Babatunji Wusu –
- Nigeria saved $20 billion by removing the petrol subsidy and adopting market-based foreign exchange pricing.
- Despite these savings, the government borrowed N1.77 trillion ($2.2 billion) for the 2024 budget.
- The subsidy removal has caused widespread hardship, with many Nigerians struggling to afford basic necessities.
- Nigeria is spending $3.5 billion to service existing debts.
- The saved funds are being reinvested into infrastructure, healthcare, education, and social services.
- The reforms have eliminated inefficiencies, including profiteering from the previous subsidy regime.
- A report by NNPC revealed that the government still owes N7.8 trillion for under-recovery, challenging earlier claims of no subsidy reintroduction.
Wale Edun, Nigeria’s Minister of Finance and Coordinating Minister of the Economy, has revealed that the country saved $20 billion through the removal of the petrol subsidy and the adoption of market-based foreign exchange pricing. This announcement came during an event in Abuja, marking the first 100 days of Esther Walson-Jack as the head of the federation’s civil service.
Despite these significant savings, the federal government recently secured approval from the National Assembly to borrow N1.77 trillion (about $2.2 billion) for the 2024 budget. The removal of subsidies has, however, led to severe economic difficulties, with many Nigerians struggling to afford basic necessities. According to the National Bureau of Statistics, a large portion of the population is now facing significant hardship.
Additionally, Nigeria is currently spending $3.5 billion to service existing debts. Edun explained that the reforms—specifically the market-based pricing of premium motor spirit (PMS) and foreign exchange—saved approximately 5% of the country’s GDP, equating to $20 billion as of October 2024. These funds, Edun noted, would now be directed towards infrastructure, healthcare, social services, and education.
He emphasized that the changes mark a shift away from the inefficiencies of the past. “No one can wake up and target cheap funding or forex from the central bank to enrich themselves without adding value,” Edun stated. He also pointed out that profiteering from the outdated petrol subsidy regime is no longer possible.
After 18 months of reforms led by President Bola Tinubu, the country is beginning to see the positive effects, though not without facing discomfort and increased living costs. President Tinubu officially ended the petrol subsidy regime on May 29, 2024. However, a report in August from the Nigerian National Petroleum Company (NNPC) contradicted earlier claims, revealing that the government owed N7.8 trillion for under-recovery, suggesting that the full impact of the subsidy removal remains unclear.
