Three years after Nigeria scrapped one of Africa's biggest fuel subsidies, the country's fiscal position has strengthened dramatically. Government revenues have jumped.
States are collecting record sums. International investors have come back.
Yet millions of Nigerians still ask the same question: where is the promised dividend?
When President Bola Tinubu announced in May 2023 that "fuel subsidy is gone," he set Nigeria on a path to dismantle a policy that had warped public finances for decades. The move was seen as unavoidable.
The subsidy scheme devoured trillions of naira annually, handed its biggest benefits to wealthier households that used more fuel, and fuelled large-scale smuggling across borders where petrol cost more. Official investigations repeatedly flagged inflated and fraudulent claims tied to the programme.
Money that could have built roads, hospitals and schools instead went to keeping pump prices artificially low. The government's pitch to Nigerians was straightforward: endure short-term hardship now, and the freed-up cash would finance infrastructure, schools, health services and social support.
Reform was also supposed to cut government borrowing, stamp out corruption and restore investor trust. Today, the subsidy has vanished, but the real question lingers: did the dividend follow?
That answer rests on whether public finances improved and whether ordinary Nigerians felt the benefits.
By 2023, the subsidy had become the single largest item in the federal budget. The World Bank pegged petrol subsidies at roughly N4 trillion in 2022, with budget forecasts suggesting the bill might have hit N6 trillion in 2023 if the scheme had stayed in place—all while debt repayments ate up nearly every naira the federal government retained.
The case for scrapping it went beyond raw numbers. Because richer people use more fuel, they pocketed most of the subsidy's benefits, making it a poor tool for helping the poor.
The International Monetary Fund, World Bank and African Development Bank had said so for years.
The World Bank later calculated that removing the subsidy would improve Nigeria's fiscal position by roughly 2.6 percent of GDP in 2024—one of the largest single gains to the country's finances in recent times. The numbers have borne this out.
On the fiscal measure, the reform worked. Government revenues climbed sharply, FAAC allocations hit record highs and budget pressures eased.
Pump prices shifted toward import parity almost instantly and climbed higher still as the naira was liberalised.
Major revenue agencies collected N29.5 trillion in 2024, up from N16.5 trillion in 2023, driven by subsidy removal, the unified exchange rate and stronger tax collection. The government's consolidated fiscal deficit shrank from around 5.4 percent of GDP in 2023 to roughly 3.0 percent in 2024.
Debt servicing as a share of revenue fell from 96.3 percent in 2022 to 68 percent in 2024 as revenues rose, according to World Bank figures. All three tiers of government benefited from higher Federation revenue.
FAAC distributions jumped from N10.14 trillion in 2023 to N15.26 trillion in 2024, the data showed.
