IMF AUSTERITY AND THE POLITICS OF INCUMBENCY: LESSONS FOR TINUBU AND THE 2027 ELECTION

IMF AUSTERITY AND THE POLITICS OF INCUMBENCY: LESSONS FOR TINUBU AND THE 2027 ELECTION

A Political-Economic Assessment for the Attention of Former Vice-President Atiku Abubakar

By Abbati Bako, PSC, BSIS, Alumnus, University of Kent, UK

INTRODUCTION: WHEN ECONOMIC REFORMS BECOME POLITICAL LIABILITIES

History offers a sobering lesson for political leaders in developing countries: economic reforms may promise long-term stability, but when implemented without adequate social protection, effective communication and visible improvements in living standards, they can become powerful instruments of political self-destruction.

Across the Global South, successive governments have adopted economic policies associated with the International Monetary Fund (IMF) and the World Bank, including fuel subsidy removal, currency devaluation, privatisation of state-owned enterprises, trade liberalisation and fiscal austerity.

Although these measures are often justified as necessary steps towards economic recovery, their immediate consequences can be severe. Rising fuel prices, expensive food, higher electricity tariffs, unemployment and declining purchasing power can erode public confidence in a government long before its promised economic benefits materialise.

For incumbent leaders seeking re-election, the political consequences can be devastating.

Nigeria's President Bola Ahmed Tinubu faces this challenge as the country approaches the 2027 general election. His administration's economic reforms have generated considerable debate over whether the immediate sacrifices imposed on citizens will eventually translate into sustainable economic growth and improved living standards.

To understand the political risks, it is useful to examine selected experiences from Africa, Asia and Latin America.

The following cases illustrate how economic crises, unpopular reforms, political miscalculations and public dissatisfaction have contributed to the decline or removal of incumbent governments. They do not establish that IMF or World Bank prescriptions alone caused every electoral defeat or political collapse.

1. GOODLUCK JONATHAN — NIGERIA, 2015

Policy context: Fuel subsidy reform, currency pressures and power-sector privatisation

In January 2012, President Goodluck Jonathan's administration attempted to remove the petrol subsidy, triggering widespread protests under the Occupy Nigeria movement.

Petrol prices rose sharply, placing additional pressure on households and businesses already struggling with the cost of living. The government subsequently reduced the increase following public resistance.

The administration also pursued reforms in the electricity sector, including the privatisation of the Power Holding Company of Nigeria's successor companies.

These policies became part of a wider political controversy over governance, economic management and the distribution of national resources.

In March 2015, Jonathan lost his re-election bid to Muhammadu Buhari of the All Progressives Congress (APC). It was the first time an incumbent Nigerian president had been defeated at the ballot box.

However, the result cannot be attributed to economic reforms alone. Insecurity, particularly the Boko Haram insurgency, corruption allegations, political realignments and the opposition's electoral strategy also contributed to the outcome.

The lesson: Economic reforms can become electoral liabilities when citizens believe their sacrifices are immediate, their benefits uncertain and the government's response to their hardship inadequate.

2. KENNETH KAUNDA — ZAMBIA, 1991

Policy context: Structural adjustment, food subsidies and economic hardship

Kenneth Kaunda governed Zambia for approximately 27 years before losing power in the country's 1991 multiparty elections.

During the 1980s, Zambia faced mounting economic difficulties, including declining copper revenues, external debt and shortages of essential goods. The government pursued economic adjustment measures amid pressure from international financial institutions.

Attempts to reduce food subsidies and implement austerity generated considerable public discontent. Rising living costs and food-price pressures contributed to unrest, while opposition leader Frederick Chiluba capitalised on widespread frustration with the government.

Kaunda was decisively defeated, bringing an end to his long period in power.

Although the economic crisis had several causes, the experience demonstrated the political dangers of imposing painful adjustments on a population already experiencing declining living standards.

The lesson: Even leaders with long political histories and established political networks can lose public support when economic hardship becomes the defining experience of their administration.

