The Federal Government and organised labour have clashed over the use of subsidy savings following the removal of petrol subsidy in 2023.
While the government says the funds helped finance debt obligations, higher salaries and student loans, labour unions have rejected the explanation and demanded verifiable evidence. The disagreement came as Finance Minister and Coordinating Minister of the Economy, Taiwo Oyedele, promised to publish a detailed account of the savings and how they were utilised.
Oyedele spoke at the ongoing 7th Africa Emerging Markets Forum in Abuja. He said the combined impact of fuel and foreign exchange subsidies previously amounted to about five per cent of Nigeria’s Gross Domestic Product. According to the minister, removing the subsidies created savings, although he said eliminating economic distortions and corruption was the primary objective of the reform.
He explained that part of the savings had been absorbed by increased debt-servicing costs following higher interest rates. Oyedele said interest rates had risen substantially from about eight per cent before the reforms, increasing the cost of servicing government debt. He also cited the increase in the national minimum wage from N30,000 to N70,000 as another major expenditure.
According to him, the wage increase nearly doubled the Federal Government’s wage bill. The minister further listed the Nigeria Education Loan Fund among areas benefiting from government spending. He said more than 1.5 million students currently receive tuition support and monthly stipends through the programme.
Oyedele argued that the intervention also provides relief to families that would otherwise have to borrow or divert resources from their businesses to finance tuition. He promised to provide Nigerians with a detailed breakdown showing how much was saved and where the money went.
The minister also addressed concerns over continued government borrowing despite claims that revenue targets had been exceeded. He explained that surpassing a revenue target does not necessarily eliminate the need for borrowing. According to Oyedele, a government that plans to spend N10 but expects revenue of N6 would need to borrow N4.
If revenue later rises to N7, the government would have exceeded its target but would still have a N3 funding gap. He maintained that borrowing was not inherently problematic if the funds were invested productively. Oyedele said the government must ensure that every naira and dollar borrowed generates more value than its cost.
Organised labour, however, rejected the Federal Government’s explanation. The Nigeria Civil Service Union and Joint National Public Service Negotiating Council challenged Oyedele to provide a comprehensive account of the subsidy savings generated since the reform.
Olowoyo Gbenga, General Secretary of the NCSU and National Secretary of the JNPSNC Trade Union Side, questioned the claim that the savings were used to finance workers’ salary increases and debt servicing. He argued that personnel costs were already provided for in the 2024, 2025 and 2026 budgets currently being implemented.
Gbenga also questioned the amount generated from the removal of subsidy since President Bola Tinubu announced in May 2023 that “fuel subsidy is gone.” He challenged the government to support its claims with empirical evidence. The labour leader further disputed the claim that workers had received corresponding salary increases.
According to him, the Federal Government had yet to implement the 40 per cent peculiar allowance associated with the new minimum wage, despite a directive that it should take effect from May 1, 2026. He also said the outstanding two-month wage award remained unpaid.
A senior Nigeria Labour Congress official also faulted the minister’s explanation. Speaking anonymously, the official accused the government of being “economical with the truth” and demanded verifiable facts and data. He claimed that revenue generated from subsidy removal in the first month exceeded N3 trillion and challenged the government to demonstrate how workers’ salaries had increased correspondingly.
The labour official also alleged that government had spent public funds on what he described as frivolous purchases, including presidential aircraft and yachts. He dismissed the minister’s explanation as “voodoo economics,” arguing that Oyedele should provide documentary evidence to support the government’s position.
The official said Nigerians deserved a transparent account of the funds generated since the subsidy removal. The dispute has now intensified calls for the Federal Government to publish a comprehensive breakdown of the subsidy savings, including the amounts generated, deductions made and specific programmes or obligations financed with the proceeds.
