• Tinubu implemented a comprehensive exchange-rate liberalisation that previous administrations had avoided, restoring macroeconomic credibility but failing to improve living standards.
• Tinubu’s float rebuilt reserves and eased inflation; however, the transition to a fully market-determined exchange-rate remains incomplete. 
• Even though international actors back Tinubu’s reforms, domestic resentment makes the election in January 2027 his most immediate political vulnerability.

Why is Tinubu MILD?

Answer: President Tinubu shifted Nigeria to a market-determined exchange rate, restoring macroeconomic credibility while worsening household living standards.

Since taking office in May 2023, President Bola Tinubu reoriented Nigeria’s exchange-rate policy, shifting it towards a market-determined exchange rate system and dismantling the multiple exchange-rate windows that had drained reserves, encouraged arbitrage, and reduced investor confidence. Central to his policy is the unification of windows in a “willing buyer, willing seller” framework, where the naira is primarily determined by market supply and demand. The reforms initially contributed to a sharp depreciation of the naira, with the official exchange rate moving from around ₦460 per US dollar in mid-2023 to over ₦1,400 per US dollar by May 2026.

These structural corrections have materially improved Nigeria’s global position. Gross international reserves have risen to USD 46 billion in 2025 from USD 33 billion in 2023, rebuilding the external buffer that allows Nigeria to absorb external shocks without abandoning the float. However, the human cost remains high; food inflation, peaking at 40% in 2024, has contributed to a cost-of-living crisis, leaving millions of Nigerians food insecure. The reforms prioritised long-term macroeconomic credibility over short-term price stability.

The IMF reports that, while exchange-rate unification has largely occurred, exchange-rate restrictions and multiple currency practices persist, and a full transition remains ‘in progress’, meaning the reform remains incomplete. No major political institution has attempted to overturn the framework, no elite faction has defected over the float, and yet the pressure to reverse it is rising. That risk of reversal is administrative rather than institutional. This is because the float rests on central-bank discretion rather than law; the same discretion that built it could quietly reintroduce FX restrictions, most plausibly under a future government, without any formal repeal. These factors support a MILD assessment: the reforms remain institutionally durable and internationally defensible, yet domestically unpopular and incomplete.

What is changing Tinubu’s heat level?

Answer: Institutional control makes the policy sustainable; collapsing public favour and informal actor pressure create risks to its long-term political viability.

Following his inauguration, Tinubu replaced Godwin Emefiele with Olayemi Cardoso at the Central Bank of Nigeria (CBN). The appointment replaced the official most capable of altering the pace of FX liberalisation with a governor committed to orthodox monetary policy. This matters because the liberalisation was administered, not legislated, i.e., dependent on central bank discretion. Tinubu’s control over the CBN made the reform institutionally durable since no other institution can independently reverse it; however, it also stripped him of anyone else to blame. Because the reform became closely associated with Tinubu’s presidency, episodes of naira depreciation have increased the political costs of the policy.

The National Assembly cannot directly reverse monetary policy, limiting its ability to block Tinubu’s exchange-rate reforms despite political opposition.

Organised labour, represented by the Nigerian Labour Congress and Trade Union Congress, has played an important role in opposing Tinubu’s reform. Lacking authority to reverse the policy, it raises the political cost of maintaining it: repeated strikes and pressure forced Tinubu’s administration to raise the minimum wage and expand social support. This suggests that the political sustainability of the reforms increasingly depends on compensatory wage increases and social support.

Public opinion of Tinubu has collapsed as Nigerians have experienced the immediate effects of currency depreciation and inflation. Tinubu’s net favourability rating sits at -58.5%, with only 11% of respondents believing Nigeria was moving in the right direction. Stronger macroeconomic indicators have not translated into stronger public support.

However, unpopularity does not instantly create a threat to Tinubu’s position. Turnout in the 2023 presidential election was at 27%, the lowest ever recorded in Nigeria, suggesting that, if turnout remains low, fragmented competition may reduce the immediate political consequences of low approval ratings. Because Nigerians primarily associate FX liberalisation with higher living costs rather than macroeconomic gains, the reform has weakened its social legitimacy despite remaining institutionally secure.

What is driving Tinubu?

Answer: Tinubu’s reforms seek to restore Nigeria’s economic credibility while establishing his legacy as a leader willing to implement politically difficult reforms.

FX liberalisation has distinguished Tinubu’s administration from previous governments that had sustained the multiple-rate system and an overvalued naira. The move towards a market-determined exchange-rate system demonstrates a willingness to implement a politically difficult reform that other administrations had deferred, which is the legacy Tinubu appears to be pursuing.

International recognition has strengthened confidence in Nigeria’s macroeconomic reform programme. Nigeria was removed from the Financial Action Task Force’s grey list and from the European Union’s list of jurisdictions with strategic Anti-Money Laundering and Counter-Terrorist Financing deficiencies. Nigeria’s return to international capital markets included a USD 2.2 billion Eurobond issuance, reflecting stronger investor confidence following the government’s macroeconomic reforms.

International economic institutions also support Tinubu’s reforms. The IMF states that the new exchange rate is “serving Nigeria well”, also crediting an end to Ways and Means advances, which had previously allowed the federal government to borrow from the CBN, effectively printing money. Similarly, the World Bank finds that the liberalisation increased FX turnover, encouraged formal FX flows, and narrowed the parallel market premium, though still dependent on shifting inflows. This broad institutional endorsement strengthens the international credibility of Tinubu’s reform programme.

Tinubu’s governance goals have been to restore macroeconomic stability, improve investor confidence, and, in the long run, raise living standards. GDP growth was at 4.1% in 2024 and 4.0% in 2025, and inflation has fallen to 15.1% from a peak of 33.2% in 2024; the recent appreciation in the naira shows signs of stabilisation, suggesting the administration’s expectation that short-term adjustment costs will ease over time. The underlying trend is still downward, which supports the administration’s claim that the initial pain is temporary rather than structural.

However, broader positive economic indicators have not been matched by improved household conditions. Poverty remains widespread, with around 63% of Nigerians living below the national poverty line, while more than 27 million experienced food insecurity in late 2025. Cash-transfer programmes intended to act as a safety net reached only 9.2 million of a targeted 15 million households. This shortfall matters for Tinubu: it is the mechanism meant to convert reform into domestic consent, and it is underperforming.

What does this mean for you?

Answer: Tinubu’s Nigeria shows that reform, even though praised internationally, can still become unstable when its benefits do not reach citizens quickly enough.

In the short term, the cost of the reforms is a living political problem rather than a technical one. Expect sustained pressure on Tinubu to expand his cash transfer programme the closer we get to the 2027 election. Financial markets are likely to continue responding positively provided macroeconomic stability is maintained. It is precisely this difference, improving foreign confidence and deteriorating approval at home, that is defining Tinubu’s short-term legacy.

In the long run, the reform will be tested on whether it produces real wage recovery and reduced poverty. Should inflation continue to fall and investment grow, Tinubu’s framework becomes a model for resilience and economic growth. However, if gains stay concentrated, pressure to modify or reverse the currency float will take over national political debate. 

As one of Africa’s largest economies, Nigeria’s experience is likely to inform debates over market-oriented reform across Africa, particularly in countries considering exchange-rate liberalisation under the guidance of international financial institutions.