Nigeria has already eliminated an unsustainable subsidy. The real test is whether the fiscal space it created translates into lower transport costs, stronger industry and better public services. That framework already exists.
The National Economic Council where the federal government and all 36 governors sit is the natural forum to negotiate and publish binding investment and transparency commitments tied to subsidy financing, without which Nigeria risks winning the battle against a bad subsidy regime while losing the larger war for sustainable development. As the 2027 political season gathers pace, fuel subsidy removal has resurfaced as a live political fault line.
Atiku Abubakar has proposed a “targeted” subsidy framework to cushion citizens from the continuing cost-of-living crisis. President Tinubu, meanwhile, continues to defend the 2023 decision, arguing that it expanded resources available to the federating units, helped states meet salary obligations, funded NELFUND and social programmes, and enabled major infrastructure projects.
Both miss the more important question: not whether subsidy removal was right, but whether the fiscal space it created is being converted into the assets, especially transportation, that would actually lower the cost of living of Nigerians.
A subsidy regime consuming trillions of naira annually, and encouraging arbitrage and smuggling in the process, was fiscally unsustainable , which was a case I made at length in an earlier op-ed, “Can Nigeria’s 2023 Reforms Still Be Turned into a Development Dividend?” Three years later, that diagnosis still holds. Yet Nigeria never established a binding federating framework for channelling a defined share of the reform’s fiscal space into productivity-enhancing investment.
The Federal Ministry of Finance’s “By the Numbers” provides a useful clarification. It estimates that ₦15.8 trillion in subsidy savings accrued to the federation between June 2023 and December 2025, with ₦5.43 trillion distributed to the Federal Government, ₦6.52 trillion to states