Fuel and FX Subsidies Removed, Finance Minister Updates on Economic Measures Amid Hardship

Nigeria’s Finance Minister confirms the removal of fuel and foreign exchange subsidies while outlining economic plans to alleviate hardship

The Nigerian government has confirmed that fuel and FX subsidies removed will remain a permanent policy, according to the Finance Minister, Wale Edun. Speaking at the World Bank’s Nigeria Development Update presentation in Abuja, Edun emphasized that these subsidies, which have long strained the country’s economy, are now a thing of the past.

“Fuel and FX subsidies are extinguished,” Edun said, stressing that the elimination of these policies has eased the financial burden on Nigeria. Over the years, the subsidies drained the national economy, costing more than N10 trillion, which equates to about 5% of the country’s Gross Domestic Product (GDP).

Edun also announced a new government plan aimed at addressing rising unemployment through initiatives in mortgage and housing financing. Fuel and FX subsidies removed, he explained, is part of the broader economic reforms, and the focus will now shift toward housing development as a key sector for job creation.

“This new plan will boost construction activities and, in turn, create a significant number of jobs,” he added. The government believes that a strong housing finance structure will not only support the housing market but also help reduce unemployment in the long run.

In a related development, Central Bank Governor Olayemi Cardoso justified the recent half-percent interest rate increase to 26.75%. According to him, the decision was based on data-driven policies aimed at curbing the naira crisis and rising inflation. Cardoso affirmed that future policy decisions would also be grounded in empirical evidence.

However, not all leaders agreed with the government’s approach. The Governor of Bauchi State voiced his opposition, blaming the current policies for the hardship many Nigerians are enduring. “These policies are not working,” he declared during the same event.

This shift in policy direction, which includes fuel and FX subsidies removed, has led to significant price increases. The cost of fuel surged from N195 per liter in May 2023 to N1030, while the naira exchange rate skyrocketed from N461 per dollar to N1660.49. Consequently, Nigeria’s inflation rate jumped to 32.70% in September 2024, up from 20.41% in May 2023.