Nigeria on brink of collapse before Tinubu took over in

When Bola Tinubu assumed the Nigerian presidency in May 2023, he inherited an economy in acute distress. The incoming administration faced a fiscal hemorrhage of staggering proportions: fuel subsidies were consuming an estimated $10-15 billion annually—roughly 90% of government revenue—while the naira had collapsed to historic lows against the dollar, inflation was accelerating beyond 20%, and foreign exchange reserves had dwindled to precarious levels.

For decades, successive Nigerian governments had treated fuel subsidies as a political untouchable. The policy, ostensibly designed to protect consumers from oil price volatility, had calcified into a mechanism of state dysfunction: it incentivized smuggling of subsidized fuel to neighboring countries, starved public services of investment, and created a fiscal trap that deepened with every barrel of crude oil Nigeria exported. By 2022-2023, the contradiction had become unsustainable. The government was simultaneously broke and bankrupt—unable to pay public sector salaries reliably while hemorrhaging resources to a subsidy that primarily benefited smugglers and wealthy consumers with access to fuel stations.

Tinubu's decision to remove fuel subsidies entirely was indeed bold, but characterizing it as merely symbolic misses its economic necessity. Within months of implementation, the policy yielded measurable results: the naira stabilized from 780+ per dollar to more sustainable levels; central bank foreign exchange interventions became manageable rather than desperate; and fiscal space opened for investment in critical infrastructure and social programs. The government collected approximately $2.2 billion in additional revenue in the latter half of 2023 alone—funds that could finally be directed toward schools, hospitals, and roads rather than financing inefficient consumption.

For European investors, this moment represents a critical inflection point. Nigeria's near-collapse scenario of 2022-2023 reflected a broader pattern across African oil-exporters: economies held hostage by legacy subsidies and unable to invest in economic diversification. The subsidy removal signals a willingness to implement structural reforms, however painful their immediate social costs. This is precisely the kind of macro-stabilization that precedes sustained investment cycles.

However, the window remains narrow. The naira has stabilized but remains under pressure; inflation, while trending downward, is still elevated at 28-30% depending on measurement; and political sustainability of subsidy removal remains uncertain ahead of 2027 elections. The administration must demonstrate tangible improvements in electricity supply, road infrastructure, and port efficiency to justify the short-term hardship imposed on consumers. Without visible progress, political pressure could mount for subsidy reinstatement.

For investors in Nigerian equities, consumer goods, and financial services, the coming 18-24 months are critical. Energy-intensive sectors benefit directly from higher fuel prices (reduced input cost inflation), while logistics and manufacturing firms gain from improved fiscal capacity for infrastructure investment. Banking sector NPL ratios should improve as macro stability translates to lower borrowing costs for businesses.

The subsidy removal was not a victory lap—it was emergency triage. Its success depends on whether the government can convert fiscal breathing room into tangible economic transformation.