Good policies, weak institutions: Nigeria’s missing middle of reform

Nigeria has no shortage of reform ideas. Over the past three decades, successive administrations have produced an impressive array of policies: fiscal responsibility laws, banking sector reforms, power sector privatisation, petroleum industry restructuring, and social investment programmes. Most recently, these have been followed by wide-ranging macroeconomic adjustments. Despite this abundance of reform initiatives, the gap between policy ambition and lived outcomes remains stubbornly wide. The country continues to grapple with underdevelopment and inadequate basic amenities, while poverty remains a defining challenge.

The central problem is not policy design. It is institutional capacity—often weakened by poor sequencing, where policies are announced before credible plans are made for their implementation.

Nigeria is not alone in this experience. Across much of the developing world, reform has become a buzzword and a recurring ritual. Governments announce new policies with impressive technical sophistication: fiscal rules, industrial strategies, social protection frameworks, and regulatory overhauls. Donors, impressed by the elegance of these plans, applaud and release funding. Experts, both local and international, debate design details and propose refinements. Yet from one reform cycle to another, outcomes disappoint. Growth underperforms expectations, inequality persists, and public trust steadily erodes.

These reforms tend to follow a familiar pattern: technically sound policies are introduced into systems that are either unable—or unwilling—to implement them effectively. In some cases, the state lacks the human capacity to execute programmes; in others, the same human agency becomes an obstacle. Between reform objectives and real-world impact lies a weak institutional middle, where implementation falters, incentives misalign, and accountability evaporates. Nigeria’s fiscal reform experience is instructive. The dangers of fiscal indiscipline are well understood. This awareness gave rise to instruments such as the Fiscal Responsibility Act, the Medium-Term Expenditure Framework, and debt management rules—designed to impose order on public finances and ensure that public resources are used for public purpose.

Yet while these frameworks have the potential to deliver sustainable budgeting and fiscal discipline, Nigeria remains far from these ideals. The experience of 2025—marked by budget implementation failures and visible breakdowns in policy coordination—underscored this reality. Nigeria cannot plead ignorance of fiscal best practice. The challenge lies in weak enforcement institutions, fragmented responsibilities, and the absence of meaningful consequences for non-compliance or poor performance.

The same pattern is evident in the oil and gas sector. Prior to its passage in 2021, the Petroleum Industry Act (PIA) was widely promoted as a silver bullet capable of resolving long-standing governance and fiscal challenges in the sector. More than half a decade after its adoption, however, many of these issues persist. Regulatory overlaps remain, while commercial discipline at the national oil company continues to be contested. Although the sector has been formally deregulated, debts accumulated by the post-reform national oil company are still being written off arbitrarily, often without regard for market principles. This undermines the very efficiency that market reforms are meant to achieve. Without stronger regulatory enforcement, the promise that accompanied the PIA risks remaining largely rhetorical.

The roll call of underperforming reforms extends to the power sector. Nigerians have lost count of reform initiatives in electricity, yet unreliable supply remains the norm. Consumers were told that privatisation and tariff reforms would attract investment, improve efficiency, and stabilise power supply. Instead, the sector has cycled through tariff freezes, mounting debts, repeated government bailouts, and deteriorating service quality.

Regulators, contrary to the principles of market reform, appear to lack the autonomy required to exercise their authority. Contracts are weakly enforced, while political intervention frequently overrides commercial logic. This does not suggest that reformers failed to identify the right levers. Rather, institutions are too weak—or insufficiently protected—to sustain reform once political costs begin to surface.

What, then, is the way out? Institutional reform is politically harder than policy reform, but this reality is often ignored in Nigeria at great cost. Policies can be announced quickly and framed as decisive action. Institutions, by contrast, are deeply rooted. They constrain discretion, limit patronage, reduce arbitrariness, and bind future leaders. In a political economy where control over state resources remains central to power, such constraints inevitably face resistance.

Until Nigeria confronts this missing middle of reform, perhaps by investing seriously in institutional capacity and protecting it from political erosion, good policies will continue to yield weak outcomes, and reform will remain an exercise in ambition rather than results.

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