Professor of Economics at Lagos Business School (LBS). Professor Bongo Adi has said Nigeria’s macroeconomic indicators are improving, citing a stabilising exchange rate and easing inflation, while also noting that recent reforms appear to be strengthening overall economic conditions, even though concerns remain about the impact on citizens facing high living costs.
Prof. Adi said this in an interview with ARISE NEWS where he discussed Nigeria’s 2026 fiscal policy.
“I think it speaks to the micro more than the macro. I think we’ve had a lot on the macro side because if you look at and analyze the system as it is today, you will notice that everything seems to be very strong on the macro side. We have all the indicators pointing upwards; the scenery has boosted significantly and very strongly. We also have the exchange rate that has somehow steadied for quite a long time now, and then the parallel market and official rate gap has narrowed significantly.
“On the macro side, I think things have been looking up. Of course, inflation has been dropping, even though that is now being challenged by what is going on in the Gulf region,” he noted.
Professor Adi explained that tariff reductions may not translate quickly into lower prices for consumers, noting that current economic conditions limit purchasing power.
“This is not a time many Nigerians are buying cars because the income—if you look at per capita income—it has shrunk significantly. And, of course, we haven’t seen the data on unemployment in recent times, but if you go by anecdotal evidence, you will know that unemployment is on the high side. So, that’s not an economy where people will be buying a lot of vehicles.”
He added that while the tariff reduction policy on imports such as vehicles, rice, sugar and other commodities is designed to improve welfare through the supply side, stronger and faster relief would come from demand-side measures that increase household income and spending power.
“What I see here, we’re looking at it as a kind of supply-side policy to really increase the welfare of citizens. But I think what would be of more impact would be from the demand side. And what would that demand side be? Having a policy that puts more money in the pocket of people. One of them would be the removal of subsidy one way or the other. I mean, the return of the subsidy, whatever name they call it; that would really serve to increase living standards and improve the welfare of citizens in the shortest period of time,” he suggested.
According to him, Nigeria’s high inequality means benefits from such policies may not reach ordinary citizens effectively.
“Now, another thing that happens with an economy where inequality is very high, as it is in Nigeria today—we have inequality, if you measure it by the Gini coefficient, it’s around 50%. Inequality goes from 0 to 1 in the measurement; 0 means that it’s equal distribution, everybody has the same proportion of income or resources. When it is 1, it means that just one individual dominates everything. 50 means that 50% of the population control everything and then the rest of the 50 have just nothing, to put it in layman’s terms. That tells you that a lot of people really have nothing. And then the poverty rate, everybody knows what it is: many Nigerians, 65% or so of the citizens, live below $2 a day. That’s huge,” he noted.
According to the economics expert, reducing these costs would help ensure that government interventions translate more effectively into improved welfare for ordinary Nigerians.
“What I think would be to the benefit of the people is if we go in the direction of some demand-side, increase aggregate demand by reducing the cost of living. What could do that better than some reimbursement of subsidy, one way or the other, to reduce the cost of energy? That will directly impact transportation. When you talk about the inputs to production and the inputs to living standards, transportation is one and energy is the other. If we can reduce that—the cost of transportation and the cost of energy—then you will now be sure that government policy or government actions are having a positive impact on the welfare of citizens.”
Speaking on the impact of tariff reductions on agriculture, Prof. Adi said Nigeria’s past protectionist policies delivered mixed outcomes, with only limited success recorded in rice and wheat production. He explained that while such measures were intended to support local farmers, productivity gains were constrained by dependence on imported inputs.
“There is no policy that doesn’t have winners and losers, however you look at it. So, the way I would look at that is, you know, we go back some few years ago. There were these protectionist policies whereby government slammed tariffs on the import of those commodities under the infant industry protection measures. Import substitution—that’s what the Buhari administration under the Central Bank actually worked very hard on.
“And that had an effect. When the evaluation assessment was done at the end of that tenure, we found out that only on rice and wheat did we register some significant improvement in the sense that volumes of production increased with the policy regime. But in other areas, it didn’t quite work. Why? Because in order to produce in Nigeria, you need to also import equipment; you need to import so many inputs. So without those inputs, you can’t have those productivity gains,” he explained.
Professor Adi added that opening up trade could expose local farmers to stronger competition but also help improve productivity by ensuring access to essential equipment and inputs needed for large-scale agricultural production.
“The argument here is that if you liberalize your trade and allow everything to come in, it will damage your capacity to grow—the capacity for the local industry to grow the necessary capability they need to compete in the global world. Especially today where we have this recession of globalization or globalism. You’ve seen it in the United States and other countries that are escalating tariffs, but here we’re going the other way around. I think our situation is quite different. In order to boost productivity, of course, we need to have those inputs to keep production going.”
Favour Odima
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