Nigeria has officially ended fuel and foreign exchange subsidies, according to the country’s Minister of Finance, Wale Edun. Edun made the announcement during a recent presentation of the Nigeria Development Update by the World Bank in Abuja. The move is part of a broader effort to address the financial strain the subsidies had imposed on Nigeria’s economy.
“Fuel and FX subsidies are extinguished,” Edun stated, revealing that the subsidies had drained the country’s economy, costing over N10 trillion – approximately five percent of Nigeria’s Gross Domestic Product (GDP). The minister also unveiled a new plan aimed at tackling unemployment, with a focus on housing finance. The plan is expected to boost construction activities and generate significant job creation through mortgage and housing financing.
The Central Bank of Nigeria (CBN) Governor, Mr. Olayemi Cardoso, also addressed the recent half-percent interest rate hike, which stands at 26.75 percent. According to Cardoso, the policies and interventions implemented to cushion the Naira crisis and inflation are based on empirical data and necessary steps. “Policies and decisions will be based on evidence and data going forward,” he emphasized.
However, not everyone is in favor of the government’s policies. The Governor of Bauchi State condemned the policies, emphasizing that they are the cause of the hardship faced by Nigerians across the country. “These policies are not working,” he declared.
Nigeria’s fuel and FX subsidies removal, announced in June 2023, has led to significant increases in fuel prices and FX exchange rates. The country’s fuel price surged to N1030 per liter from N195 per liter, and the FX exchange rate rose to N1660.49 from N461 per dollar in May last year. The country’s inflation also rose to 32.70 percent in September from 20.41 percent in May 2023.
As Nigeria moves forward with its new policies, the country is looking to stabilize its economy and address the challenges faced by its citizens. The success of these policies remains to be seen, but the government is confident that its data-driven approach will lead to positive change.