A senior US official on Monday applauded tough reforms taken by Nigerian President Bola Ahmed Tinubu since coming to office in May, saying they provided an opportunity for Africa’s largest economy.
Tinubu has ended a long-standing fuel subsidy that kept the price of petrol artificially low but cost the government billions of dollars and also freed up the naira currency.
Investors, trade partners and economists praised the measures as necessary for the long-term growth of the economy and to bring new investment into Africa’s most populous country.
But government has urged patience from Nigerians feeling short-term austerity as fuel prices tripled, inflation has hit 25 percent and the naira devalued around 40 percent against the dollar.
Visiting Lagos on a trip to improve US-Nigeria economic ties, US Deputy Secretary for the Treasury Wally Adeyemo echoed praise for Tinubu’s reform package at a “critical moment” for Nigeria.
“The opportunity has never been greater. Your government is pursuing difficult and bold reforms,” he said in remarks to a Lagos business school.
Adeyemo, the highest-ranking Nigerian-American official, was also due to meet US companies in Nigeria and tour a tech incubator in Lagos for startups.
He said Nigeria needed to stabilise the naira currency, and lauded “difficult steps” taken so far by the government.
In June, Tinubu’s administration abolished the country’s multiple exchange rate system and floated the naira in a move long urged by World Bank and IMF economists.
The naira had traded about 460 to the dollar but devalued to around the current rate of 800 to the greenback.
“The path to unification is not easy, but going backwards would be even worse,” Adeyemo said.
He also called for the government to implement investments using resources from the abandoned fuel subsidy in areas from infrastructure, education and small business to agriculture.
Government officials acknowledge the fuel subsidy and exchange rate reforms are causing economic pain, and promise financial aid and other measures to ease the impact.
Protesting against the fuel subsidy measure, the National Labour Congress union movement is threatening to call an indefinite strike unless the government does more to ease suffering.
A former Lagos governor, Tinubu won February’s highly contested election promising a campaign of “Renewed Hope” to tackle the country’s economic problems and insecurity.