FG Ends Fuel and Foreign Exchange Subsidies, Unveils New Economic Measures

The federal government has officially ended fuel and foreign exchange (FX) subsidies, signaling a significant shift in Nigeria’s economic policy. This announcement came from Wale Edun, the Minister of Finance and Coordinating Minister of the Economy, during the presentation of the Nigeria Development Update by the World Bank in Abuja on Thursday, October 17.

Edun emphasized the heavy burden these subsidies had placed on the nation’s finances, revealing that the subsidies had drained over N10 trillion from the economy, equivalent to five percent of Nigeria’s Gross Domestic Product (GDP). “Fuel and FX subsidy are extinguished,” Edun declared, pointing to the need for a new direction to stabilize the country’s financial situation.

In addition to ending subsidies, Edun outlined a new government initiative to tackle Nigeria’s unemployment challenges, focusing on housing finance. He explained that the plan involves a mortgage scheme offering near single-digit interest rates, which is expected to stimulate construction activities and create jobs. “The plan will be anchored around mortgage and housing financing,” he said, describing it as a strategic approach to foster economic growth and support job creation.

Central Bank Focuses on Inflation Control

The event also featured insights from the Governor of the Central Bank of Nigeria (CBN), Mr. Olayemi Cardoso, who discussed the recent half-percent interest rate increase. Cardoso explained that the Monetary Policy Committee (MPC) had anticipated rising inflation, which informed their decision to raise rates. “Policies and decisions will be based on evidence and data going forward,” Cardoso assured, emphasizing the CBN’s commitment to using data-driven approaches for policy-making.

State Governors Express Concerns Over Economic Policies

Bauchi State Governor, Bala Mohammed, was among the state representatives present at the discussion. He voiced his concerns about the limited funds available to states through the Federation Account Allocation Committee (FAAC), stressing that the current allocations are inadequate to meet infrastructure needs. “The money coming from FAAC every month is not enough for state governments to provide infrastructure,” he lamented.

Governor Mohammed also criticized federal policies, arguing that they have reduced the purchasing power of Nigerians and exacerbated economic difficulties. “These policies are not working,” he asserted, highlighting the impact of the recent changes on ordinary citizens.

Regarding the implementation of the new N70,000 minimum wage, Mohammed acknowledged that some states face challenges in adopting the new standard. “Some states can afford N70,000, some cannot. We in Bauchi State are paying the old minimum wage religiously. We’re looking at paying the new minimum wage as soon as possible,” he said. He pointed out that while states are committed to wage laws, balancing wage payments with funding for essential infrastructure remains a tough challenge. “We are about to be lynched,” he remarked, illustrating the pressure that state governments face.

Calls for a Better Investment Climate

From the private sector, Amal Hassan, CEO of Outsource Global Limited, urged the federal government to improve Nigeria’s investment climate. She called for efforts to make the country more appealing to investors despite its challenges. “The government must de-risk the economy to make it easy for investors to come in,” Hassan said. She acknowledged that while Nigeria faces a negative global perception, its rich talent pool continues to attract interest from international businesses.

World Bank Official Stresses the Need for Collaboration

Concluding the discussion, World Bank Senior Vice President and Chief Economist, Indermit Gill, emphasized the importance of better coordination among Nigeria’s economic institutions, including the Monetary and Fiscal units. He called for unified efforts to drive forward economic reforms and foster growth in the country.

The government’s decision to end subsidies and introduce new economic strategies represents a turning point in Nigeria’s approach to fiscal management. As Nigeria navigates this new path, stakeholders from both the public and private sectors continue to push for policies that can stabilize the economy and improve the lives of its citizens.