SUBSIDY, REFORM AND THE COURAGE TO CHANGE

 ABIODUN OLUWADARE contends that reform should not be judged solely by its discomfort

The 2027 presidential contest has barely begun, yet one important thing has already changed: the political conversation is gradually moving beyond the personalities and histories of the candidates towards the policies that will determine the daily lives of Nigerians. That is a welcome development. Elections should ultimately be contests over competing visions of how to govern the country, strengthen its economy and improve the welfare of its citizens. In this context, former Vice President Atiku Abubakar’s recent position on petrol subsidy deserves attention. Atiku now says that, if elected president in 2027, he would restore a form of subsidy, although he has clarified that he is not proposing a return to the old import-subsidy regime but a targeted, capped and transparently budgeted production subsidy tied to domestic refining. There is nothing inherently wrong with proposing an alternative policy. Indeed, that is what democratic elections should permit. But the proposal raises an important question that Nigerians are entitled to ask: what changed between 2023 and 2026?

During the 2023 presidential campaign, Atiku did not oppose subsidy removal. His position was explicit. He said he had chaired a committee on subsidy removal and would continue from where previous administrations had stopped, remove subsidies completely and redirect the resources into the economy. His policy document similarly proposed ending fuel subsidies within his first 100 days in office. That was not an incidental position; it reflected an economic argument that a system consuming enormous public resources while creating opportunities for fraud, smuggling and rent-seeking was unsustainable. President Bola Ahmed Tinubu subsequently acted on essentially the same diagnosis. The important difference is that Tinubu inherited the problem and accepted the political consequences of confronting it. On 29 May 2023, Tinubu announced the end of the subsidy regime, knowing that the decision would have immediate and painful consequences for households, commuters and businesses. The hardship that followed has been substantial and should not be minimised. Nigerians experienced higher transportation costs, rising food prices and declining purchasing power, and the government has a responsibility to acknowledge those realities. Yet acknowledging the hardship associated with reform is not the same as accepting the argument that the reform itself was unnecessary. That distinction is at the heart of the present debate.

For decades, Nigeria spent enormous public resources subsidising petrol consumption while struggling to finance the infrastructure and productive capacity needed for sustainable development. The old arrangement was also vulnerable to smuggling, diversion and manipulation, while the benefits were not necessarily distributed according to need. Ordinary Nigerians certainly benefited from cheaper petrol, but a universal subsidy on a commodity disproportionately consumed by vehicle owners, commercial operators and businesses was a blunt instrument for fighting poverty. A government does not automatically become pro-poor simply because it subsidises a commodity consumed by both the poor and the wealthy. The more fundamental question is how scarce public resources should be allocated. Should they remain locked into keeping one commodity artificially cheap, or should a greater proportion be redirected towards education, healthcare, social protection, infrastructure, employment and productive investment? That was the difficult choice confronting Nigeria, and Tinubu chose to confront it rather than postpone it once again.

This is where the political significance of the subsidy reform becomes clearer. The removal of the subsidy was not merely a decision about petrol pricing; it was an attempt to alter the fiscal structure within which the Nigerian state operates. The reform released resources that could potentially be deployed across the federation, including through increased allocations to state and local governments. This is particularly important in a federal system where many of the services that directly affect citizens are delivered at the subnational level. The question, therefore, should not be restricted to how much the Federal Government saved or how much Nigerians paid for petrol. It should also include what state and local governments have done with the additional resources that became available to them. If citizens do not see corresponding improvements in roads, schools, healthcare, salaries, social services and local development, accountability must extend beyond Abuja. The reform created fiscal space; the next responsibility is to ensure that the space is converted into public value.

The Tinubu administration should, of course, be required to demonstrate clearly how that fiscal space is being used. Government must provide facts, figures and visible results rather than relying on rhetoric. But the claim that the administration simply removed the subsidy and left Nigerians to suffer is incomplete. The reform changed the revenue position of the federation, expanded subnational fiscal resources and created greater room for interventions in education, infrastructure, social protection and human-capital development. Whether those interventions are sufficient is a legitimate question, and there is room for criticism over the speed, targeting and communication of implementation. But one can defend the direction of reform while demanding better execution. One can acknowledge the pain caused by inflation and the rising cost of living without concluding that Nigeria should return to the economic architecture that contributed to the fiscal pressures the reform sought to address.

