One challenge every government since Obasanjo has faced is the growing cost of governance. The cost of running our democracy is among the highest in the world, consuming trillions of Naira annually.
Servicing the three arms of government, the many agencies under the executive, state governments, and even the legislature requires enormous sums, primarily funded by the oil industry and internally generated revenue (IGR).
Previous governments have found different ways to manage this financial burden. Some have attempted service reforms, others have focused on blocking leakages, while some resorted to printing money or using the Central Bank’s “ways and means” as a financial fallback. Despite these efforts, most administrations tried to shield the masses through subsidies and various buffers.
The current government, however, seems to have taken a more straightforward, yet problematic, approach: price increases.
What we’ve seen so far is a general rise in fees for government services—whether it’s driver’s licenses, port dues, or international passports. It appears that increasing the cost of everything is viewed as the solution to covering the growing expenses of running the government.
With the removal of subsidies and the liberalization of fuel prices, the focus seems to be on raising enough money to keep the machinery of government running, rather than cutting costs or finding more sustainable solutions.
Government spending, especially on travel and logistics, has not eased, despite claims of restrictions. We still witness significant donations by the government and its close allies, as well as unchecked spending, as if we were in a time of abundance.
While citizens are making sacrifices and cutting their own costs of living, the same is not happening in governance. Across all levels of government and its agencies, expenditures remain high, funded by service price hikes and the near-total removal of subsidies.
This has significantly reduced the purchasing power of the people, affecting businesses, and bottom lines, and driving up unemployment. Inflation will inevitably rise, increasing replacement costs and further worsening the already alarming cost of living, pushing more people into poverty.
These economic conditions are fueling crime, deepening despair, and worsening the ratio of human misery.
Yet, the government continues to raise costs—whether it’s electricity, which is already unaffordable for many, or fuel, with justifications ranging from international price comparisons to claims that fuel costs are beyond government control due to global trade.
For the first time, the economic crisis has severely impacted the informal sector, which has traditionally served as a stabilizing force. The unbanked and cash-driven retail economy once shielded from import-driven inflation, now faces vulnerability due to recent financial inclusion initiatives and the spillover effects from the struggling middle class, which has shifted its consumption to the informal sector.
Rising demand in the informal sector has led to price increases for basic goods like bread and sachet water, as well as for housing and land in suburban and rural areas.
To address this, the government must first prioritize the national interest over personal gains in policymaking. It must urgently block financial leakages, fight corruption, reduce the cost of governance, and free up funds that can be used to support strategic areas of the economy.
There is also a need to restore some level of subsidy to control the costs of essential items like electricity, fuel, and fertilizers. It is unsustainable to remove subsidies while wastefully spending the saved funds on excessive government expenses that provide little benefit to the people.
What we are witnessing is a “robbing Peter to pay Paul” scenario, where only those in or close to the government are finding any relief. Prices and the cost of living cannot continue to rise indefinitely—something will have to give when we reach an economic breaking point.
The time to act is now.
Duke of Shomolu
Joseph Edgar, also known as The Duke of Shomolu, is an expert investment banker with over 30 years of cognate experience, specializing in strategy and business development. He is a seasoned stockbroker who has traded on the floor of the Lagos Stock Exchange, now known as the NGX. Edgar is also a theatre producer with the largest body of work in modern-day theatre. In addition, he is a columnist, writer, and essayist, having published about eight works. He is widely read and regularly appears on media platforms to discuss economic and political iss
