The announcement of the recent tax and fiscal reforms came with unpleasant reverberations across the country. Nigerians haven’t stopped talking about these reforms; watching with eerie attention as the 2026 implementation date approaches. Reforms which they say will further impoverish the masses. Given a history of monumental mismanagement, why should Nigerians trust that these new taxes will now, miraculously, be the catalyst for infrastructural revolution?
To many citizens, these reforms are strangely familiar, echoing the bitter promises of 1986 when the IMF and World Bank persuaded Nigeria to adopt the Structural Adjustment Program (SAP). Then, as now, the mantra was belt-tightening for stability, liberalization for growth, and short-term sacrifice for long-term gain. The reality was a lost decade: economic contraction, de-industrialization, soaring poverty, and the systematic dismantling of our social institutions.
Today’s policies, subsidy removal, currency flotation, and tax base expansion is a reanimation of the SAP philosophy. The IMF’s 2024 Article IV Consultation proaudly praises Nigeria’s “bold reforms,” and the connection was made explicit by IMF senior economist, Paulo Paz, who in June 2025 thanked the Federal Inland Revenue Service (FIRS) for its “strong ownership of the tax policy advice.”
Nigeria is not alone in this renewed push for austerity. Kenya’s Finance Bill 2024 mirrors the same IMF-endorsed template: widening the tax net, removing exemptions, and taxing the digital economy. In both nations, these measures are framed as non-negotiable for fiscal stability and debt sustainability. The critical difference, however, lies in the political response.
In Nigeria, despite profound hardship from subsidy removal and a devalued Naira, widespread outrage has been largely muted, channeled into online dissent rather than coordinated action.
Why This Prescription is Not a Cure
Proponents argue there is no alternative. We must, they insist, endure the pain to cure the disease. But what if the medicine itself is the poison? The evidence is clear.
When SAP was implemented in 1986 under General Babangida, Nigeria was one of many guinea pigs in the Global South. Ghana, often cited as an SAP “success,” saw modest growth initially, but its industrial base eroded and inequality skyrocketed. Decades later, it remains trapped in a cycle of IMF bailouts and debt. For those who argue these reforms need time, consider Jamaica: after nearly 30 years under IMF guidance, it remains mired in debt and austerity with minimal fiscal space for development.
Let’s consider the nations that chose a different path. Following the 1997 Asian Financial Crisis, Malaysia defiantly rejected IMF orthodoxy, imposing capital controls and launching a domestic-led stimulus. It recovered faster and with less social damage than its IMF-compliant neighbors. Ethiopia, for years, used strategic state investment in infrastructure and local industry to become one of the world’s fastest-growing economies though its recent crises also caution against the pitfalls of that model.
The lesson is not that one model is perfect, but that successful development requires a strategic state, not a minimalist one. It requires a social contract where fiscal discipline is matched by visionary investment in people, productivity, and innovation.
The fundamental failure of the current approach is its sequence. The removal of fuel subsidies and the floating of the Naira were profound shocks to the economy, triggering inflation that has pushed millions into hunger and despair. The promised palliatives have been, as predicted, temporary and insufficient.
Now, the government seeks to tax an economy it has first suffocated. This is the core of the failure: you cannot tax your way out of poverty without first creating wealth. Without a vibrant manufacturing sector, a secure and productive agricultural base, and a supportive ecosystem for local enterprise, higher taxes do not stimulate growth; they merely redistribute hardship. They overburden the struggling middle class and formal businesses, driving more of the economy into the informal shadow sector.
This is not a call for fiscal irresponsibility. It is a demand for fiscal intelligence. The alternative to mindless austerity is not recklessness, but strategic prioritization.
Instead of focusing solely on extracting more from a stagnant pool, the government must first demonstrate a ruthless commitment to:
1. Cutting the Cost of Governance: Reducing corruption and bureaucratic waste is the most significant fiscal reform possible.
2. Protecting and Incentivizing Local Production: Implementing smart tariffs, stable power, and affordable credit for agriculture and manufacturing is not protectionism; it is nation-building.
3. A Massive, Audited Infrastructure Push: Investing in roads, rail, and ports doesn’t just create jobs; it lowers the cost of doing business for everyone.
Nigeria’s leaders are once again dancing to a tune composed in Washington, refusing to learn from our own history. The lessons of SAP are clear: when adjustment forgets the people, recovery becomes a mirage. It now falls to citizens, civil society, and a conscious press to demand a Nigerian solution for a Nigerian crisis, one that places the productivity and dignity of its people at the very center of policy.
Because while fiscal discipline is necessary, development has never been born from austerity alone.
–Yusuf, is a Political Commentator and a political economy history enthusiast
