By Lanre Alabi
The stakes are usually higher in a complex economy with multifaceted issues intertwined in politics and social criminality, and uneasy lies an economy where the players technically direct their anger at the state.
In a complex economic situation such as ours, removing fuel subsidy and exchange rate arbitrage usually don’t mix well with inflation. It calls for a raft of smart policy ideas and sometimes a change in policies as needs evolve.
Nigeria’s economy faces tough times not because there is absence of policies that can stimulate development or lack of resources but the presence of too many contending forces impinging on its development, growth and impact.
The Nigerian economy is being defined at the moment by various government policies with various degrees of success, but it still needs long-term sustainability and commitment, and patriotism from wider stakeholders.
On the list of policies is the deregulation of the downstream oil sector, which is fueled by the Petroleum Industry Act and the protection it granted key local players, predominantly headlined at the moment by Dangote Refinery.
The resistance to the incentives granted by the Federal Government to Dangote has also directly impacted the businesses of independent fuel marketers, whose trade model is fuel importation and survival by cost margin. With Dangote coming on stream, their businesses are technically grounded as Dangote did not find a place for them in its value chain.
This has created bad blood between the two with accusations of sabotage and counteraccusations of monopolistic tendencies. To cap it all, the recent imposition of 15 % import tax on imported fuel thus strengthens the capacity of Dangote refinery to operate more competitively and thus puts the fuel importers on an existential threat.
Is Dangote Refinery a win for Nigeria? The answer is yes. The Refinery’s source of raw materials has been locked in. the primary and secondary sources are within easy reach. With its Single Point Mooring (SPM) facility, and the deep sea port nearby, the delivery system has also been locked in.
With its huge production capacity, and its distribution strategy firmly in place, the company is primed to service the largest market in Africa. Compared to Dangote, nothing is nearby for the independent marketers. Importation of crude from far away, and a cumbersome/ costlier delivery process to the depots put them at a disadvantage.
Their operations had cost government huge resources in the past and their cartel nature does not give the economy comfort. Though that area provided thousands of jobs, it is not economically sustainable. Smart investors in that business sold their tank farms long ago while those that remained are looking for either a miracle or a showdown.
Can the issue be resolved? Yes. They should have their own SPM to eliminate the transportation of fuel from the high sea to their tank farms. A cluster of tank farms can achieve it. They can buy from Dangote which means the cost of transportation will reduce.
A second option is for Dangote to lay pipes to their tank farms. With the Atlas Cove and its pipes sabotaged, that could be a far-fetched solution. Recently the NNPC was reported to have spent N17.5 Trillion securing fuel pipelines in 12 months while non-working refineries gulped N3 Trillion (The Punch). If it is expensive for the Federal Government, I see no one investing in pipelines.
Somehow, the government needs to have a role for all the stakeholders as they all have key roles to play in the economic transformation of the country in one way or the other. The fuel importers have made huge infrastructure investments and would suffer hugely if one policy just collapsed the investment they made over time. A partnership relationship should be worked out between the two groups, and a mutually beneficial middle way attained. The marketers should stop grandstanding
Food security is one of Nigeria’s intervention policies. Trillions of Naira has been spent over 10 years. Just as farming became a lucrative business, a combination of forces are militating against it. First is the economic forces.
Middle men were mopping up and hiking the prices. Secondly, insecurity in the farming areas is leading the farmers to abandon their trade. With these two forces combining to make prices of food unaffordable to the common man, the government had to step in to adjust its policy to enable the people to ride out the tough times.
Reacting to public outcry over the high cost of food, the Federal Government in early 2025 commenced massive importation of staple foods such as rice, maize, millet, and palm oil. This was in contrast to the policy, which banned the importation of these items during the Buhari regime.
The rationale then was simple. Nigeria has the capacity to produce these foods in enough quantity, and local initiatives should be encouraged to boost supply and encourage the value chain.  This was the first time the country came up with such policies to encourage local supplies and reap from the wider multiplier effect. But the initiative suffered a huge setback as it failed to achieve the core objective – affordable prices for foodstuffs.
