Tinubu Economic Reforms Put Governors, LG Chairmen Under Fresh Accountability Test — Fasua

 

Tinubu Economic Reforms Put Governors, LG Chairmen Under Fresh Accountability Test — Fasua

By Akin Alade

Nigeria’s economic debate may be entering a new phase as President Bola Ahmed Tinubu’s reforms dramatically alter the financial relationship between the Federal Government, states and local governments, raising a fresh question over how the country’s growing subnational revenues are being spent.

That is the central argument advanced by economist and policy adviser ‘Tope Fasua, who believes that some of Nigeria’s most entrenched fiscal problems have been substantially addressed within the first three years of the Tinubu administration.

Rather than judging the administration solely by inflation, exchange rates and the immediate cost-of-living pressures confronting Nigerians, Fasua argues that a deeper examination of government finances reveals a major structural change.

At the heart of his argument are the removal of petrol subsidy, foreign exchange reforms, increased government revenue, improved tax collection and substantially higher allocations to states and local governments.

According to Fasua, these measures have helped repair a fiscal system that had deteriorated over several administrations and left governments increasingly dependent on borrowing and Central Bank financing.

The development, he argues, means Nigerians should increasingly scrutinise governors and local government chairmen over how significantly higher allocations are being converted into roads, schools, healthcare, jobs, security and other improvements in their communities.

Nigeria’s fiscal difficulties did not begin with Tinubu.

Fasua traces the problems through successive administrations, arguing that the country had struggled for decades with fuel subsidies, inadequate revenues, weak infrastructure, petroleum shortages, salary arrears and an economic structure unable to generate sufficient resources to meet growing government obligations.

The situation became particularly difficult during the Muhammadu Buhari administration, when several states struggled with salary obligations while the Federal Government increasingly relied on the Central Bank’s Ways and Means facility to finance expenditure.

By the end of the Buhari administration, Fasua noted, the Ways and Means balance had risen above ₦30 trillion.

He contrasted that approach with the strategy adopted by Tinubu after assuming office in May 2023.

Tinubu announced the end of the petrol subsidy at his inauguration and subsequently pursued foreign exchange and revenue reforms that profoundly changed government finances.

The policies came with considerable short-term consequences for households and businesses.

The naira depreciated significantly, transportation and energy costs increased and inflation eroded household purchasing power.

But Fasua argues that focusing exclusively on these consequences risks overlooking the structural fiscal changes taking place underneath the economy.

One of the most important, he maintains, is the financial position of Nigeria’s 36 states.

Under previous administrations, salary arrears became a recurring crisis.

Fasua recalled that about 20 states experienced serious financial difficulties during the Goodluck Jonathan administration, while the number reportedly increased to 27 during the Buhari era.

Some workers endured months of unpaid salaries, while pension arrears accumulated across several states.

Today, Fasua argues, the situation is substantially different.

Increased revenues flowing through the Federation Account have strengthened state finances, making the widespread salary crises witnessed in previous years far less prevalent.

That change has broader economic implications.

Civil servants are major drivers of economic activity, particularly in states where government remains the largest formal employer.

When salaries are paid consistently, workers spend money on food, rent, transportation, education, construction and other services.

Those transactions circulate through local economies, supporting traders, artisans, landlords, transport operators and small businesses.

Fasua therefore rejects arguments that the ability of states to pay salaries consistently represents an insignificant achievement.

For millions of families, predictable income provides the minimum foundation upon which household economic decisions are made.

But the improved financial position of states also creates a new political responsibility.

If governors are receiving substantially larger allocations following the removal of fuel subsidy and other reforms, Fasua argues that citizens must demand evidence of how those resources are being deployed.

The same scrutiny should increasingly extend to Nigeria’s 774 local government areas.

Fasua cited examples of councils receiving allocations running into billions of naira monthly, arguing that Nigerians should pay closer attention to what councils are delivering with those resources.

This potentially changes the direction of Nigeria’s post-subsidy political debate.

Rather than asking only what happened to the money previously spent subsidising petrol, Fasua believes the question should include what governors and local government administrations are doing with the increased resources flowing to them.

The economist also points to Nigeria’s revenue mobilisation as another significant development.

He argues that the country’s tax-to-GDP ratio has risen considerably from the historically low levels that constrained government finances.

Improved revenue collection, subsidy removal and foreign exchange reforms have collectively expanded the amount available for distribution across the tiers of government.

However, Fasua believes Nigeria’s fiscal restructuring remains unfinished.

One outstanding issue is the existing revenue-sharing formula among the Federal Government, states and local governments.

The Federal Government receives the largest share of federation revenue but simultaneously shoulders the overwhelming majority of Nigeria’s public debt and several expensive national responsibilities.

According to Fasua, the Federal Government currently carries about 97 per cent of the country’s debt burden, leaving states with a comparatively small proportion.

That imbalance, he argues, presents both a problem and an opportunity.

States have greater fiscal space to finance transformational projects but many remain reluctant to borrow, partly because of high interest rates and concerns about public opposition to debt.

Fasua believes states should explore more innovative financing mechanisms, including the domestic capital market, Islamic finance, green bonds and blue bonds, provided borrowing is tied to economically productive projects and accompanied by safeguards against reckless indebtedness.

Nigeria, he argues, cannot achieve the rapid economic growth it requires through federal spending alone.

States must become major engines of growth.

That would require governors to move beyond dependence on monthly Federation Account Allocation Committee receipts and develop projects capable of attracting long-term investment.

Fasua also identifies the enormous financial obligations of the Federal Government as another challenge yet to be resolved.

While increased revenues have strengthened subnational governments, the centre continues to shoulder huge personnel, infrastructure, debt and national security expenditures.

This means Tinubu’s economic restructuring, in Fasua’s assessment, should be regarded as an ongoing process rather than a completed mission.

He nevertheless believes the administration has crossed an important threshold by confronting problems that previous governments either postponed or attempted to manage through temporary interventions.

Beyond fiscal reforms, Fasua points to programmes including the Presidential Compressed Natural Gas Initiative, 3 Million Technical Talent programme, Investment in Digital and Creative Enterprises programme and Skills-Up Artisans programme as examples of interventions intended to expand opportunities and develop human capital.

Their ultimate impact, however, will depend on implementation and the ability of ordinary Nigerians to access and benefit from them.

For households struggling with food prices, transportation costs, rent and other expenses, macroeconomic improvements will matter most when they translate into greater purchasing power and better living standards.

That remains one of the biggest tests confronting the administration.

Tinubu’s reforms may have improved government revenues and strengthened the finances of states and councils, but Nigerians will ultimately measure economic success by jobs, incomes, affordable food, functioning infrastructure and improved public services.

Fasua’s argument therefore presents both a defence of the President’s economic strategy and a challenge to Nigeria’s subnational governments.

If more money is reaching states and local councils, the next question is unavoidable: What are governors and local government chairmen doing with it?

That question could become increasingly important as Nigeria approaches the 2027 general elections.

The debate over Tinubu’s economic record will not simply be about whether subsidy removal and other reforms generated more government revenue.

It will also be about whether that increased revenue produced measurable improvements in the lives of Nigerians.

And if Fasua’s assessment is correct that a substantial part of Nigeria’s fiscal problem has already been repaired, the next phase may be even harder: ensuring that the additional resources now available across the federation translate into development citizens can actually see and feel.