There is a more fundamental question beneath Nigeria’s subsidy debate. What is the purpose of economic reform if its immediate consequence is to make citizens poorer? This is not an argument for preserving the old subsidy regime, which was costly, opaque and vulnerable to abuse. It is an argument about how reform should be designed, sequenced and governed, and whether the state can protect citizens while restructuring the economy.
When President Tinubu announced the removal of the petrol subsidy on May 29, 2023, many Nigerians initially interpreted it as a necessary act of political courage. The old system had become associated with corruption, smuggling, inefficiency and a heavy fiscal burden. Nigerians were prepared to accept reform if the sacrifice would produce a more productive economy and a better life. What they did not bargain for was the speed with which the costs were transferred to households and the lack of transparency surrounding implementation.
Reforms cannot be judged only by their theoretical efficiency. They must also be judged by their distributional consequences. In an economy where millions live on low and precarious incomes, petrol is not simply another commodity. Its price runs through transportation, food distribution, manufacturing, agriculture and virtually every other economic activity. The World Bank itself acknowledged that the reforms introduced since May 2023 imposed significant pressure on households and firms.
The immediate social consequence was a severe erosion of purchasing power. Petrol prices rose sharply; transport fares followed; businesses faced higher logistics and energy costs; and those costs were transmitted to consumers. Even workers with higher nominal salaries became substantially poorer in real terms as the prices of transportation, food and other necessities multiplied.
The government may have been right that the old subsidy regime was unsustainable. But removing a subsidy is not the same thing as managing its removal. The policy required a transition capable of protecting vulnerable households, supporting productive enterprises and ensuring that the fiscal savings were converted into visible public benefits. Instead, the adjustment was front-loaded. The pain was immediate, while the promised benefits remained largely in the future.
That is where the politics of reform becomes inseparable from its economics. The government says the reforms generated ₦15.8 trillion in subsidy savings for the Federation between June 2023 and December 2025. But this figure was not ₦15.8 trillion sitting in a Federal account. The Finance Ministry says ₦5.43 trillion accrued to the Federal Government, while ₦10.4 trillion went to states and local governments through the Federation Account. The government also says the Federal Government had ₦20.4 trillion in incremental resources when additional revenue and borrowing are included, against ₦30.64 trillion in incremental expenditure.
The figures surrounding petrol itself are even more difficult to reconcile with the simple declaration that “subsidy is gone.” The World Bank reported that the implicit petrol subsidy effectively continued until October 2024. It also reported that, as of February 2025, NNPCL claimed ₦7.8 trillion in arrears, while the Federation claimed ₦6.1 trillion. NNPCL subsequently began transferring only half of the revenue gains from the full subsidy removal to the Federation, using the other half to settle past arrears.
This raises a question that if the subsidy disappeared in May 2023, why did a substantial subsidy-like fiscal exposure persist until October 2024? There may be technical explanations involving exchange-rate differentials, under-recoveries and accumulated liabilities. But that is precisely why the government owes Nigerians a transparent account. Fiscal reform cannot depend on changing terminology while citizens carry the cost.
There is a similar issue with off-budget expenditure. The IMF’s 2026 assessment identified a substantial discrepancy between reported fiscal accounts and actual expenditure. IMF also separately described unreported spending equivalent to roughly 2 percent of GDP. Atiku subsequently called for investigations into the matter. Why was expenditure executed outside the original budget framework and subsequently incorporated through revisions? The issue raises serious questions about fiscal discipline, transparency and legislative oversight.
Economic reform is also a question of political legitimacy. When citizens are cutting consumption and businesses are struggling with high costs, expenditure associated with elite comfort acquires a meaning beyond its individual budgetary value. A government cannot credibly preach sacrifice to citizens while appearing indifferent to the optics of official extravagance.
This is why Atiku Abubakar’s new subsidy proposal has introduced a more substantive dimension into the 2027 campaign. He initially presented the idea as restoring subsidy, but his subsequent proposal is more specific: to replace the old import-dependent system with a targeted, capped, budgeted and independently audited production subsidy tied to domestic refining. The proposed framework would link government support to verified production, domestic supply and refinery performance, with a fiscal ceiling and a mechanism for eventually withdrawing the subsidy as domestic refining becomes more competitive.
That is a more serious proposition than simply arguing that subsidy should return. It reframes subsidy as a temporary instrument of industrial policy: government support used to build productive capacity rather than permanently subsidise consumption.
Such a policy is not without risks. Subsidies can become permanent, distort markets and create opportunities for political capture. Atiku therefore has to answer difficult questions: how much will the programme cost? Who qualifies? Who verifies production? How are subsidised barrels tracked? What prevents diversion or manipulation? What happens when the fiscal ceiling is reached? When exactly does the intervention end? These are not reasons to dismiss the proposal. They are the questions that should shape it.
Atiku has also argued that subsidy removal should have been phased. He has said that during the Obasanjo administration, the committee on subsidy removal recommended four phases and that the first two were implemented after negotiations with labour. Whether one accepts every element of his recollection is secondary to the policy principle, sequencing matters.
A reform can be economically defensible in the long term and still be badly implemented in the short term. The distinction between reform and shock therapy lies partly in whether government gives citizens and institutions time to adjust. If purchasing power collapses faster than productive capacity expands, the reform can become economically and politically destabilizing, as Nigerians have experienced under Tinubu.
In my opinion, Atiku should therefore not receive an automatic pass. His proposal must be costed, audited and subjected to the same scrutiny he is applying to the Tinubu administration. His previous positions on subsidy also deserve examination. Politics demands consistency, and voters are entitled to ask what has changed in his economic thinking and why.
If subsidy removal was necessary, what measurable improvements have the savings produced? If ₦15.8 trillion in resources was mobilised, what proportion has translated into productive investment and improved welfare? If the subsidy was fully removed only in October 2024, why was that not clearly communicated in 2023? And if citizens were asked to make extraordinary sacrifices, what comparable restraint did government impose on itself?
These are not partisan questions. They are questions of governance because, for too long, Nigerian politics has reduced economic questions to personalities, ethnicity, religion and region. That allows Nigerians to argue over identity instead of examining policy. But inflation has no ethnicity. Transport costs have no religion. Poverty has no region. A country cannot debate its way out of economic failure by changing the identity of the person to blame.
The 2027 election should therefore be different. It should be a contest between competing economic propositions. Candidates should publish their numbers and assumptions. They should explain how they will finance their promises, what they will subsidise, what they will tax, what they will privatise, what they will regulate and how they will protect the vulnerable.
This is where Atiku has helped move the campaign from the old cargo of ethnicity, religion and regionalism toward policy. He has put forward a proposal that should be interrogated by Nigerians. That is precisely how a serious democrat and policymaker should operate. And that is precisely how a serious Nigerian voters should decide.
Nigeria does not need another election fought primarily through tribal arithmetic, religious mobilisation or personality worship. It needs a contest over ideas on energy, industrialisation, employment, taxation, infrastructure, education, healthcare, security, public finance and social protection. Let Nigerians compare the policies. Let economists test the numbers. Let journalists challenge the claims. Let candidates defend their records. Then let citizens vote.
