Tinubu says saved subsidy billions going to Nigerians. No, they’re not

President Bola Tinubu said the removal of fuel subsidy last year has left a lot more money in the hands of federal, state and local governments, funds he said are “available to directly impact the lives of Nigerians.”

But the reality shows the opposite: while governments at all levels receive more money, there is little to show they are committing those resources to helping citizens grappling with the worst economic hardship in decades.

Mr Tinubu’s removal of petrol subsidy on his inauguration day, and his government’s subsequent devaluations of the naira, drove consumer prices to the 29.9 percent in January, the highest in nearly 30 years. Food inflation exceeded 35 percent, leaving millions of families struggling to feed daily.

The three tiers of government have shared on average N1 trillion monthly since then, an increase from just over N600 billion before the reforms.

President Tinubu said the revenues accruing to all three government levels grew by between 50 and 100 percent after the removal of the petrol subsidy.

“This means more funds are available to directly impact the lives of Nigerians through investments in critical infrastructure, social security, and other areas,” he said Tuesday at an annual conference and award by Leadership newspaper in Abuja.

Nigerians not benefitting – just yet

The president, represented by the minister of information and national orientation, Mohammed Idris, listed gains the government has realized from the subsidy policy as evidence the economy was not distressed.

“For example, the additional funding we are receiving is going into a new minimum wage for which negotiations have started, between the federal and state governments and organized labour,” he said.

He said he approved the disbursement of N200 billion, through three new special intervention funds established to support Nigerian businesses.

But most of these remain at planning level more than nine months after petrol was removed, as the president acknowledges.

In his speech, he said, he is releasing a N50 billion presidential conditional grant scheme that will provide business grants and loans to traders, food vendors, transport workers, ICT businesses, creatives, and artisans. However, “verification of all submitted applications is ongoing, and disbursements will commence through the Bank of Industry as soon as this verification is completed,” he said.

There is also a N75 billion fund that will provide single-digit-interest loans to micro, small and medium enterprises. The third is a N75 billion fund for the manufacturing sector, he said.

The government has yet to set a new minimum wage for workers as it promised, and has not paid wage awards to civil servants after the first three months.

“Removing subsidies was to improve government revenue. And revenues have increased, but they have not been efficiently spent. What have they done with it?” Bismarck Rewane, chief executive of Lagos-based consultancy Financial Derivatives, told UK-based Financial Times.

States are worse

The situation seems worse at the state level where governors control state and local funds.

So far, no state except one or two has come forward with a clear initiative that converts extra huge funds they now receive into supporting citizens, beyond a few nominal spending such as payment of N10,000 monthly to civil servants for a few months.

In an interview with Lagos-based TVC two weeks ago, Kaduna Governor Uba Sani said the removal of fuel subsidy has led to states experiencing a “surplus of money.” He called on fellow governors to provide an account of how these funds have been utilized.

Governor Sani said the blame should not solely be placed on the president.

“Everyone in Nigeria that is blaming the President, for me, is missing the point. Government is about local governments, state governments and the federal government…” he was quoted as saying.

Last month, the House of Representatives tasked its committees on special duties, national planning, and economic development with scrutinizing the expenditure and utilization of increased allocations by state governments.

“It is worrisome that some state governors have brazenly refused to complement the Federal Government’s poverty amelioration efforts and are not driving the necessary economic transformation,” said Ademorin Kuye (APC-Lagos) who raised the matter for discussion.

The lawmaker said states and local government areas received N6.57 trillion in 2023, double the N3.16 trillion they received in 2022, arguing that despite the availability of more cash to the states, more than 14.2 million citizens continued to grapple with poverty.

“If the states were doing the needful, that would have reduced the suffering of Nigerians,” he said.