Nigeria on the Brink: A Call for Urgent Pragmatic Reforms – Dr Kenny Odugbemi

Introduction

Nigeria is facing one of the most challenging periods in its history. With a poverty rate of 70%, an unemployment rate of 37.2%, and GDP growth stagnating at 2.1%, the nation is on the verge of economic collapse. Inflation has surged to 34.8%, and fiscal policies have struggled to stabilize an economy burdened by a budget deficit of ₦8.5 trillion and a debt-to-GDP ratio of 40.6%.

Yet, instead of prioritizing policies that address these pressing issues, the political class is focused on creating 31 additional states, a move widely seen as an attempt to expand political influence and access to public funds. This distraction risks worsening Nigeria’s economic woes and diverting attention from real solutions that can revive the country.

This article critically examines Nigeria’s economic situation and proposes bold, world-class reforms that can safeguard the nation from imminent collapse.

Nigeria’s Economic Crisis: A Snapshot of Key Indicators

The country’s macroeconomic indicators paint a grim picture. GDP growth remains weak at 2.1%, far below the rate required to absorb the growing workforce. Inflation, projected to stay between 20.7% and 33.99% in 2025, continues to erode purchasing power, making basic necessities unaffordable for millions of Nigerians.

Fiscal challenges are equally concerning. Nigeria’s VAT revenue is expected to hit ₦5.5 trillion, yet the budget deficit remains at a staggering ₦8.5 trillion, highlighting the government’s reliance on borrowing. Meanwhile, high interest rates (14.5%) and money supply growth (18.5%) indicate ongoing liquidity pressures that could drive inflation even higher.

To address these challenges, the government has proposed several economic policies, including a VAT increase, a telecom tariff hike, and subsidy reform. While these policies could help raise revenue, their potential to worsen inflation and increase economic hardship cannot be ignored.

Proposed Economic Reforms: Balancing Revenue Growth and Economic Stability

The government has outlined key fiscal and monetary changes, but their success depends on strategic implementation.

1. VAT Increase

The proposed VAT rate increase to 10% is expected to generate ₦5.5 trillion in revenue. However, this move could push inflation up by 3-4%, exacerbating the cost-of-living crisis. A phased approach and targeted VAT exemptions for essential goods could minimize the negative impact on ordinary Nigerians.

2. Telecom Tariff Hike

With a proposed 40% increase in telecom tariffs, the government hopes to raise ₦600 billion. However, this could increase communication costs by 25-35%, limiting digital access in a country where technology and connectivity are crucial for business, education, and innovation. Alternative revenue-generation models, such as corporate tax adjustments for telecom companies, could be considered instead.

3. Subsidy Reform

The shift to a targeted subsidy system could save ₦2 trillion annually while ensuring that only the most vulnerable benefit. If properly implemented, this reform could reduce poverty by 5-10%. However, to prevent a backlash, the government must increase investment in social safety nets and alternative energy sources to cushion the impact.

SWOT Analysis: Strengths, Weaknesses, Opportunities, and Threats

Nigeria’s economic transformation hinges on leveraging strengths, addressing weaknesses, capitalizing on opportunities, and mitigating threats.

• Strengths: Expanding revenue sources, improving tax collection, and increasing investments in infrastructure and human capital.
• Weaknesses: High inflation, unemployment, and poverty levels remain key barriers to economic stability.
• Opportunities: A phased reform approach, effective subsidy targeting, and expanded social safety nets.
• Threats: Potential inflationary pressures from VAT and telecom hikes, declining economic growth due to subsidy removal, and a worsening poverty crisis.

To navigate these complexities, Nigeria must go beyond short-term fixes and implement structural reforms that foster long-term stability.

Political Reforms: The Case for a Unicameral Legislature

One of Nigeria’s most costly and inefficient governance structures is its bicameral legislature. Maintaining two houses—the Senate and the House of Representatives—has led to excessive government spending, bureaucratic delays, and overlapping functions. A unicameral legislature could significantly reduce government expenditure while enhancing accountability and efficiency.

Benefits of a Unicameral System

1. Reduced Costs: Eliminating the duplication of legislative functions would cut administrative expenses and lawmaker allowances, freeing funds for critical sectors like education and healthcare.
2. Increased Efficiency: A single legislative chamber would streamline decision-making processes, ensuring that laws are passed and implemented faster.
3. Greater Accountability: With fewer legislators, citizens would have a clearer line of responsibility, reducing political impunity and legislative corruption.

Judicial Reforms: Ensuring Justice and Accountability

Nigeria’s judiciary plays a critical role in upholding democracy and economic stability. However, political interference, corruption, and inefficiency have weakened its effectiveness. Strengthening the judiciary requires bold reforms in independence, accountability, transparency, and efficiency.

• Judicial Independence: Judges must be insulated from political influence to ensure fair rulings.
• Judicial Accountability: Mechanisms should be established to hold judges responsible for unethical conduct.
• Judicial Transparency: Court proceedings and rulings should be accessible to the public to build trust.
• Judicial Efficiency: Case backlogs must be reduced through fast-track courts and digitization.

By ensuring a fair and independent judiciary, Nigeria can foster investor confidence, protect citizens’ rights, and enhance governance.

World-Class Reforms for a Sustainable Future

For Nigeria to avoid economic collapse and chart a path toward stability, the following world-class improvements must be prioritized:

1. Adopt a Unicameral Legislature – Streamline governance, cut costs, and improve decision-making efficiency.
2. Strengthen the Judiciary – Ensure judicial independence, efficiency, and transparency to uphold the rule of law.
3. Implement a Targeted Subsidy System – Reduce wasteful spending while protecting the most vulnerable citizens.
4. Promote Economic Diversification – Reduce dependence on oil by investing in technology, agriculture, and manufacturing.
5. Expand Digital and Financial Inclusion – Leverage fintech innovations to boost employment and entrepreneurship.
6. Invest in Human Capital – Increase funding for education and vocational training to equip Nigerians with skills for the future.

Conclusion: The Time for Action is Now

Nigeria stands at a critical crossroads. Without decisive action, the current trajectory could lead to deeper economic instability, social unrest, and governance failures. However, with pragmatic reforms, the country can reverse its decline and position itself for sustainable growth.

The political class must rise above self-interest and prioritize policies that truly benefit the people. Economic reforms should be phased and inclusive, ensuring that no segment of society is disproportionately affected. Meanwhile, governance and judicial reforms must eliminate inefficiencies and strengthen institutions to foster accountability and transparency.

The future of Nigeria depends on bold leadership, strategic policy-making, and the collective will to drive real change. The time to act is now.