3. JOHN DRAMANI MAHAMA — GHANA, 2016

Policy context: IMF-supported economic adjustment and public dissatisfaction

Ghana entered an IMF-supported programme in 2015 amid fiscal pressures, currency depreciation, rising inflation and energy-sector difficulties.

The government of President John Dramani Mahama faced criticism over electricity shortages, higher living costs, public-sector employment constraints and the broader management of the economy.

Opposition leader Nana Akufo-Addo made economic hardship a central issue in the 2016 election campaign.

Mahama lost the election, with Akufo-Addo securing approximately 53.9 per cent of the valid votes against Mahama's 44.4 per cent.

Economic dissatisfaction played an important role, although concerns about corruption, governance and the opposition's campaign also influenced the result.

Mahama subsequently returned to the presidency after winning Ghana's 2024 election.

His political comeback illustrates another important point: an electoral defeat does not necessarily mark the permanent end of a political career.

The lesson: When citizens associate an incumbent administration with unemployment, expensive electricity and declining purchasing power, economic dissatisfaction can become a decisive electoral issue.

4. MAURICIO MACRI — ARGENTINA, 2019

Policy context: IMF bailout, currency depreciation and austerity

Argentina under President Mauricio Macri provides another important case study.

His administration pursued market-oriented reforms but struggled with inflation, debt pressures, currency depreciation and declining confidence in the economy.

In 2018, Argentina secured a major IMF financing arrangement, initially valued at approximately US$50 billion and subsequently expanded to about US$57 billion, making it the largest IMF lending programme approved at that time.

Despite the intervention, the Argentine peso depreciated sharply, inflation remained high and economic hardship intensified.

Macri lost the 2019 presidential election to Alberto Fernández, whose campaign benefited from public dissatisfaction with the incumbent government's economic record.

The defeat demonstrated that access to international financing does not automatically translate into economic recovery or political survival.

The lesson: External financial support cannot compensate indefinitely for declining household incomes, persistent inflation and the perception that economic policies are failing.

5. FERNANDO DE LA RÚA — ARGENTINA, 2001

Policy context: Austerity, debt crisis and economic collapse

Argentina's crisis in 2001 represents an extreme example of the political consequences of economic collapse.

President Fernando de la Rúa inherited an economy burdened by recession, unemployment, mounting debt and a rigid currency-convertibility arrangement that linked the peso to the US dollar.

The government pursued fiscal adjustment while attempting to preserve confidence in the financial system.

However, the economy deteriorated, unemployment and poverty increased, and restrictions on bank withdrawals intensified public anger.

Mass protests and deadly unrest followed in December 2001. De la Rúa resigned on 20 December, before completing his presidential term.

Argentina subsequently experienced extraordinary political instability, with several presidents serving in rapid succession.

The crisis reflected a combination of domestic policy failures, structural economic weaknesses, political conflict and external pressures. It should not be reduced to a single IMF prescription.

The lesson: When economic adjustment loses public legitimacy and the government can no longer provide credible relief, a financial crisis can escalate into a national political emergency.

6. SUHARTO — INDONESIA, 1998

Policy context: Asian financial crisis and IMF-supported reforms

Suharto ruled Indonesia for more than three decades before resigning in May 1998.

The Asian financial crisis of 1997 triggered a severe economic and political breakdown. Indonesia's currency collapsed, businesses failed, unemployment rose and household purchasing power deteriorated.

The government entered an IMF-supported programme that included financial-sector restructuring and other economic measures. The handling of bank closures, subsidy reductions and the wider crisis became deeply controversial.

Public anger grew as students and demonstrators demanded political reform. Widespread unrest, including deadly violence, further weakened the regime.

Suharto resigned amid mounting pressure.

Although the IMF programme formed part of the crisis response, Indonesia's collapse also reflected severe currency mismatches, corporate debt, weaknesses in the financial system, political grievances and the loss of confidence in Suharto's government.

The lesson: Economic reforms introduced during a financial emergency can become politically explosive when citizens believe the burden is unfairly distributed and the government lacks credibility.

7. ABDOULAYE WADE — SENEGAL, 2012

Policy context: Cost-of-living pressures and political dissatisfaction

President Abdoulaye Wade lost his re-election bid in Senegal's 2012 presidential election to Macky Sall.

