Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, disclosed this on Wednesday at the seventh Africa Emerging Markets Forum in Abuja while responding to questions on whether Nigerians were beginning to feel the impact of the economic reforms introduced by President Bola Tinubu’s administration.
Oyedele admitted that many Nigerians have repeatedly demanded an explanation on the utilisation of the subsidy savings, describing the concern as justified.
“Where has the money gone? I’ve heard this question so many times. And guess what? It’s a valid question,” he said.
He assured that the government would soon release a comprehensive analysis detailing the savings and how they had been deployed.
“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,” the Minister said.
President Tinubu had, in his inaugural address on 29 May 2023, announced the removal of the petrol subsidy, declaring that “subsidy is gone.”
The policy, alongside the liberalization of the foreign exchange market, formed the cornerstone of his administration’s economic reform agenda aimed at reducing fiscal pressures, attracting investment, and restoring macroeconomic stability.
However, the reforms triggered a sharp rise in the cost of living, prompting widespread public debate over their impact.
Oyedele said the combined cost of petrol subsidy and what he described as “subsidy on FX” had accounted for about five per cent of Nigeria’s Gross Domestic Product (GDP), stressing that while the reforms generated fiscal savings, their primary objective was to eliminate distortions and entrenched corruption in the economy.
“The money saving is also important,” the Minister added.
According to him, much of the savings has been channelled towards financing obligations previously funded through Central Bank financing, servicing higher debt obligations resulting from tighter monetary policy, and implementing the new national minimum wage.
He explained that before the reforms, government expenditure was partly financed through money creation, while debt-servicing costs were considerably lower.
“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,” the Minister said.
Oyedele also revealed that the Ministry of Finance and the Central Bank of Nigeria had strengthened coordination between fiscal and monetary authorities to ensure both institutions work with the same macroeconomic assumptions before implementing policy measures.
He said aligning projections on inflation and other economic indicators would minimise policy conflicts.
“If the central bank sees outlook for inflation to be on the upside, and the fiscal authorities think inflation will turn downwards, those are two assumptions that will drive policy actions,” Oyedele said.
“We said to ourselves, we will start with the assumptions. At least when we get convinced about what is driving the assumptions, we can adopt the same assumption and then go do our work independently.”
The Minister acknowledged that high interest rates remained a major challenge for businesses but said the finance ministry was developing a framework to lower borrowing costs without returning to subsidy-driven interventions.
“Within the Ministry of Finance, we are working on a framework on how to bring down the cost of capital without introducing subsidies,” he said. “We believe we can complement the work of the monetary authorities and bring down the cost of capital.”
Oyedele also challenged the World Bank’s assessment that poverty had worsened as a result of the reforms.
While conceding that the removal of subsidies initially reduced household purchasing power, he argued that the reforms had created the foundation for stronger income growth over time.
“This is one area where I tend to disagree with the narrative by the World Bank,” Oyedele said. “Poverty has gone up because you cannot remove subsidy and people become richer. Reform itself was a reset.”
He disclosed that Nigeria recorded nearly 10 per cent real per capita income growth in dollar terms in 2025 and expressed confidence that poverty levels would decline as economic growth became more inclusive.
The World Bank, however, has maintained that although economic growth across Sub-Saharan Africa is improving, the pace remains insufficient to significantly reduce poverty, with high living costs continuing to weigh on households across the region.
Oyedele further disclosed that preliminary government analysis indicated that the economic cost of excessive regulation, bureaucracy and policy inconsistency exceeded the country’s combined revenue from Value Added Tax (VAT), Company Income Tax (CIT) and Personal Income Tax (PIT).
“Our preliminary analysis shows that the cost of over-regulation, bureaucracy and policy inconsistency is more than the combined revenue that we generate from corporate income tax, personal income tax and VAT combined,” he said.
He argued that removing bureaucratic obstacles would deliver greater economic benefits than introducing additional tax incentives.
“One thing that is better than incentives is removing disincentives, and that’s what we tend to prioritise,” he said.
Oyedele added that the Federal Government’s immediate priorities remained improving revenue generation, accelerating economic growth and maintaining fiscal discipline.
He also disclosed that the Ministry of Finance was developing a public data portal to improve transparency and reduce dependence on external sources for Nigerian economic data.
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