SUBSIDY IS GLOBAL: RELIEF IS COMING TO NIGERIANS. - Lauretta Onochie

Across the world, governments subsidise things they consider strategically important to the welfare, security and economic survival of their citizens.

They subsidise agriculture. 

They subsidise energy. 

They subsidise food. 

They subsidise public transportation. 

They subsidise housing. 

They subsidise healthcare. 

They subsidise education. 

They subsidise electricity and, in a number of oil- and gas-producing countries, governments intervene to keep domestic energy prices below international market levels.

So the real economic question for Nigeria should never have been simply:

“Subsidy or no subsidy?”

The more intelligent question is:

What should Nigeria subsidise, who should benefit, how much can the country afford, and how do we prevent the subsidy from becoming an avenue for corruption?

THE WORLD HAS NOT ABANDONED SUBSIDIES

The evidence is overwhelming.

The International Energy Agency reported that governments spent about $620 billion subsidising fossil-fuel consumption in 2023, particularly in emerging and developing economies. 

The OECD-IEA database identifies dozens of countries with fossil-fuel support measures, including Saudi Arabia, Kuwait, Qatar, the United Arab Emirates, Algeria, Iran, Indonesia, Malaysia, India, China and others.

And subsidies are certainly not restricted to oil.

Agriculture is heavily supported across the developed world. OECD data show that around $842 billion a year in positive agricultural support was provided across the economies it monitored during 2021–2023. China, the European Union, the United States and Japan together accounted for roughly 70% of positive producer support over the preceding two decades.

Norway, Iceland, Switzerland, South Korea and Japan provided agricultural producer support exceeding 30% of gross farm receipts in the OECD's 2021–2023 assessment. 

The United States also provides substantial budgetary assistance to food consumers, particularly lower-income households, while India supports consumers substantially through its public distribution of food grains.

WHY?

Because serious governments understand that the market is an instrument for serving society; society does not exist merely to serve the market.

WHY NATIONS SUBSIDISE;

A subsidy can serve several legitimate economic purposes.

When farmers receive assistance with fertiliser, seeds, credit, irrigation, insurance or machinery, governments are not merely giving farmers money. They are protecting domestic food production and food security.

When public transportation is subsidised, governments can reduce the cost of getting workers to their jobs and children to school.

When electricity or gas is supported for vulnerable households, governments can protect families from extreme energy-price shocks.

And when a petroleum-producing nation deliberately makes part of the value of its natural resources available domestically at preferential terms, as Atiku Abubakar is daring to provide, it will be choosing to convert some of its resource wealth into lower production and living costs.

Therefore, subsidy is not free money.

It is a policy choice about where the benefit of a nation's wealth should go. Tinubu chose his family, friends and business associates. Atiku Abubakar has chosen that the benefits must go to the people of Nigeria. 

SUBSIDIES CAN IMPROVE QUALITY OF LIFE

For ordinary citizens, properly designed subsidies, as an Atiku presidency proposes, can have positive consequences far beyond the subsidised commodity itself.

Let's Consider Fuel.

A farmer needs fuel to move tomatoes from Kano to Lagos.

A transporter needs fuel to carry passengers.

A manufacturer needs diesel, petrol, gas or electricity to produce goods.

A trader pays transportation costs to bring products to market.

A school proprietor pays energy and transportation costs.

A hospital needs power.

When energy becomes dramatically more expensive, those costs cascade through an economy.

Fuel → Transportation → Production → Food → Services → Household expenditure.

Nigeria's own experience demonstrates why cushioning matters. The World Bank warned following the 2023 petrol-subsidy removal that without adequate compensation, higher petrol prices could push households into poverty and force damaging coping mechanisms, including withdrawing children from school or avoiding preventive healthcare. How prophetic!

That is the human dimension of economic policy.

Economic reforms cannot be judged exclusively by what happens to government revenue.

They must also be judged by what happens inside the household.

BUT SUBSIDIES CAN BE DISASTROUS -IMF

The IMF makes a selfish criticism across the so called third world countries, aimed at keeping the people in abject poverty and unable to benefit from their nature-given resources. President Buhari ignored the the Bretton Woods Institute and Nigeria survived the brazen pressure she was up against. Along came Pres. Tinubu and he eagerly sold out to the IMF's tactics.

Subsidies can create fiscal pressures, but the answer, does not necessarily have to be no intervention whatsoever. The alternative is better intervention. And this distinction is at the centre of Atiku Abubakar's newly announced proposal.

ATIKU'S PROPOSAL: SUBSIDISE PRODUCTION, NOT IMPORTATION

Atiku Abubakar has now provided considerably more detail about what he describes as a targeted, capped and transparently budgeted petroleum subsidy.

His proposal is not simply to resurrect Nigeria's previous import-subsidy architecture.

According to the plan announced in August 2026, qualifying Nigerian refineries—public and private—would receive domestic crude at preferential prices, subject to production, efficiency, transparency and domestic-supply requirements.

In other words:

Move the intervention from imported petrol to Nigerian production.

Move it from unverifiable import claims to verifiable domestic barrels.

Move it from open-ended expenditure to a predetermined fiscal ceiling.

And require the benefit to reach Nigerian consumers.

