…Allege profligacy in spending, lifestyle
…Want oil subsidy savings saved, not shared
When Nigeria’s federal government ended fuel subsidy in mid-2023, it was hailed as a bold step toward fiscal discipline. The move, economists argued, would free up significant revenue that could be redirected toward infrastructure, education, health, and other pressing national priorities.
Two years later, a new reality is settling in: the billions saved from ending fuel subsidy have indeed been disbursed, but not necessarily in ways that have improved the lives of ordinary Nigerians.
A historic windfall
In 2024 alone, the Federation Account Allocation Committee (FAAC) shared N28.78 trillion to the three tiers of government, a 79 percent jump from the N16.28 trillion shared in 2023 and more than double the N12.36 trillion in 2022, according to data from FAAC and Agora Policy.
For context, N1.681 trillion was disbursed in May 2025 alone, a sharp rise from N976 billion shared in May 2023, reflecting a 72.17 percent increase.
Much of this bonanza went to state governments, presenting what experts called a “once-in-a-generation” opportunity to reset development priorities and rebuild state capacity. Yet, as Nigerians continue to grapple with inflation, poor infrastructure, unpaid salaries, and underfunded schools and hospitals, many are asking: Where is the impact of all that money?
Lesson from a costly past
For veteran observers of Nigeria’s fiscal history, today’s situation evokes memories of an earlier era, the days of the Excess Crude Account (ECA).
Established in 2004 under President Olusegun Obasanjo’s administration, the ECA was designed to save oil revenue earned above a set benchmark. By the time President Goodluck Jonathan assumed office in 2010, the account held more than $20 billion. But by the time he left in 2015, that figure had dropped to just around $2 billion.
Jonathan later revealed that state governors led by then Rivers State governor, Rotimi Amaechi, routinely pressured the federal government to dip into the ECA to augment FAAC disbursements.
“At any time, the earnings dropped, the governors would insist that there is no place in our laws that actually says that the federal government should keep the reserve,” he said in a 2016 interview with Bloomberg.
Ngozi Okonjo-Iweala, former finance minister, who spearheaded the creation of the ECA, echoed that sentiment. She described how the lack of political will, particularly from state governors, frustrated attempts to sustain savings.
“We saved $22 billion [at first] because the political will to do it was there. And when the 2008/2009 crisis came, we were able to draw on those savings… and we never had to come to the Bank or the Fund,” she said at the IMF/World Bank annual meetings in 2016.
Today, Nigeria’s ECA balance has dwindled to a paltry $473,754.57, according to Shamseldeen Ogunjimi, the accountant-general of the Federation, as of April 2025.
Squandering the subsidy savings?
Many Nigerians fear that the current fuel subsidy windfall is going the way of the ECA, if not worse. Instead of channeling the saved funds into long-term infrastructure and human capital development, states are accused of spending them on recurrent expenditure and politically expedient projects.
Simon Samson, an economics lecturer at Baze University and chief economist at ARKK Economics and Data Limited, is among those sounding the alarm.
“Sharing the subsidy savings instead of saving and investing means depletion of savings (dissaving); pursuing consumption instead of investment; putting the present ahead of the future,” he warned.
Samson emphasised that Nigeria appears to be repeating old mistakes, “and probably worse.” The ECA, for all its shortcomings, at least helped establish the Sovereign Wealth Fund. By contrast, “the subsidy savings so far do not seem to make any provision for the future.”
He added that using these funds as short-term political cash is dangerous: “If a domestic or global downturn occurs, then the Nigerian people should be prepared for maximum impact.”
Political allowance?
Critics say the disbursement strategy also has a political dimension. By sharing all the subsidy savings with state governments, the federal government may be buying silence, or even loyalty.
This theory has gained traction with the recent wave of governor defections to the ruling party, and what some describe as “praise-singing” by state executives who once sat in opposition.
“The danger,” one Abuja-based policy analyst said under condition of anonymity, “is that this becomes a form of rentier politics, where governors are kept compliant with cash, not policy incentives.”
History on playback
Nigerians recall the insistence of the Nigerian Governors’ Forum (NGF) led by the then governor of Rivers State, Rotimi Amaechi to share the money from the Excess Crude Account (ECA) under the Goodluck Jonathan administration.
The governors had said at that time that the money was not properly managed, hence their agitation.
But Ngozi Okonjo-Iweala, then minister of finance and coordinating minister of the economy, had consistently maintained that governors lacked the political will to save in that dispensation.
Hiding behind a finger
Although Nigerians are worried that the huge largesse to state governors have not been able to trickle down to the man on the street, the governors are saying that the money being received is not able to do anything as inflation and high foreign exchange rate have made a nonsense of the huge sum. They are quick to rationalise that such huge receipts today pale into insignificance when compared to what their predecessors received, even though it may appear that the volume is bigger now than what was the case in the past. But this argument has been dismissed by many who described it as the usual playing to the gallery by politicians and a habit of pulling a wool over the eyes of their fellow compatriots.
Citizens left wanting
For ordinary Nigerians, these political games and fiscal debates mean little if their daily reality does not improve.
“What have they done with all the money?” asked Olakunle Samuel, who lives in Ondo State. “No new hospitals. The roads are the same. Yet every month we hear of billions shared to the states. It’s frustrating.”
The sentiment is echoed across the country. Civil servants, students, traders, and farmers alike have seen little change in their economic fortunes, even as the cost of fuel, food, and transportation continues to rise.
As Nigeria enjoys a temporary surge in revenues, thanks to subsidy removal, the real question is whether leaders at all levels will use the opportunity wisely, or squander it, as they have in the past.
“We cannot continue to treat public finance like political allowance. These funds could be laying the foundation for the next generation. But right now, we are consuming tomorrow today,” the policy analyst, earlier quoted, said.
The danger, he warned, is not just fiscal. “It’s existential. If we don’t learn from the past, we are doomed to repeat it, with even worse consequences.”
(BusinessDay)
