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…Experts criticize IMF’s endorsement of Tinubu’s economic policies
By Chinwendu Obienyi
Nigeria has slipped into the “vulnerable” category in the 2024 SBM Intelligence Africa Country Instability Risk Index, a significant decline from its “stable” classification in 2023.
This comes as experts pick holes in the recent endorsement of President Bola Tinubu’s economic reforms by the International Monetary Fund (IMF), saying the support betrays the hardship majority of Nigerians face currently.
SBM Intelligence is an Africa-focused market/security intel gathering and strategic consulting firm.
According to the report, Nigeria’s drop, attributed to worsening economic conditions and contentious government policies, saw Nigeria’s score rise to 45 from 39 last year, reflecting heightened political risk for businesses.
SBM Intelligence explains that a higher score indicates greater instability.
Nigeria now joins Ethiopia, Comoros, Côte d’Ivoire, Benin, and Togo in the “vulnerable” category, mirroring wider governance and economic challenges across the continent.
The report paints a bleak picture of Nigeria’s socio-economic landscape, highlighting rising food inflation, deepening poverty, and widespread insecurity as key destabilizing factors.
According to SBM Intelligence, “Nigeria’s economy continues to worsen, with rising food inflation, persistent insecurity across all geopolitical zones, and many people falling into extreme poverty. It is more polarised now than ever after the 2023 election and the unpopular reforms of the new government, such as the removal of petrol subsidies, which has worsened living conditions and led to the closure of businesses.”
Across Sub-Saharan Africa (SSA), the average risk score improved slightly to 45.4 percent in 2024, down from 47.7 percent in 2023. Out of 48 countries assessed, 31 recorded progress, while others, including Nigeria, saw performance deteriorate.
Angola, Burundi, Chad, Togo, and Madagascar emerged as top gainers. Angola’s progress stemmed from cuts in governance costs, while Madagascar reported modest GDP growth, improving to 4.4 percent in 2023 from 4.3 percent in 2022.
In contrast, Nigeria, alongside Botswana, Seychelles, Namibia, and Zimbabwe, ranked among the biggest losers. Botswana suffered a nearly 2 percent GDP contraction in the first quarter of 2024, while Zimbabwe grappled with debt and currency crises.
Central Africa topped the list of unstable regions, with 40 percent of its countries, including Angola, the Central African Republic, Chad, and Gabon, appearing among the least stable.
West Africa followed with 30 percent, represented by Guinea, Sierra Leone, and Togo. East Africa and Southern Africa had smaller representations, with Burundi, Madagascar, and Eswatini making the list.
“The worst-performing entities are shared by Eastern and Southern Africa, at 40 percent each—represented by countries such as Seychelles, Kenya, Mauritius, and Comoros on the East side and Botswana, Namibia, Zimbabwe, and Zambia on the South,” the report states.
Despite these challenges, Southern Africa remained the most stable region for the second consecutive year, with a modest score change of -1.3. In contrast, Central Africa emerged as the least stable region, recording a significant score change of 6.78, performing worse than East Africa (1.07) and West Africa (2.47).
The stability in Southern Africa was partly driven by an improved South African economy, which grew by 0.4 percent in the second quarter of 2024, up from 0.1 percent in the first quarter.
Meanwhile, the International Monetary Fund’s (IMF) endorsement of President Bola Tinubu’s economic reforms has sparked debate among experts, with some criticizing the policies for exacerbating hardship among Nigerians.
The financial body in a statement on X expressed strong support for the economic reforms introduced in Nigeria under President Bola Tinubu’s administration.
During a meeting at the G20 Summit in Brazil, IMF Managing Director Kristalina Georgieva commended Nigeria’s decisive actions, emphasizing their potential to drive economic growth and create jobs for the country’s large and vibrant population.
The reforms include the removal of petrol subsidies, the liberalization of the foreign exchange system, and the deregulation of the petroleum downstream sector.
However, while the IMF strongly supports the reforms, many Nigerians face increasing inflation, unemployment, and poverty as a result of these measures.
Critics argue that these policies, though intended to attract investment and stabilize the economy, disproportionately burden the poor and middle class.
Despite efforts of the administration to drive economic growth, Nigeria’s economy seems to be dwindling.
Hence, this has intensified calls for the Nigerian government to adopt a more inclusive approach to reform implementation, ensuring that economic benefits are equitably distributed.
Kalu Aja, a financial and economic expert while speaking during a forum on X, noted that the removal of subsidies, for instance, has significantly raised fuel prices, leading to higher transportation and food costs, further straining household budgets.
He argued that the IMF’s continued backing of Tinubu’s policies has fueled concerns about the organization’s alignment with reforms that, as the reforms prioritize macroeconomic stability over the welfare of ordinary citizens.
For his part, Head, Research at FSL Securities, Victor Chiazor, called for more robust social safety nets and better implementation strategies to cushion the effects on vulnerable populations.
“I just think the IMF is being IMF. However, this administration has to think outside the box. Nigeria’s are suffering, inflation is on the rise, the Naira is depreciating, we have bad debts while there is insecurity in the North. There has to be some sort of social safety nets to cushion the hardships citizens are facing”, Chiazor stated.
He added that proponents of the reforms, including the IMF, highlight their long-term potential to reset Nigeria’s economy and restore investor confidence. “However, without addressing structural inefficiencies, corruption, and inadequate infrastructure, these reforms may fail to deliver sustainable economic growth”, he maintained.