This is particularly important because the Tinubu reform programme extends considerably beyond petrol subsidy. The administration has pursued changes in taxation, foreign exchange, public finance, education, social protection, infrastructure and investment. The Nigerian Education Loan Fund, for example, represents an effort to expand access to higher education by shifting attention from an exclusive reliance on direct public funding towards a structured financing mechanism for eligible students. Such a programme cannot put food on a household’s table today, but it addresses another dimension of national vulnerability: the inability of young Nigerians to acquire the education and skills required to participate productively in the economy. Governments must therefore perform two tasks simultaneously: respond to present hardship and invest in the capabilities that can reduce future vulnerability. The second task may not produce an immediate reduction in the price of petrol, but it is essential to building a more productive and less dependent society.

The same principle applies to infrastructure and investment. Nigeria’s long-standing infrastructure deficit has constrained production, increased business costs and limited national competitiveness. Roads, railways, electricity, ports, digital connectivity and other forms of infrastructure are not simply physical projects; they are foundations for economic activity. A government that succeeds in creating fiscal space but fails to invest productively will have squandered the opportunity created by reform. Conversely, a government that uses the opportunity to strengthen infrastructure, human capital and productive capacity can gradually transform temporary fiscal gains into long-term economic benefits. This is why the success of the Tinubu reforms should ultimately be judged not merely by the immediate cost of adjustment but by whether the country becomes more capable of producing, investing, competing and providing opportunities for its citizens.

The same logic applies to domestic refining. Nigeria’s dependence on imported refined petroleum products exposed the country to external price movements, foreign-exchange pressures and supply vulnerabilities. The expansion of domestic refining capacity creates the possibility of a different petroleum economy in which crude resources are increasingly processed within Nigeria, value is retained domestically, and dependence on imported refined products is reduced. If a carefully designed production incentive can support domestic refining without recreating the fiscal distortions of the old subsidy regime, that proposition deserves consideration. But it must be accompanied by transparency, clear limits, effective auditing and a credible account of its fiscal cost. The central lesson of the old subsidy system is that good intentions do not protect public policy from abuse. Institutional safeguards matter.

This is precisely why Atiku’s new proposal deserves serious examination rather than ridicule. If he believes that a targeted, capped production subsidy tied to domestic refining would produce better outcomes than the present arrangement, he should explain the economics in detail. How much would it cost annually? Who would receive the benefit? How would the subsidy be funded? How would diversion be prevented? What would happen when international oil prices rise, or crude production falls? What would happen to the resources now available to states and local governments? What expenditure would have to be displaced to finance the subsidy? And how would the country avoid recreating the same fiscal vulnerabilities that made the previous system unsustainable? These are not hostile questions. They are the minimum questions that any serious presidential economic proposal should answer.

There is also a question of political consistency. The same politician who now proposes bringing back a form of subsidy previously argued that subsidy should be removed. If Atiku’s position has changed because the consequences of reform have differed from what he expected, he should simply explain that. If he argues that subsidy removal was correct in principle but that the Tinubu administration implemented it badly, that too would constitute a legitimate political position. Nigerians are capable of understanding a politician who says that circumstances have changed or that experience has altered his judgement. What voters should resist, however, is the substitution of an attractive promise for a demonstrated economic model. A presidential candidate asking Nigerians to entrust him with the management of the national economy must show the arithmetic behind his promises.

This is where the Tinubu administration has an important advantage in the present debate: it has already made the difficult decision. It did not merely campaign on reform; it implemented reform and accepted the political consequences. That does not make every subsequent policy correct, nor does it make every implementation flawless. It does not absolve the administration of responsibility for inflation, poverty or the hardships experienced by Nigerians. But it does mean that the administration should be judged within the circumstances it inherited and against the alternatives that were realistically available at the time. Tinubu inherited serious fiscal constraints, a costly subsidy regime, foreign-exchange distortions, weak public finances, infrastructure deficits, insecurity and a large burden of accumulated expectations. Faced with those conditions, the administration could have preserved an increasingly difficult system and postponed the reckoning, or it could confront the distortions and accept the political consequences. It chose the latter.

That decision is the strongest foundation of the case for the Tinubu Presidency. The argument in its favour should not be that the reform has been painless; it has not. Nor should it be that every government intervention since 2023 has been perfectly executed; that would be impossible to sustain. The stronger argument is that the administration has attempted to change the underlying structure of the Nigerian economy rather than merely administer its symptoms. Three years is not enough to repair structural weaknesses accumulated over decades, but three years is enough to establish direction. Direction matters because countries cannot transform themselves if they repeatedly abandon difficult reforms whenever the initial costs become politically uncomfortable.

