…saves N15.8tn from subsidy removal
By Chika Okeke
Hope seems to have dimmed for Nigerians awaiting the Federal Government to reverse the fuel subsidy removal, as Nigeria’s total incremental spending rose to ₦30.64 trillion between June 2023 and December 2025.
President Bola Ahmed Tinubu had on May 29, 2023, ruled out the payment of subsidy on Premium Motor Spirit, PMS, from third quarter of 2023, arguing that based on the budget he inherited from the past administration of late President Muhammadu Buhari, subsidy was supposed to end by June, 2023. It implied that the subsidy ceased to exist from July 2023.
But the Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, while presenting Nigeria’s reform scorecard titled “The Benefits, Costs and Harm Prevented,” on Wednesday in Abuja, confirmed that the total incremental spending is ₦30.64 trillion.
A breakdown of the expenditure revealed the top three spending categories as wage adjustment, comprising wage, award and allowances (N9.39 trillion); external debt service (N9.37 trillion) and strategic infrastructure development (N6.7 trillion).
Others are electricity subsidy (N3138 billion); domestic debt services (N1240 billion); social welfare transfers (N424 billion); FCT development, ecological fund and natural resources investment, among others (N419 billion) and higher naira cost of foreign obligations (N201 billion).
This brings the total expenditure to N30, 640.54 trillion within two years.
Oyedele added: “Altogether, the Federal Government’s incremental resources over the period came to ₦20.4 trillion. That money did not sit idle – it partly funded incremental expenses of ₦30.64 trillion.
“Of this, ₦9.39 trillion went to wage adjustments, minimum wage increases and allowances for public servants; ₦9.37 trillion went to external debt service made necessary by exchange rate depreciation; and ₦6.5 trillion went into strategic infrastructure – making the top three expenditure lines.
“Every naira of this is accounted for, and the breakdown is in the scorecard we are releasing today. Put another way: of the ₦20.4 trillion, 58 percent came from borrowing, 27 percent from subsidy savings, and 15 percent from other revenue.
“Against total incremental spending of ₦30.64 trillion, two-thirds was funded by these new resources, while the remaining third – about ₦10 trillion – came from the existing revenue base, despite ending the excessive printing of naira.
“That, in itself, is evidence of improved public financial management. And it is instructive that the single largest expenditure line – wage adjustments, at ₦9.39 trillion – outstripped the Federal Government’s entire savings from subsidy removal.
To this end, the minister listed how the N15.8 trillion generated from the removal of fuel subsidy and the liberalisation of the foreign exchange was spent within the period under review.
He noted that the reforms benefited Nigerians in 10 different ways, adding that it resulted in wage increases and timely payment of salaries and pensions; settlement of pension arrears and gratuities owed to retirees; wealth creation for millions of Nigerians through capital market gains and transformative infrastructures development nationwide.
Also, top globally friendly student loan schemes, NELFUND, and affordable consumer /SME credit; subsidised mortgage and housing schemes, plus social transfers to the most vulnerable, up to 15million households; agricultural interventions strengthening food security; and fuel availability and energy scarcity despite global shocks.
This is in addition to return of investors’ confidence, driving local and international investment; and tax exemption for low-income earners and small businesses, and a friendlier tax environment.
Oyedele said: “Between June 2023 and December 2025, subsidy savings mobilised ₦15.8 trillion in resources for the Federation. Of this, ₦5.4 trillion accrued to the Federal Government, while ₦10.4 trillion was shared to states and local governments.
“In addition, the Federal Government earned incremental independent revenue of ₦3.1 trillion – principally remittances from government-owned entities while ₦11.9 trillion came from incremental borrowing, a figure that would have been far higher, and economically destabilising, without the fiscal space the reforms created.”
He noted that the minimum wage more than doubled, from ₦30,000 to ₦70,000, adding that NELFUND, is currently one of the most affordable student loan schemes globally, helping over 1.5 million students through school.
The Minister informed that the new Tax Act exempts low-income earners and small businesses from tax, while simplifying a system that had over-burdened the poor for decades.