The proposal would reconcile crude allocations, refinery intake, production yields, inventories and domestic deliveries, while requiring participating refineries to supply an independently verified quantity of petroleum products into the Nigerian market according to a pricing formula reflecting the preferential crude price. It also proposes independent auditing, eligibility rules for public and private refineries, periodic reviews and a statutory sunset mechanism as domestic refining becomes more competitive.

That distinction is fundamental.

WHAT COULD NIGERIANS GAIN?

When implemented, a reformed production-focused petroleum subsidy will deliver several benefits simultaneously:

First: CHEAPER TRANSPORTATION.

Reducing the domestic cost of petrol and diesel could reduce pressure on fares for buses, taxis, motorcycles, trucks and other transportation.

Second: CHEAPER FOOD LOGISTICS.

Nigeria does not eat only what is produced next door. Food travels enormous distances from farms to aggregation centres, processing facilities, wholesalers and markets. Transportation is embedded in the final price. Lower logistics costs therefore have the potential to reduce pressure on food prices.

Third: RELIEF FOR BUSINESSES.

Millions of Nigerian businesses effectively provide their own electricity. Barbers, welders, restaurants, supermarkets, pharmacies, hotels, tailors, factories and small manufacturers all carry energy costs.

Reducing those costs can improve margins, protect jobs and potentially reduce consumer prices.

Fourth: STRONGER DOMESTIC REFINING.

This will be the most strategically important part of Atiku's proposal. Assistance will be tied to actual Nigerian refining, public money or foregone oil revenue would no longer merely subsidise consumption of imported petroleum products. It would simultaneously encourage domestic refining capacity, investment and employment.

Fifth: GREATER PURCHASING POWER.

Purchasing power is not determined solely by the number printed on a worker's salary.

It is determined by what that salary can buy.

A worker earning ₦200,000 whose transportation, food and energy bills consume ₦170,000 is economically poorer than someone earning the same amount whose essential expenses consume ₦100,000. Reducing essential living costs can therefore function like an indirect increase in real household income.

Sixth: AN OPPORTUNITY TO ATTACK INFLATION FROM THE COST SIDE.

Nigeria's inflation problem has multiple causes, so petroleum policy alone cannot solve it. But energy and transportation are important inputs across the economy. Reducing those costs sustainably will ease some cost-push pressures across supply chains.

Seventh: NIGERIANS WILL RECEIVE A MORE VISIBLE DIVIDEND FROM THEIR NATURAL RESOURCES.

Nigeria is an oil-producing nation. That citizens should experience part of that resource advantage through lower domestic energy costs is more beneficial to citizens, rather than Tinubu’s government capturing the entire market-equivalent value and promising to redistribute it later. This gain becomes particularly important when social protection is weak. 

Even their ally, the IMF's 2026 assessment says that although 9.2 million Nigerian households had been enrolled in the cash-transfer system, individual enrolled households received at MOST three ₦25,000 transfers since 2023. Not even the Minister in charge, can name a recipient family. 

IMF also estimated poverty at 63% under the national poverty line and warned that poverty and food insecurity could worsen with higher fuel and food prices.

THE DIFFERENCE MUST BE REFORM

Nigeria should not have to choose between two extremes:

A corrupt, unlimited subsidy regime or energy prices that transmit unbearable costs throughout society.

There is a third possibility, The Atiku Plan:

A targeted, transparent, affordable and accountable intervention. Atiku's proposed model is subject to measurable conditions.

Every subsidised barrel will be traceable.

Every participating refinery will be accountable.

The annual fiscal exposure will be published.

The opportunity cost to the Federation will be disclosed.

There will be an enforceable ceiling.

No retrospective or unverifiable claims will be permitted.

Consumer-price benefits will be independently measured.

And the programme will be periodically reviewed against its objectives.

NIGERIA'S OIL SHOULD WORK FOR NIGERIANS

There is nothing economically sophisticated about watching citizens of a resource-rich country become progressively poorer while congratulating government merely because its revenues have increased.

Government finances matter.

Fiscal sustainability matters.

Investment matters.

Infrastructure matters.

But the people of Nigeria, matter most.

A country's balance sheet cannot be declared healthy while the balance sheets of millions of its families are collapsing.

The success of economic reform must ultimately be visible in the market basket of the mother feeding her children; in the transport fare of the worker going to work; in the farmer's cost of moving produce; in the electricity bill of the manufacturer; in the survival of the small business owner; and in the purchasing power of the pensioner.

This is why the debate Atiku Abubakar has opened is bigger than petrol. It asks a fundamental question:

Who should ultimately benefit from Nigeria's natural wealth?

A reformed subsidy will solve Nigerians' basic problems. Properly designed, capped, audited and linked to domestic production, would become one component of a wider strategy to reduce living costs, strengthen Nigerian industry and restore household purchasing power.

The objective is therefore:

BRING BACK RELIEF. REFORM THE SUBSIDY. SUBSIDISE PRODUCTION. PROTECT THE PEOPLE.

Because the ultimate measure of Nigeria's oil wealth should not merely be how many barrels we export or how much money enters government accounts.

It should also be how that wealth improves the lives of Nigerians.

— Lauretta Onochie

@Laurestar