Fuel Subsidies Bad For Economy, Lifeblood of Nigeria Politicians?

Nigeria has come under fire from the International Monetary Fund and World Bank for the heavy financial burden it carries in providing subsidies for fuel and kerosene. The criticism is rooted in the belief that the money could be better spent on other essential services, such as healthcare and education, writes Wale Fatade for The Conversation Africa.

Fuel subsidies have been in place in Nigeria since the 1970s. It began with the government routinely selling petrol to Nigerians at below cost. However, despite numerous attempts at reform, Nigeria has never successfully removed gasoline subsidies, in large part due to strong popular opposition to reform.

The federal government says it will take care of petrol subsidy in the first six months of 2022. President Muhammadu Buhari shelved plans announced in March 2021 to eliminate the costly fuel subsidies. While senior government officials acknowledge the need to phase them out, doing so is politically risky - especially with elections on the horizon in early 2023. Many Nigerians regard affordable gasoline as their single dependable benefit from the country's misspent oil wealth.

Some Nigerians have called for the removal of the subsidy, to enable the government to invest the funds into other developmental projects. Others have however condemned calls for its removal, citing it as perhaps one of the most significant "benefits" the masses enjoy from the government.

Every year, the Nigerian government runs huge budget deficits that could have been avoided if money budgeted for oil subsidies was allocated to other critical projects.