pannigeriannews 
By Gabriel Adisa
It is becoming increasingly evident that President Bola Ahmed Tinubu’s decision to remove fuel subsidy, though initially painful and widely criticised by many Nigerians, may prove to be a turning point for the country’s economy.
On May 29, 2023, with three simple words, “Subsidy is gone”, President Tinubu ended a policy that had reportedly cost Nigeria more than ₦15 trillion over a decade.
Three years later, the question remains: Was it worth it? Has fuel subsidy removal become the lifeline the Nigerian economy needed?
Before the subsidy was removed, Nigeria was borrowing heavily to keep petrol prices artificially low. The scheme consumed an average of ₦4 trillion annually—an amount that exceeded the combined federal budgets for education, health and defence in some years.
An economist, Dr. Amina Bello, of the University of Ibadan summed up the situation thus: “We were subsidising consumption for the rich and fuel smugglers while schools lacked basic facilities and hospitals had inadequate equipment. The subsidy was simply not sustainable.”
The system was also plagued by leakages. Large quantities of subsidised fuel meant for Nigeria were reportedly smuggled into neighbouring countries such as Benin, Togo and Cameroon, where fuel sold at much higher prices. For years, the International Monetary Fund (IMF) and the World Bank had advised Nigeria to phase out the subsidy to prevent further fiscal strain.
The first year after the removal was difficult. Transport fares rose sharply, food prices increased, and inflation climbed to about 34 per cent. For many Nigerians, including traders, artisans and commercial drivers, the policy brought immediate hardship.
The Federal Government, however, maintained that the pain was temporary and that the savings from subsidy removal—estimated at over ₦17 trillion between 2023 and 2025 by the Ministry of Finance—were being redirected to critical sectors of the economy.
Speaking at the 7th Africa Emerging Market Forum in Abuja, the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, explained that the objective of the reform went beyond saving money. Responding to questions on the utilisation of the subsidy savings, Edun said the reform was designed to correct longstanding distortions in the economy and establish a more sustainable fiscal framework.
According to him, substantial resources have been channelled into social intervention programmes and other government obligations. He cited the Nigerian Education Loan Fund (NELFUND), through which more than 1.5 million students have received tuition support and monthly stipends. He also highlighted the implementation of the new ₦70,000 national minimum wage, the introduction of Compressed Natural Gas (CNG) buses, ongoing road projects across the six geopolitical zones, and increased allocations to states through the Federation Account Allocation Committee (FAAC).
Edun noted that many states, including Oyo and Lagos, have used the increased allocations to fund road construction, pay wage awards and improve public services. He also pointed to the growth of local refining through the Dangote Refinery and several modular refineries.
At Orita Naira in Ogbomoso, Oyo State, commercial driver, Musa Suleiman, admitted that the transition was difficult.
“The first six months were very tough. But after converting my vehicle to CNG, things have started improving.”
For Mrs. Bose Olabade, a food vendor, the experience has been mixed. “Food is still expensive, but my son was able to continue his education because he got a NELFUND loan.”
Economic analysts believe it is still too early to declare the policy a complete success, but many agree that the reforms have placed the economy on a more sustainable path.
In its 2025 assessment, the International Monetary Funds (IMF) reported that Nigeria’s debt-to-GDP ratio had become more stable, while capital expenditure had increased significantly following the removal of fuel subsidy.
Critics, however, argue that unless inflation is brought under control and social protection programmes are strengthened, many ordinary Nigerians will continue to struggle despite the reforms.
Supporters of the policy maintain that retaining the subsidy would have placed even greater pressure on the nation’s finances.
They said that fuel subsidy removal was never going to solve Nigeria’s economic problems overnight. It was a difficult policy decision with immediate consequences, but one aimed at addressing deep-rooted structural challenges.
Whether it ultimately becomes the measure that transformed the Nigerian economy will depend largely on how transparently and effectively the savings are invested in infrastructure, education, healthcare, power supply and job creation.
If those resources are managed responsibly and produce visible improvements in people’s lives, history may judge the decision as one of the most significant economic reforms in recent years.
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