By Emmanuel Nduka Obisue
The Nigerian Government has announced plans to soon publish a detailed account of how savings from the removal of fuel subsidy have been spent, as it seeks to address growing public concerns over the economic reforms.
Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, disclosed this while speaking at the African Emerging Markets Forum in Abuja, where he defended the government’s fiscal and foreign exchange reforms.
According to Oyedele, savings realised from the removal of fuel subsidy and foreign exchange market reforms have largely been absorbed by rising debt servicing costs, an increased government wage bill and expanded social intervention programmes.
He explained that before the reforms, fuel subsidy and what he described as an implicit foreign exchange subsidy cost Nigeria about five per cent of its Gross Domestic Product (GDP).
Oyedele said a substantial portion of the savings had been channelled into servicing government debt after borrowing costs rose from about eight per cent to as high as 24 per cent following the reforms.
He also noted that the government’s wage bill increased significantly after the implementation of the new national minimum wage of ₦70,000, adding that personnel costs had nearly doubled.
The tax reform committee chairman further disclosed that the government had increased funding for its education loan programme, which currently provides tuition support and monthly stipends to more than 1.5 million students nationwide.
“I’ve heard this question so many times, and guess what? It’s a valid question,” Oyedele said while responding to concerns over the utilisation of the subsidy savings.
He assured Nigerians that the government would soon publish a comprehensive breakdown of how the funds had been spent to enhance transparency and accountability.
Oyedele also rejected a recent assessment by the International Monetary Fund (IMF) that millions of Nigerians remain in poverty despite the reforms, arguing that a temporary decline in real incomes was an inevitable consequence of ending decades of fuel and foreign exchange subsidies.
He added that the government would measure the success of its reforms using indicators such as multidimensional poverty, growth in real per capita income and income inequality, rather than relying solely on headline GDP growth.
