President Bola Tinubu was elected on May 29, 2023. His first term in office will end on May 28, 2027. We are now at midterm. Many midterm performance assessments have been conducted, most based on economic factors: inflation rates, employment, exchange rate stability, GDP growth figures, poverty levels, and similar metrics.
A midterm assessment is generally based on economic performance, but in the case of Nigeria, I am not sure this approach is appropriate, given the underlying structural problems. The country suffers from a flawed federal system where power is excessively centralized, creating inefficiencies and bottlenecks that economic policy cannot resolve.
Wrong diagnosis leads to wrong treatment that produces wrong results. Nigeria must confront its structural political deficit otherwise economic interventions will continue to yield suboptimal results, regardless of their technical soundness. I will therefore depart from assessing President Tinubu’s midterm based on economic factors alone. Let me explain.
The structural reality: 90 per cent dysfunction
Everyone knows that Nigeria operates a deeply flawed, over-centralised political system that cannot be characterised as a federal system. The result is 774 local governments and 36 states (90 per cent of Nigeria’s governance architecture) fully depend on the Federal Government. Local and state governments are primarily collection points for federal allocations rather than centres of productive governance.
The result is that economic activity is artificially concentrated at the federal level while the natural drivers of bottom-up economic growth (local governments and states) remain dormant and excluded.
The administrative governance structure is a huge hindrance to economic development. The administrative system is not designed to enable optimal economic performance but rather to control and regulate economic policy by layers of bureaucratic interference. Private sector is stifled by lack of innovation and entrepreneurship. The bureaucracy is simply too unwieldy to deliver optimal results to drive investment and economic growth.
More critically, this centralised economic planning excludes majority of Nigerians from economic participation. Over 200 million Nigerians are trapped in an informal sector that is unproductive and disconnected from formal economic opportunities. The political system allows the extraction of enormous economic value by rent-seekers and plutocrats who position themselves at the centralised chokepoints of resource allocation.
The economic implications of political over-centralisation Consider the agricultural sector, which employs majority of our people. Agricultural productivity is inherently local—soil conditions, climate patterns, market access, and farming techniques vary significantly across Nigeria’s diverse geography. Yet agricultural policy is mostly formulated and implemented from Abuja, creating a one-size-fits-all approach to an inherently localised economic activity.
This centralised approach excludes smallholder farmers, local traders, and community-based enterprises from accessing credit, technology, and markets, trapping Nigeria’s largest economic sector in subsistence patterns while well-connected agribusiness interests capture the formal value chains. International perspectives: Learning from successful models In Spain, regional governments have substantial autonomy over agricultural policy. Local governments manage rural development programmes, and municipalities coordinate directly with farming communities. This multilevel governance approach allows for responsive, adaptive policies that reflect local conditions whilst contributing to national economic objectives.
Nigeria’s fixation on oil and gas reflects the centralised governance model where complex resources are managed from the centre. Meanwhile, simple crops that could drive broad-based economic growth—tomatoes, rice, yam, beans, cassava—remain underdeveloped precisely because the governance structures needed to support them are dysfunctional.
Tinubu’s economic reforms: Necessary but insufficient However, the critical question is not whether these reforms were correct—they were—but whether they can achieve their intended impact in the context of Nigeria’s governance structure. Economic reforms operate within political systems, and when those systems are fundamentally flawed, even the best economic policies produce suboptimal results. Also, these federal-level reforms do not address the fundamental exclusion of majority of Nigerians from formal economic participation. Without complementary governance reforms that empower local institutions, these macroeconomic adjustments may worsen inequality by concentrating benefits among those already connected to formal economic networks.
The missing follow-through The foundation problem: Building on unstable ground When local governments are not allowed to register births and deaths, and also not allowed to manage basic education, water, sanitation, health, when municipalities cannot issue driving licenses, the entire system operates below capacity. Local governments are the building blocks of economic development because they create the institutional environment within which businesses operate.
The capacity trap
Economies grow from the bottom up, not top down. This fundamental principle explains why countries with robust local governance structures consistently outperform highly centralised systems. When local governments cannot effectively manage local resources, local challenges, and local opportunities, the entire economic ecosystem suffers.
European economies offer instructive examples. Countries like Spain built significant portions of their economies around simple agricultural products—olive oil, grapes, and apples. The key difference lies not in the products themselves but in the governance structures that support their production and commercialisation.
President Tinubu deserves credit for implementing long-overdue economic structural reforms. This is known as market correction. The removal of fuel subsidies and deregulation of the foreign exchange market were courageous decisions that previous administrations avoided due to political costs. These reforms are economically sound and necessary for long-term stability.
I believe the challenge with Tinubu’s economic reforms lies in their execution within a dysfunctional governance framework. Fuel subsidy removal was intended to free up resources for productive investment, but if state and local governments lack capacity and autonomy to deploy them effectively, reform benefits remain unrealised. Similarly, forex deregulation aimed to improve market efficiency will not happen if the regulatory environment remains centralised and unresponsive to local business conditions. Efficiency gains cannot translate into broad-based economic growth.
Nigeria’s development challenge resembles building a 20-storey edifice on a cracked foundation. No matter how impressive the superstructure—federal economic policies, national development plans—the underlying cracked foundation will limit what can be achieved.
Nigeria is in a capacity trap. The federal government is overburdened with responsibilities it cannot effectively manage. Subnational governments are underpowered to handle functions they are best positioned to execute. This misalignment creates inefficiency at every level.
To be continued tomorrow.
Dr Agbakoba, SAN, is a former President of the Nigerian bar Association (NBA).
