The federal government has officially declared the termination of fuel and foreign exchange subsidies, signaling the conclusion of a long-debated policy.
During the presentation of the Nigeria Development Update by the World Bank in Abuja on Thursday, October 17, Minister of Finance and Coordinating Minister of the Economy, Wale Edun, made this announcement.
Edun revealed that these subsidies had heavily strained the country’s economy, costing over N10 trillion, equivalent to five percent of Nigeria’s Gross Domestic Product (GDP).
“Fuel and FX subsidies are abolished,” Edun stated, emphasizing the financial burden these policies imposed on the nation.
He also unveiled a new government initiative aimed at combatting unemployment, particularly by enhancing housing finance.
This plan will include a mortgage scheme featuring near single-digit interest rates, which the government anticipates will stimulate construction activities and create substantial jobs.
“The initiative will be anchored around mortgage and housing financing,” Edun confirmed.
At the same gathering, Mr. Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), shed light on the rationale behind the recent half-percent interest rate hike.
He noted that the Monetary Policy Committee (MPC) had factored in the latest inflation trends when making this decision.
“Future policies and decisions will be guided by evidence and data,” Cardoso promised, reflecting the CBN’s commitment to data-driven policy formulation.
Bauchi State Governor, Bala Mohammed, shared his concerns regarding the inadequate funds allocated to state governments via the Federation Account Allocation Committee (FAAC).
“The monthly disbursement from FAAC is insufficient for state governments to provide essential infrastructure,” he lamented.
Mohammed criticized federal policies, asserting they have diminished the purchasing power of Nigerians. “These policies are ineffective,” he declared, highlighting the hardships faced by the populace.
Addressing the implementation of the new N70,000 minimum wage, Governor Mohammed acknowledged the discrepancies among states.
“Some states can afford N70,000 while others cannot. In Bauchi State, we are diligently paying the old minimum wage and are considering the new minimum wage as soon as possible,” he noted.
He expressed concern that while states are compliant with the wage law, funding critical infrastructure remains a significant challenge after meeting wage obligations. “We are close to a breaking point,” he said, indicating the immense pressure on state governments.
From the corporate sector, Amal Hassan, CEO of Outsource Global Limited, urged the federal government to cultivate a more enticing environment for investors.
“The government must mitigate risks to facilitate investor entry,” she stated, adding that despite Nigeria’s negative global image, its pool of talent continues to attract international businesses.
World Bank Senior Vice President and Chief Economist, Indermit Gill, concluded the discussion by urging Nigeria’s economic institutions—Monetary, Fiscal, and others—to collaborate more effectively.
He highlighted the necessity for unified efforts to drive economic reforms and growth.