The election unfolded against a background of public dissatisfaction, including concerns over the cost of living, unemployment, governance and Wade's controversial attempt to secure another term at the age of 85.

His decision to seek re-election also generated opposition over constitutional and democratic questions.

Wade lost the second-round vote decisively, with Sall receiving approximately 65.8 per cent of the vote.

It would be misleading to attribute Wade's defeat solely to World Bank-backed privatisation or subsidy reforms. Nevertheless, the election reinforces the importance of economic welfare, political legitimacy and respect for democratic expectations.

The lesson: Economic dissatisfaction can compound existing political grievances, particularly when voters believe a leader has become disconnected from their everyday struggles.

8. GOTABAYA RAJAPAKSA — SRI LANKA, 2022

Policy context: Economic mismanagement, foreign-exchange shortages and public revolt

Sri Lanka's 2022 crisis provides a powerful warning about the consequences of economic mismanagement.

The country experienced severe shortages of fuel, food, medicines and other essentials amid a devastating foreign-exchange crisis.

The crisis reflected several interacting factors, including tax cuts that weakened government revenue, declining tourism earnings, mounting debt obligations, policy mistakes and external economic shocks.

Public frustration escalated into mass protests against President Gotabaya Rajapaksa and his government.

In July 2022, demonstrators stormed the presidential residence, and Rajapaksa fled the country before resigning.

Sri Lanka subsequently pursued an IMF-supported programme involving fiscal adjustment, revenue mobilisation, debt restructuring and other reforms.

The crisis should not be presented simply as the consequence of removing fuel subsidies or floating the currency. The country's economic collapse was already rooted in a broader set of policy failures and external pressures.

The lesson: When citizens can no longer reliably access food, fuel, electricity and medicines, economic grievances can overwhelm even powerful political families.

9. MEXICO — THE DECLINE OF THE PRI'S POLITICAL DOMINANCE, 2000

Policy context: Market reforms, inequality and political transition

Mexico's Institutional Revolutionary Party (PRI) governed the country continuously for approximately 71 years before losing the presidency in 2000.

During the preceding decades, Mexico implemented extensive market-oriented reforms, including privatisation, trade liberalisation and the North American Free Trade Agreement, which took effect in 1994.

The country also experienced the 1994–1995 peso crisis, which required substantial international financial assistance.

However, the PRI's defeat in 2000 cannot be explained by economic reforms alone. Political liberalisation, electoral competition, public dissatisfaction with the established political order and the emergence of a stronger opposition were central to the transition.

Vicente Fox of the National Action Party won the presidency, ending the PRI's uninterrupted hold on the office.

The lesson: Economic dissatisfaction may weaken an established political party, but lasting electoral change usually involves a wider combination of institutional, political and social factors.

10. NAWAZ SHARIF — PAKISTAN, 1999 AND 2017

Policy context: Economic pressures, political conflict and removal from office

Nawaz Sharif's political career illustrates the danger of treating economic policy as the sole explanation for a leader's removal.

In October 1999, Sharif was ousted in a military coup led by General Pervez Musharraf. His removal occurred amid a confrontation with the military, rather than a straightforward electoral rejection of IMF-backed austerity.

In July 2017, Pakistan's Supreme Court disqualified Sharif from office following proceedings arising from the Panama Papers revelations and questions concerning the declaration of his assets.

Although Pakistan has repeatedly implemented IMF-supported economic programmes and faced difficult fiscal choices, these two removals had distinct political and institutional causes.

The lesson: Economic pressures can complicate political survival, but military intervention, judicial decisions and institutional conflicts must be distinguished from electoral punishment for economic reforms.

WHAT DOES THIS MEAN FOR TINUBU'S 2027 RE-ELECTION BID?

The central question for Nigeria is not whether economic reforms are necessary. It is whether the reforms being implemented are socially sustainable, economically effective and politically defensible.

President Bola Ahmed Tinubu inherited a challenging economic environment and has defended his government's decisions to remove the petrol subsidy and unify the foreign-exchange market as necessary steps towards fiscal stability and economic recovery.

