Nigerians expect state governments to complement the federal government’s efforts by transparently deploying their increased allocations to provide tangible benefits such as improved infrastructure, social services, and economic relief that reflect the promised gains of fuel subsidy removal, writes Festus Akanbi

As activities marking the second anniversary of the current administration gather steam, one question that the Nigerian people are asking in most of the public discussions on the anniversary is what happens to the savings from the removal of fuel subsidy, which was announced during the president’s inauguration.

While announcing the tough measure, President Bola Tinubu, who also announced a foreign exchange reform, promised to spend the savings to cushion economic problems and restore hope in the country.

The president said the removal of fuel subsidy has helped reduce Nigeria’s daily petrol consumption from several million litres to about 30 million litres.

He explained that following the removal, the country now has an accurate understanding of its petrol consumption, which has significantly disrupted smuggling activities.

The president said that the petrol subsidy was holding back investment in critical areas such as infrastructure, education, and health.

He added that as a result of the subsidy, Nigeria has been unable to equip its school facilities, and healthcare system and provide social welfare programmes that will bring a better return on investment.

Bumper ‘Harvests’ to States

The fuel subsidy removal, hailed by economists as a necessary step to restore fiscal sanity, has brought about an unprecedented increase in allocations from the Federation Account Allocation Committee (FAAC).

In 2024 alone, FAAC shared N28.78 trillion with the three tiers of government, a 79 per cent jump from the N16.28 trillion disbursed in 2023, and a leap from N12.36 trillion in 2022, according to data from FAAC and Agora Policy.

Much of this bounty flowed to state governments, offering what many described as a rare opportunity to reset their fiscal outlook and invest heavily in social and economic development. Yet, observers argue, the opportunity is being squandered.

Given the inactivity of the local government, attention is shifted to the state government, which is closer to the people as it handles key issues like primary and secondary school education and healthcare for the people.

However, analysts say that state governments continue to go unchallenged on how revenue accrued to them is spent because in Nigeria, public discourse on governance often tilts toward the federal government, yet the most glaring failures in the delivery of essential services and public accountability are unfolding at the states’ level.

The reality is that despite a significant increase in revenue since the removal of fuel subsidies and the unification of the exchange rate, state governors have largely failed to translate the windfall into tangible improvements in the lives of their citizens.

The Savings

Official figures of the savings from fuel subsidy removal vary, but the Minister of Finance and coordinating minister of the economy, Wale Edun, says Nigeria has saved $20 billion from petrol subsidy removal and market-based pricing of the foreign exchange rate.

This figure was corroborated by the Chairman of Presidential Fiscal Policy and Tax Reforms, Taiwo Oyedele, who stated that from the ongoing reforms by the federal government, Nigeria has saved between $20-$25 million daily, which, according to him, has stabilised the naira.

FG Reels Out Projects

Information and National Orientation, Mohammed Idris said, funds being saved from the stoppage of subsidy were being used to execute what he described as high-impact projects and schemes by the Tinubu administration. He listed such projects and schemes as student loans, physical and digital infrastructure, low-cost consumer credit, agricultural production, and targeted social investments.

Idris stated that following the subsidy removal, Tinubu was gradually guiding Nigeria into an unprecedented energy transition phase, launching a presidential initiative to move the country from fossil fuels to Compressed Natural Gas (CNG) as fuel for vehicles and machinery.

He said the federal government had approved fresh N110billion for payment of tuition for 120,000 students of public tertiary institutions that applied for loans through the Nigerian Education Loan Fund (NELFUND) and that 500,000 civil servants nationwide were targeted as beneficiaries in the first set of the consumer credit scheme, which is to enable Nigerians have access to funds to purchase locally-made goods on credit.

The Burden of Rising Costs

The federal government account doesn’t tally with the result of a 2024 Afrobarometer survey, which reveals deep public dissatisfaction with the subsidy removal policy. According to the survey, 62 per cent of Nigerians believe that the removal of petrol subsidy has made life worse, intensifying the burden of rising costs and economic hardship.

Only 18 per cent of respondents said they believe the savings from the subsidy removal are being put to good use, highlighting a widespread perception of mismanagement or lack of visible impact from the policy shift.

“Since they removed the subsidy, life has only become harder for people like us. Prices keep rising, including food, transportation, and even school fees. They said the money saved would be used to improve our lives, to fix roads, build hospitals, and provide support. But we haven’t seen anything change,” Wale Adeowo, a Lagos-based teacher, lamented.

A joint report by the World Bank and the National Bureau of Statistics (NBS) found that 129 million Nigerians, over half the population, now live below the national poverty line, up from 104 million in 2023. This means that an additional 25 million people fell into poverty within a year. Analysts say the pressures from subsidy removal, high inflation, and a sluggish labour market have pushed more households into precarity.

Pressure Mounts on States

Observers argued that while much of what the Minister said is verifiable, there is still a yawning gap between what Nigerians expect. The fact is that Nigeria is big and so hugely populated that the impact of what the minister reeled out seems to be lost on the majority.

Analysts said it is worrisome that despite the increase in statutory allocation to the states due to the money being made from subsidy removal, this is not translating to improved welfare of the people. They said that although President Tinubu may not be in a position to dictate to the states how they spend their money, he needs to find some ingenious ways to make this happen, given that it is his reform that is driving the national economy.

They maintained that the time had come for governors to take greater charge of their responsibilities to the people.

They maintained that the only verifiable proof of an increase in revenue is the rise in yearly budgetary provisions. This is because budgetary provisions of most states this year have gone up significantly to reflect the increase in Federal Allocations since the advent of the present administration. For instance, states like Lagos, Rivers, Ogun, and Niger have crossed over to the trillions trajectory.

Despite this windfall from savings from fuel subsidy removal, workers in many states are still being owed salaries, new hands are not being recruited into the civil service to check the high rate of unemployment, and ex-workers are still living in poverty caused by the failure of most state governments to pay the backlogs of pensions and gratuities owed to them.

According to an Abuja-based economist and Policy advisor, Chinwe Abuwais, while the immediate impact of subsidy removal on the lives of Nigerians is undeniable, it also holds an equal seed of opportunity for progress if the leaders make the right choices.

She added that swift and decisive action is necessary to alleviate the burden and ensure the transparent allocation of funds into strategic sectors that will foster long-term development and prosperity for all Nigerians. This path, according to her, will pave the way for positive and inclusive development across the nation.

Apart from some palliative programmes introduced at the federal level. Some states introduced their relief measures, such as Ounje Eko, a subsidised food programme and transport subsidy for BRT buses in Lagos, but these interventions have been either unsustainable or insufficient to stem the tide of hardship.

Critics say that for many governors, the increased allocation has merely expanded the scope for patronage politics. New convoys, bloated bureaucracies, and inflated contract awards are more visible than road repairs or school renovations.

Therefore, to ensure the gains of subsidy savings reach every Nigerian, there must be an urgent, transparent, and accountable framework jointly developed and implemented by the federal and state governments, focused on investing in critical infrastructure, targeted social welfare programmes, and mass transportation systems.

This requires coordinated planning, strict monitoring of disbursements, regular public reporting, and the active involvement of civil society to ensure that every kobo saved directly improves the lives of ordinary citizens, especially the poor and vulnerable

(THISDAY)