This is the larger lesson that the subsidy controversy should teach Nigeria. The country has repeatedly postponed difficult economic decisions, allowing structural problems to accumulate until the eventual adjustment becomes more painful. Governments defer reform, political pressure builds, the reform is weakened or reversed, and the next administration inherits an even more difficult problem. Such a cycle cannot produce sustainable development. If Nigeria is serious about escaping it, the country must distinguish between the pain of correcting structural weaknesses and the pain of preserving them. The first may be temporary if reform is properly implemented and its benefits are widely shared. The second can become permanent.

The responsibility of the Tinubu administration, therefore, is now greater than simply defending the removal of subsidy. Having taken the politically difficult first step, it must demonstrate that the sacrifice is producing a more capable and productive Nigerian economy. It must show how increased federation revenues are translating into better public services. It must strengthen social protection so that vulnerable households are not abandoned during adjustment. It must accelerate infrastructure delivery, expand opportunities for productive employment, deepen education financing and continue strengthening domestic refining and energy security. It must also communicate these achievements more effectively. At times, the administration has appeared too defensive when Nigerians were asking legitimate questions. That should change. Government should welcome scrutiny, respond with evidence and make the connection between present sacrifice and future opportunity much clearer.

This is also why the administration should not treat criticism as a threat to reform. Criticism can improve reform. Where implementation is weak, it should be strengthened. Where social protection is inadequate, it should be expanded. Where policy design produces unintended consequences, it should be adjusted. Where communication has failed, government should communicate better. The choice is not between defending everything the administration has done and abandoning the reform agenda altogether. A more mature position is to defend the direction of structural reform while insisting that its benefits must be broader, faster and more visible.

The political opposition has every right to challenge the Tinubu record, and Nigerians should listen carefully to alternative proposals. But elections should offer more than competing promises of immediate relief. They should offer competing economic models. If subsidy is to return, Nigerians should know how much it will cost, how long it will last, who will benefit, how it will be financed and what safeguards will prevent a return to the distortions of the past. More importantly, Nigerians should ask which candidate has the more credible plan for building an economy in which citizens require less government protection because they possess greater economic capacity of their own.

That is ultimately the choice before the country. The question is not whether Nigerians want cheaper petrol. Of course they do. Nigerians also want cheaper food, better roads, reliable electricity, good schools, affordable healthcare, security, productive employment and a stronger economy. The real question is how to finance and sustain these objectives. A government can provide temporary relief by subsidising consumption, but a transformative government must also build productive capacity, strengthen institutions and create the conditions under which citizens can become less vulnerable to economic shocks.

President Tinubu has chosen the more difficult road. He confronted a subsidy regime that successive governments had struggled to dismantle and accepted the political costs of doing so. His administration has subsequently pursued a wider programme of fiscal, monetary, educational, infrastructural and institutional reform. The work remains unfinished, and Nigerians are justified in demanding faster and more tangible results. But unfinished does not mean failed. Structural transformation is rarely achieved in a single political cycle.

The more consequential question, therefore, is whether Nigeria should turn back or consolidate the direction it has taken. If aspects of the reform require correction, correct them. If implementation requires improvement, improve it. If the vulnerable require greater protection, provide it. But Nigeria should be cautious about returning to the very economic architecture that reform was intended to dismantle simply because the transition has been difficult.

Atiku has opened an important debate. He is right that Nigerians want to know what has happened to the resources released by subsidy reform. Government should answer that question clearly and transparently. But Atiku must answer a question of his own. In 2023, he argued that subsidy should go. In 2026, he argues that a form of subsidy should return.

What changed?

Did the economic evidence change? Did the fiscal mathematics change? Did the structure of Nigeria’s petroleum economy change? Or did the political environment change?

Whatever the answer, Nigerians deserve to hear it. But they deserve something even more important: a choice between competing visions of Nigeria’s economic future. One vision must explain how to provide immediate relief. The other must explain how to build an economy that eventually requires less relief. President Tinubu has chosen the latter path. The challenge before him now is to prove, through delivery and results, that the difficult reforms undertaken since 2023 can become the foundation of a more productive, prosperous and resilient Nigeria.

The reform should therefore not be judged solely by the pain it has caused. It should be judged by the Nigeria it makes possible. Nigeria must not turn back. 

 Oluwadare is a professor of Political Science in Nigerian Defence Academy, Kaduna