For the first time since crude oil was discovered in Nigeria in 1956, the Federal Government removed fuel subsidy on May 29, 2023. The announcement, made by President Bola Ahmed Tinubu during his inauguration, marked a turning point in the country’s economic history and immediately altered the lives of millions of Nigerians.
Fuel subsidy had long meant that the government paid part of the cost of petrol, keeping pump prices artificially low by covering the difference between the actual market price and what consumers paid. With its removal, petrol prices were allowed to reflect market realities, influenced by global oil prices, foreign exchange rates, and distribution costs. The result was swift and severe: fuel prices surged, and the financial burden shifted directly from government to citizens.
While economic explanations followed, most Nigerians did not need theory to grasp the implications. Traders dependent on public transport, farmers moving produce to markets, civil servants on stagnant wages, and students counting every naira all felt the impact almost immediately. Transport fares doubled or tripled in many areas, triggering a ripple effect across the economy. Food prices rose sharply, followed by increases in rent, school fees, healthcare, and basic household items.
For many families, survival strategies became unavoidable. Meals were skipped, medical visits postponed, children withdrawn from private schools, and small comforts abandoned. Subsidy removal quickly moved from policy debate to lived reality.
However, as households struggled, state governments experienced the opposite effect. The same policy that deepened hardship for ordinary Nigerians significantly boosted revenue for governments at all levels. Monthly allocations from the Federation Account to states reportedly increased by as much as 800 per cent. States that previously received about ₦4.5 billion monthly now receive upwards of ₦40 billion.
This financial windfall has been openly acknowledged by some governors. Imo State Governor, Hope Uzodimma, described subsidy removal as “a direct blessing” to sub-national governments, noting the sharp increase in funds flowing to the states.
In principle, increased funding for states is not problematic. Indeed, the promise of subsidy removal was that savings would be redirected to development closer to the people. But for many Nigerians, that promise remains unfulfilled. Across the country, there is little evidence that the additional revenue has translated into affordable transport, improved healthcare, better schools, or meaningful support for small businesses battered by inflation.
Instead, critics argue that many governors have prioritised expensive “legacy projects” that serve political image-building more than public welfare. While such projects may appear impressive, they often have minimal impact on everyday life. Meanwhile, critical sectors such as primary healthcare, public education, agriculture, and social welfare continue to suffer neglect.
The growing disconnect has become so pronounced that President Tinubu recently urged governors to “wet the grass” by ensuring that the benefits of increased revenue reach the grassroots. Coming from the president who announced subsidy removal, the appeal underscores an implicit acknowledgement that the pain has been real, widespread, and insufficiently addressed by state governments.
What has emerged, critics say, is an uneven outcome rather than shared sacrifice. Subsidy removal has created a sharp imbalance: governors are financially better off, while the people they govern are materially worse off. Economic pain has been transferred from government balance sheets to household kitchens, while financial relief appears to have stalled at the gates of government houses.
For the market woman paying more to transport goods, the commuter spending half of daily earnings on fares, and the family forced to choose between food and medicine, subsidy removal feels less like reform and more like abandonment. It raises a troubling question: can a policy be considered successful when it enriches those in power while deepening the suffering of the governed?
Until state governments can clearly demonstrate that the funds gained from subsidy removal are being used to reduce hardship and improve living standards, the policy is likely to remain deeply unpopular.
While President Tinubu deserves credit for taking a bold step to dismantle the corruption-ridden subsidy regime, there is an urgent need for mechanisms to ensure that the resulting resources improve the lives of ordinary Nigerians, rather than becoming inyaregh ki u gomna—personal funds of state governors.
