By ImamMalik Abdullahi Kaga
The removal of fuel subsidies has been a hotly debated and controversial topic in Nigeria for many years, especially now that the president has made the pronouncement. For the longest time, fuel subsidies represented a significant portion of government expenditures, and many Nigerian leaders refused to remove them for fear of political backlash from their citizens. However, President Tinubu’s bold decision to remove the fuel subsidy has been a critical step towards transforming the Nigerian economy and helping the poor.
The Nigerian government spent an average of $6.2 billion annually on fuel subsidies, and despite this, the country’s economy did not improve significantly. The fuel subsidy was primarily a means of subsidizing fuel prices for Nigerian consumers, and the government aimed to keep the domestic fuel prices low, which, in turn, would help fight inflation and improve the economy. However, the fuel subsidy did not achieve this goal, and instead, it distorted the market, leading to corruption, smuggling, inflation, among others.
Furthermore, fuel subsidies are often perceived as socially unjust because it benefits richer individuals more than the poor. Studies have shown that the richest 10% of Nigerians receive up to 60% of the subsidy, while the poorest 10% only receive 1%. It is well-known that the country’s wealthy motorists and industries benefit most from the subsidy, not the poor. Hence, the benefit did not trickle down to the poor but only helped the rich acquire fuel more cheaply. Since most of the poor Nigerians are not benefitting from the fuel subsidy, it’s a commendable effort that the president did.
The removal of the fuel subsidy will create jobs in the downstream sector, increasing the availability of fuel and reducing smuggling, which will contribute significantly to the Nigerian economy’s growth.
Moreover, the government’s removal of the fuel subsidy will allow it to redirect the average amount, $6.2 billion towards investing in critical sectors such as education, healthcare, agriculture, security, and infrastructure, which will help reduce poverty levels and create employment opportunities for Nigerians. The government’s commitment to investing in these critical sectors will reduce the dependency on oil, which is the country’s primary source of revenue, and make the economy more resilient to oil price fluctuations.
Tinubu’s action of fuel subsidy removal will also reduce corruption in government, which is a significant problem in Nigeria. With the fuel subsidy, many government officials fraudulently inflated the amount allocated to the subsidy scheme, which was further used to enrich themselves. The removal of the subsidy will prevent the exploitation of government funds by corrupt individuals, and this will be an essential step toward improving the Nigerian economy.
I urge Nigerians to be patient and prayerful as Tinubu Administration has a lot in store for us– poor Nigerians.
