03-06-2025
Nigeria's Minister of Information: After Aid Cuts in Africa, Only Markets Can Deliver
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Severe aid cuts have forced a reckoning for African governments. Aid dependency was never the intention, but too often it became the path of least resistance. With support suddenly withdrawn, the continent is now confronting deep structural flaws in governance.
A reflex toward economic intervention has long stymied African governments. At best, it stems from an urge to shield citizens from high prices; at worst, to protect reserves of patronage. Either way, it has failed to meet the continent's most urgent need: creating enough jobs for its rapidly growing youth population.
The Honorable Minister of Information Mohammed Idris addresses the media at the Ministry of Information & National Orientation's ministerial press briefing, on May 16, 2025.
The Honorable Minister of Information Mohammed Idris addresses the media at the Ministry of Information & National Orientation's ministerial press briefing, on May 16, 2025.
Photo Courtesy of the Ministry of Information & National Orientation
In the wake of aid cuts, it is more important than ever that government focus on doing fewer things—but doing them well. The impulse to control prices for food and energy or manage sprawling state-owned enterprises must be rejected. Most governments lack the capacity or financial firepower to sustain such roles, regardless of ideology.
My country, Nigeria, was long caught in the throes of statism—and crisis after crisis followed. Now, at the midpoint of President Bola Tinubu's first term, market reforms are reshaping the economy. Though painful, they are beginning to pay off.
Coming from a minister, this may sound like predictable rhetoric. But dispassionate observers seem to agree. The World Bank's chief economist described Nigeria as being at a turning point, and its latest report noted that Nigeria grew at its fastest pace in over a decade (excluding the post-COVID-19 rebound), with further gains projected next year. Ours is only one example—but it shows that the difficult path toward market reform is worth it. Granted, much work still lies ahead.
Many preach reform but shrink from short-term political costs. Lifting controls often leads to price spikes or inflation. In Nigeria, the removal of the fuel subsidy and exchange rate controls caused disruption: the naira fell, fuel prices initially tripled, and food prices spiked. Had any previous Nigerian government acted sooner, the adjustment would likely have been less turbulent. But they did not.
Few policies have hung heavier around Nigeria's neck than its fuel subsidy. One of the most expensive price controls in the world, it stands as a cautionary tale of state intervention gone awry. Introduced in the 1970s when local refineries still functioned, it later spiraled into a costly political fixture. By 2022, with nearly all fuel imported, the subsidy devoured over 80 percent of government revenue—more than twice the combined spending on health and education. Meanwhile, international aid filled the gaps, offering cover for the dysfunction to persist.
Despite reforms in Zambia, Ghana, and Egypt, fuel subsidies remain widespread across Africa—leaving import-reliant nations' public finances at the mercy of external shocks, instead of freeing up funds for infrastructure and public services.
A controlled exchange rate was meant to conserve Nigeria's foreign currency reserves and guard against inflation. Instead, it deterred foreign investment in the non-oil sectors Nigeria needs to diversify its economy.
The move to a market-determined exchange rate has been predictably bumpy. But foreign investment has begun to return, as companies are reassured they can repatriate profits. Alongside fuel subsidy cuts, it has helped rebuild foreign reserves—a critical buffer in an era where uncertainty is becoming the norm. When fears of global recession sent oil prices tumbling and put pressure on the naira, the central bank had the firepower to step in, selling reserves to smooth out temporary disorder.
Yet across Africa, controlled exchange rates remain common. They risk complicating the African Continental Free Trade Area—the continent's flagship initiative to create the world's largest free-trade area—by distorting markets and undermining the deeper alignment needed to build larger, more attractive investment destinations.
However, the Nigerian government will do more to cushion the impact of reforms on the most vulnerable. A taskforce was recently established to accelerate the rollout of a cash transfer program, which so far has reached only a third of its intended beneficiaries. The goal is to extend support to an additional 15 million households.
Next on the reform block are state-owned enterprises. The Nigerian National Petroleum Company (NNPC), the state energy firm, is taking its final step toward an initial public offering. A former Shell executive was appointed to oversee the transition to private sector practices, with the board replaced in its entirety. Successive governments have sought to reform the entity, but the results have remained insufficient. A change of course had become necessary.
Nigeria, like much of Africa, faces an urgent need: jobs. Only the private sector can deliver employment at the scale required. Government intervention has repeatedly shown it cannot. And only a thriving private sector can generate the revenues needed to fill the gap left by the withdrawal of aid. Nigeria lags even the continent's already low tax-to-GDP ratios. Yet following recent reforms, government revenues grew by more than 50 percent. A landmark tax bill recently passed. It should help us surpass the African average by 2027.
It is easy to rely on aid, just as it is easy to rely on market controls. Yet neither has proved sustainable. The withdrawal of the former demands a deliberate rollback of the latter.
Mohammed Idris is the minister of information for the Federal Republic of Nigeria.
The views expressed in this article are the writer's own.
