Nigeria has saved an estimated $20 billion following the removal of petrol subsidies and the adoption of market-based foreign exchange pricing, according to Wale Edun, the Minister of Finance and Coordinating Minister of the Economy.
Speaking at an event in Abuja marking the first 100 days in office of Esther Walso-Jack, Head of the Civil Service of the Federation, Edun highlighted the economic impact of these reforms. He explained that subsidies on petrol and foreign exchange previously cost the nation five per cent of its Gross Domestic Product (GDP).
“Between them, they were costing five percent of GDP,” the Finance Minister explained.
“If you say GDP was on average, let’s say $400 billion, we all know what five percent of that is – $20 billion of funds that could be going into infrastructure, health, social services, education,” he added.
Edun noted that these savings are being redirected to critical development projects, representing a shift towards better resource allocation.
He also addressed inefficiencies in the old subsidy system, describing how it allowed individuals to gain immense wealth without adding value to the economy.
“The real change that has happened with the measures of Mr. President is that nobody can wake up and their target for the day or for the week or the month or the year is to get access to cheap funding, cheap funding exchange from central bank, which they can now flip.
“And overnight, they become wealthy from no value added for doing virtually nothing, except you know the right people,” he stated.
Edun explained that the petrol subsidy, previously prone to profiteering, has also been eliminated, removing a major source of economic inefficiency.
The removal of fuel subsidies was officially announced by President Bola Tinubu during his inauguration on May 29, 2023, marking a turning point in Nigeria’s economic policies.
According to Edun, these reforms not only reduce waste but also lay the foundation for sustainable growth, allowing resources to be used more effectively for the benefit of Nigerians.
