Where Nigeria’s fuel-subsidy savings went: Debt costs, higher spending and what the figures mean for households

• Taiwo Oyedele says savings from fuel and forex subsidy removal were used for debt servicing, wages and student loans, not saved.

• The minister says Nigeria stopped financing spending by printing money, leading to higher borrowing and debt repayment costs.

• Government says the new ₦70,000 minimum wage and the NELFUND student loan scheme consumed a significant portion of the funds.

• Oyedele promised Nigerians a detailed public breakdown of the subsidy savings and how the money has been spent.

The Federal Government has finally addressed one of the biggest questions Nigerians have been asking since petrol subsidy was removed and the naira was floated: Where exactly did all the money go?

Minister of Finance and Coordinating Minister of the Economy, Taiwo Oyedele, says the savings from removing fuel subsidy and foreign exchange subsidies were not kept in a savings account. Instead, they were used to settle mounting government obligations, including debt servicing, the new national minimum wage, student loans and other critical expenses.

Speaking at the 7th African Emerging Markets Forum organised by the Central Bank of Nigeria (CBN) in Abuja on Thursday, Oyedele admitted that many Nigerians are justified in asking what became of the subsidy savings.

According to him, the government will soon release a detailed breakdown showing exactly how much was saved and where the money went.

Oyedele explained that the combined cost of fuel subsidy and foreign exchange subsidy was equivalent to about five per cent of Nigeria's Gross Domestic Product (GDP) before the reforms.

However, he stressed that the primary goal of removing the subsidies was never to accumulate cash.

"But saving money was not the primary objective. It was eliminating the distortion and the corruption in the system, which is more fundamental."

He acknowledged the growing demand for accountability from Nigerians.

"But where has the money gone to? In a few days, you will see the detailed analysis because we believe that we owe a duty to explain what we do to the Nigerian people. That's what transparency looks like."

READ ALSO: 10 important revelations Babachir Lawal made about Tinubu and Nigeria in explosive new interview

According to the minister, one of the biggest destinations for the savings was servicing Nigeria's growing debt.

He explained that before the reforms, the government financed part of its spending by printing money through the Central Bank, a practice that increased inflation but reduced immediate borrowing.

When that stopped, government still had to fund those same expenses, forcing it to borrow more at significantly higher interest rates.

"Many Nigerians will conclude that the reforms are not working for them. Some would even say it's a bad reform. What we do not normally compare is what would have been if the reforms were not carried out."

"Before the reforms, we were printing money to spend, the interest rates were about eight per cent, and the minimum wage was ₦30,000. If you just think about those three, those are big numbers," he continued.

"If you stop printing, the spending doesn't disappear. You need to finance the money you were printing before. That was part of where the savings went."

Oyedele added that rising inflation after the reforms also pushed interest rates much higher, making debt repayments far more expensive.

"So instead of paying eight per cent on our debts, we were paying as high as 24 per cent. When you need to service debts, you do not debate whether you need to pay. You cannot negotiate it. You pay, and you pay on time."

The finance minister also pointed to the implementation of the new national minimum wage as another major expense funded by the reforms.

The Federal Government increased the minimum wage from ₦30,000 to ₦70,000, a move that significantly raised government salary obligations.

"Minimum wage went up from N30,000 to N70,000. That's almost double the wage bill of the government."

Oyedele said part of the savings also went into financing the Nigerian Education Loan Fund (NELFUND), which now supports more than 1.5 million Nigerian students with tuition payments and monthly upkeep.

According to him, this has reduced the financial burden on parents who previously struggled to pay school fees.

"A million households, the parents, no longer have to save, borrow, and be stressed just to pay the tuition. Now they can deploy those resources into their small businesses and to take care of other important basic needs."

READ ALSO: Explained: Why the Federal Government borrowed ₦12.62tn in 2024 and where the money came from

The minister assured Nigerians that a comprehensive report detailing the savings from fuel subsidy removal and forex reforms, alongside how the funds have been spent, will be released soon.

"So what we need to do is we'll provide a detailed explanation of how much we saved and how the money has been spent."

He maintained that the reforms were introduced to fix deep-rooted economic distortions, improve transparency and make Nigeria's economy more attractive to investors, even though many households are yet to feel immediate relief from the changes.

Since President Bola Tinubu announced the removal of petrol subsidy in May 2023 and later allowed the naira to trade more freely, Nigerians have faced soaring fuel prices, rising transport costs and record inflation. While government officials argue the reforms were necessary to prevent a deeper economic crisis, many citizens continue to question why living costs remain high despite the promise of savings from the policy changes.