning reforms into relief

Taiwo Oyedele says Nigeria could have faced 1,000 percent inflation without the government’s economic overhaul. But the more immediate test of the reforms is whether they can restore household purchasing power and make public spending more transparent.

At the 56th Annual Accountants’ Conference of the Institute of Chartered Accountants of Nigeria in Abuja on Tuesday, the finance minister and coordinating minister of the economy warned that inflation could have reached 1,000 percent if President Bola Tinubu’s administration had not removed the petrol subsidy and reformed the foreign exchange market.

Oyedele argued that foreign exchange shortages, monetary financing and the cost of subsidising petrol had pushed the country towards a deeper crisis. “We printed plenty of naira. Plenty trillion naira was printed,” he said, attributing much of the inflationary pressure to about N30 trillion in money creation.

The 1,000 percent figure, however, is a counterfactual claim, not an observed outcome or an independently established forecast. The minister did not provide a model or assumptions to substantiate it in the remarks available. That distinction matters. The case for reform rests not on how severe an alternative crisis might have been, but on whether the policies adopted can deliver lasting price stability, stronger incomes and better living standards.

Stabilisation is not prosperity

The economic rationale for reform is clear. Fuel subsidies consumed public resources that could have funded infrastructure and social services, while multiple exchange rates and restrictions on foreign currency distorted markets and weakened confidence.

The World Bank has argued that subsidy removal and foreign exchange reform were necessary to improve Nigeria’s fiscal position and restore macroeconomic stability. The International Monetary Fund has similarly credited the reforms with reducing fiscal vulnerabilities and improving the functioning of the foreign exchange market. Both institutions have also acknowledged the pressure the adjustments placed on households and businesses.

Higher petrol prices have increased transport and distribution costs, while naira depreciation has raised the domestic cost of imported goods, machinery and production inputs. Businesses have responded by raising prices, accepting lower margins or cutting activity.

Inflation has begun to moderate. Nigeria’s headline inflation rate fell to 14.63 percent in September 2026 from 15.39 percent in August, according to the National Bureau of Statistics. Food inflation, however, remained elevated at 19.59 percent.

The distinction between a lower inflation rate and cheaper goods is crucial. Disinflation means prices are rising more slowly, not that they are falling. After years of increases in food, transport and housing costs, households can remain under severe pressure even as the inflation rate declines. The test is whether incomes and employment opportunities improve enough to restore purchasing power.

The income test

Oyedele acknowledged the strain on households, arguing that incomes must grow faster than inflation rather than prices being artificially suppressed. “We’re putting all our effort towards raising the income of the Nigerian people faster than inflation,” he said.

The objective is sound, but its success depends on wage growth, job creation and productivity. Higher nominal salaries offer little relief if food, housing, transport and electricity costs rise just as quickly. The minister also said the federal government had spent twice the amount saved from petrol subsidy removal on salary adjustments and wage awards, but did not disclose the underlying figures.

That claim demands greater transparency. How much has the government saved from subsidy removal? How much has it spent on wage adjustments and other commitments? How much of the additional revenue has translated into better public services?

These questions matter because subsidy removal redistributed costs across the economy. Households and transport operators face higher fuel expenses, while governments receive a different revenue stream. Whether the adjustment becomes socially sustainable depends partly on how effectively the resulting fiscal space is used.

Read also: Nigeria’s priority is growing incomes faster than prices, not fuel tax — Oyedele

Public money needs public scrutiny

Oyedele’s comments on cash transfers and government accounts raise a related question: can Nigerians verify how public resources are being used? The minister said the government had improved the identification of cash-transfer beneficiaries through the National Identification Number system. He defended withholding beneficiaries’ personal details on the grounds that disclosure could undermine their dignity.

Protecting privacy does not require limiting public accountability. The government can publish anonymised information on the number of beneficiaries, their geographical distribution, payments made, delivery costs and independently verified outcomes without exposing individuals’ identities. Such disclosures would help establish whether cash transfers are reaching intended recipients and cushioning the effects of higher food and fuel costs.

Oyedele also disclosed that the federal government had only recently completed the audit of its 2022 financial statements. He promised to bring outstanding accounts up to date by the first quarter of 2027 and publish subsequent audited accounts within six months of each financial year’s end.

The backlog weakens the public’s ability to assess the government’s claims about savings, expenditure and fiscal performance. Timely audited accounts allow citizens, lawmakers and investors to determine how much government raises, where the money goes and whether its commitments are sustainable. A reform programme cannot build lasting trust on improved headline indicators alone. Nigerians also need credible evidence that public resources are being managed effectively.

The evidence that matters

Nigeria’s reforms could improve investor confidence, reduce foreign exchange distortions and give businesses greater certainty when making investment decisions. But macroeconomic stability does not automatically create productive jobs, reduce poverty or improve access to essential services.

The World Bank has stressed the importance of translating stronger public revenues into better services, growth and employment. How federal and state governments allocate additional resources will therefore help determine whether stabilisation produces broader economic gains.

There is also a fiscal risk. If additional revenue is absorbed by debt servicing and recurrent expenditure without sufficient investment in productivity, the government may struggle to demonstrate the long-term value of its reforms.

The appropriate response is neither to dismiss the reforms because they have imposed immediate costs nor to accept a hypothetical 1,000 percent inflation rate as proof of their success. The evidence must come from the trajectory of real wages, employment, investment, inflation, public debt and the quality of government spending.

Oyedele’s warning makes the administration’s defence explicit: it believes its policies prevented a worse outcome. The next stage is to demonstrate that the path it chose can deliver a better one.

For Nigerians, the decisive measures are straightforward: incomes must begin to outpace living costs, public services must improve, and the government must account transparently for the use of public money. Until those gains become tangible, macroeconomic stabilisation will remain an important but incomplete achievement.