There were foodstuffs really produced locally, but they came to the market with high price tags. The incentives the government granted the local farmers and the SMEs in agriculture failed to achieve the deliverables. This was partly due to accompanied high cost of doing the business of agriculture, insecurity in farming areas and largely to greedy intermediaries who caused artificial food scarcity.
The price of foodstuffs hit the roof top forcing people to spend close to 40 percent of their earnings on feeding. This forced the government to reverse the policy early this year.
However, mass importation has impacted the price of locally supplied foods and eroded the income of farmers so much that they now suffer huge losses. Nigerians have gradually resorted to importation and patronage of imported foodstuffs. Nigerian small farm holders cannot compete with the imported food items because of the associated costs of doing business. These costs are fuel, transportation, tractors, and wages which are on the rise.
For the government, mass importation was a strategy to stem the looming unrest fueled by political upheavals, insecurity, high cost of living and loss of jobs in some sectors as the journey to put the economy on a solid pedestal is taking shape. The government needs to look into all these issues and strike a balance. There is need to encourage and keep the local farmers and agricultural value investors busy.
The new tax regime, effective January 2026, will also be a defining moment for Nigeria, especially the middle class and the high-net-worth individuals. The new tax law will demand accountability and transparency from the taxpayers. With the NIN and BVN successfully linked, there is no more hiding place for taxable individuals and businesses. While the overall impact of this is not known, it will surely impact on how businesses are being run.
High unemployment is still a problem, especially among the large youth population, and a significant portion of the population lives below the poverty line (over 46% in 2023). Although the situation is gradually changing with more foreign direct investment coming in, overall economic growth has not been sufficient to create enough quality jobs.
Complaints about economic hardship still persist but this will begin to thaw over a period of time as prices of basic necessities continue to go down. Already, Nigeria’s annual inflation rate fell further to 16.05% in October 2025, the softest since March 2022, from 18.02% in the prior month. This marked the seventh consecutive month of slowing price growth (source: Trading Economics).
Nigeria’s GDP is growing, with a 4.23% year-on-year increase in the second quarter of 2025, which was its fastest pace in about four years. This growth is driven by strong performance in the oil, industry, and agriculture sectors. For impact on the economic life of average Nigerians, the hardship for the population will take some time to ease
For the manufacturers, cost of power and transportation coupled with a still-too-high but stable forex are yet to make them smile.
Infrastructure
Nigeria faces a significant infrastructure deficit, with its stock at 30% of GDP compared to the World Bank’s 70% benchmark. Despite this, there are ongoing developments in various sectors, including road and rail expansion, urban projects, healthcare facilities, and telecommunications, alongside efforts to revive stalled projects. Challenges to development include inadequate funding, poor maintenance, vandalism, corruption, and bureaucratic delays. The states are not left behind as fat monthly allocations are translating into more investments in infrastructure development. But with the deficit gap so wide, the impact are still too little.
Effects of Different Crises on the Economy
For decades the underground economy – illegal businesses had held sway. Illegal mining, arbitrage, criminality, drugs, fake product, have for long created an underground economy with so much liquidity to destabilize the system. Illegal businesses worldwide have the tendency to invest in politics and insecurity. This is seen in the countries where drug cartels and illegal mining hold sway. With kidnapping and banditry on the rise in the northern region, there is no doubt the economic trajectory of the nation will be affected if the problems are not addressed.
Outlook
The current administration has implemented major reforms, including the removal of the fuel subsidy and floating the naira, which international bodies like the World Bank have praised as necessary long-term measures. However, these policies have contributed to short-term hardship for the population by increasing living costs.
Efforts are underway to diversify the economy, improve the business climate, and attract investment in non-oil sectors like agriculture, technology, and manufacturing. The success of these reforms hinges on effective and transparent implementation, improved security, and enhanced social safety nets to cushion the impact on vulnerable citizens.
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