By Jelili Gbadamosi
The removal of fuel subsidy by the Bola Tinubu administration has worsened economic hardship for many Nigerians because measures to cushion the impact have not matched the rising cost of living, economist Dr Samson Simon has said.
Simon, Chief Economist of ARKK Economics & Data Limited, said the policy was not necessarily wrong in principle, noting that he had previously supported subsidy removal because of the huge resources government committed to keeping petrol prices low.
However, he argued that the expected gains from the policy have not been sufficiently reflected in improvements in education, healthcare, infrastructure and social protection.
Speaking in an interview with DAILY POST, Simon said the increase in allocations from the Federation Account Allocation Committee (FAAC) should not automatically be interpreted as evidence that states had received the funds previously spent on subsidy.
According to him, much of the increase is nominal because of the naira’s depreciation.
He explained that while $1 billion was worth about N460 billion before Tinubu assumed office, the same amount is now worth more than N1.3 trillion at the official exchange rate.
Simon therefore argued that the higher naira value of government revenue does not necessarily represent a corresponding increase in real purchasing power.
He also criticised the manner in which the subsidy removal was implemented, saying vulnerable Nigerians were not adequately protected from its consequences.
He said the increase in petrol prices had triggered higher transportation and production costs, which subsequently affected food prices and other essential commodities.
The economist rejected claims that fuel subsidy mainly benefited wealthy Nigerians, arguing that although people with larger vehicles and higher fuel consumption may have received greater benefits in absolute terms, poorer Nigerians are now facing significant indirect costs through transportation, food and other necessities.
Simon said the debate should have involved a comprehensive assessment of both the cost of subsidy and the economic benefits it provided to citizens.
He further noted that removing subsidy had implications for agriculture, particularly irrigation, because farmers depend on fuel to power machinery and other equipment.
According to him, professionals and salaried workers are also struggling with the rising cost of transportation and other basic needs.
Simon, however, said he was not advocating a return to the previous subsidy regime, stressing that reinstating the policy would also create a substantial financial burden for the government.
He said petrol prices below N200 per litre were unlikely to return, given the cost of subsidising the product at current economic conditions.
Instead, he urged the government to prioritise targeted support for the most vulnerable Nigerians and strengthen social programmes to mitigate the impact of the policy.
