The Revenue Reset: Following The Subsidy Savings From Reform To Results

The Nigerian government's subsidy reform has generated significant fiscal space, with an estimated N15.8 trillion in savings mobilised between 2023 and 2025. This money was distributed across the federal, state, and local government tiers, with nearly N10.4 trillion going to states and local governments. The reform was accompanied by increased federal revenue and borrowing, totaling roughly N20.4 trillion, but also substantial expenditure pressures, including wage adjustments, debt servicing, infrastructure, and electricity subsidies.

While the reform has led to several positive outcomes, such as expanded student loans, revitalised healthcare centres, housing projects, and major infrastructure investments, the benefits have not been evenly distributed. States and local governments received the majority of the reform's financial gains, but there is a need for greater accountability from these tiers in terms of development outcomes.

Comparisons to fuel-subsidy reforms in other nations suggest that targeted cash transfers and direct transfers linked to identification systems can improve targeting while reducing dependence on blanket price support.