Tinubu Marks One Year Since Ending Fuel Subsidies in Nigeria

On this day last year, President Bola Ahmed Tinubu declared the end of the subsidy on Premium Motor Spirit (PMS), commonly known as petrol. Tinubu, who assumed office on May 29, 2023, after winning the presidential election on the platform of the All Progressives Congress (APC), made this significant announcement during his inaugural speech at Eagle Square in Abuja.

“Subsidy is gone,” Tinubu proclaimed shortly after being sworn in as the 16th President of Nigeria. He noted that the national budget did not include a subsidy provision from June 2023, marking the formal removal of the subsidy.

Reflecting on the impact of this decision, it is evident that Nigerians have felt its profound effects over the past year.

Economic and Social Impact of Fuel Subsidy Removal

The removal of fuel subsidies in Nigeria has led to substantial economic and social changes:

1. Increased Cost of Living: The higher fuel prices have caused a ripple effect, raising the cost of goods and services and leading to a higher cost of living.
2. Higher Transportation Costs: Transportation costs have surged, affecting both commuters and businesses reliant on fuel.
3. Inflation: The removal has contributed to inflation, significantly increasing the prices of goods and services.
4. Hardship for Low-Income Households: Low-income households have been disproportionately affected, struggling to afford basic necessities.
5. Increased Electricity Tariffs: With the government reducing its subsidy spending, electricity tariffs have also increased.
6. Economic Hardship: Many Nigerians face economic hardship as their purchasing power diminishes due to higher living costs.
7. Unemployment: Job losses have occurred as businesses grapple with increased operational costs.
8. Increased Poverty: More Nigerians have been pushed into poverty, unable to afford basic needs.
9. Social Unrest: Protests and demonstrations against the government’s decision have highlighted the social unrest caused by the removal.
10. Economic Growth: Despite the immediate negative impacts, the government anticipates long-term economic growth from redirecting funds previously used for subsidies into other sectors.

Government’s Mitigation Efforts

The Tinubu administration has introduced various social intervention programs and economic reforms to mitigate the effects of the subsidy removal. These efforts include targeting economic growth of at least 6% GDP through budgetary reforms, enhancing domestic manufacturing, and reducing importation. The administration is also focused on resolving grievances related to excessive taxation to boost foreign direct investment.

As President Tinubu marks this anniversary, the nation continues to navigate the complexities of these economic adjustments, striving for a future of prosperity and stability.