However, the consequences for ordinary Nigerians have been severe. Higher petrol prices have increased transportation and distribution costs, while currency depreciation has raised the naira cost of imported goods, including food, medicines, industrial inputs and essential equipment.

For millions of households, the immediate question is straightforward: when will the benefits of these reforms become visible in their daily lives?

Three critical issues deserve particular attention.

1. SUBSIDY REMOVAL WITHOUT VISIBLE RELIEF

The removal of fuel subsidies can reduce certain fiscal pressures, but the savings must translate into tangible public benefits.

Citizens need evidence of improved public transport, more reliable electricity, better healthcare, stronger social protection and targeted assistance for vulnerable households.

Without visible improvements, the public may perceive subsidy removal as an additional burden rather than a necessary economic adjustment.

2. CURRENCY REFORM AND THE COST OF IMPORTS

Foreign-exchange market reform may help address distortions and improve transparency. Nevertheless, rapid depreciation can increase the domestic cost of imported food, fuel, medicines, machinery and production inputs.

The challenge is to establish a credible foreign-exchange market while reducing excessive volatility, expanding domestic production and protecting households from the worst effects of imported inflation.

A currency reform programme must be judged not only by exchange-rate statistics but also by its effects on production, employment, food prices and real incomes.

3. THE GAP BETWEEN ECONOMIC INDICATORS AND HOUSEHOLD REALITIES

A government may point to improvements in revenue, exports, foreign reserves or other macroeconomic indicators. Yet citizens judge economic performance through the prices they pay, the jobs they can secure, the businesses they can sustain and the quality of public services they receive.

If headline economic indicators improve while households continue to experience severe hardship, the political benefits may remain limited.

For an incumbent seeking re-election, this gap between official economic assessments and everyday experience can be consequential.

FIVE STRATEGIC LESSONS FOR NIGERIA

First, reform must be accompanied by credible social protection. Cash transfers, where properly targeted and transparently administered, can help vulnerable households absorb economic shocks. Their coverage, timeliness and adequacy must be independently assessed.

Second, domestic production must become a central economic priority. Nigeria cannot sustainably reduce the cost-of-living burden without improving agricultural productivity, local refining capacity, electricity supply, transport infrastructure and industrial output.

Third, government must communicate measurable results. Citizens deserve transparent accounts of subsidy-related fiscal savings, how those resources are allocated and what benefits they produce. Independent monitoring would strengthen public confidence.

Fourth, economic adjustment must be responsive to conditions on the ground. Authorities should continuously assess the effects of reforms on inflation, employment, poverty and business activity. Where policies impose excessive hardship, corrective measures should be considered without undermining long-term stability.

Fifth, political leaders must distinguish economic reform from economic suffering. A policy may be defensible in principle but poorly sequenced, inadequately explained or insufficiently supported by safety nets. The quality of implementation matters as much as the stated objective.

THE JONATHAN–TINUBU COMPARISON: A WARNING, NOT A PROPHECY

In 2012, Jonathan's attempt to remove the petrol subsidy triggered nationwide protests and inflicted a significant political cost on his administration.

Tinubu's administration has undertaken a more far-reaching reform programme, including the removal of the petrol subsidy and changes to the foreign-exchange regime.

The comparison raises a legitimate political question: if subsidy reform contributed to public dissatisfaction under Jonathan, what are the implications of the substantially higher petrol prices and broader cost-of-living pressures Nigerians have experienced under Tinubu?

However, a direct numerical comparison between the petrol price in 2012 and prices today cannot, by itself, predict an election result. Inflation, income levels, exchange rates, population growth, economic conditions, political alliances and the credibility of the opposition all matter.

Jonathan's defeat in 2015 is therefore best understood as a warning about the cumulative political consequences of economic hardship, insecurity, governance concerns and declining public confidence.

It is not proof that Tinubu must lose in 2027.

The decisive question is whether the administration can demonstrate that the sacrifices demanded of Nigerians are producing sufficient and broadly shared benefits before voters make th