An economist and Director of Research and Strategy at Chapel Hill Denham, Tajudeen Ibrahim, has called for greater transparency and accountability in the use of savings generated from the removal of fuel subsidy, stressing the need for Nigerians to clearly understand how the funds are being deployed. Speaking on The Conversation on Lagos Television, Ibrahim said the government should establish a stronger system for tracking and publicly reporting subsidy savings and distinguish them from funds generated through ordinary government revenue or borrowing.
Ibrahim noted that although the Federal Government has reported about ₦15.8 trillion in savings from subsidy removal, significant resources have also been committed to other areas, including about ₦9.4 trillion in minimum-wage-related improvements, approximately ₦42 billion for housing, the student-loan scheme and other government interventions. He, however, stressed that Nigerians are likely to experience the impact of government spending most directly at the local level, where public investment can have a more immediate effect on livelihoods and communities.
The economist also cautioned against judging the full impact of the reforms within only three years, arguing that the subsidy regime had shaped Nigeria’s economy for decades and that correcting its consequences would take time. On debt servicing, Ibrahim said the reported ₦9.37 trillion spent on servicing debt should not automatically be viewed negatively, particularly because exchange-rate depreciation has significantly increased the naira cost of servicing external obligations. He explained that meeting debt commitments could help preserve Nigeria’s credibility with international lenders, while failure to pay could make future borrowing more difficult or significantly more expensive.
Addressing concerns over government borrowing, Ibrahim argued that borrowing itself is not necessarily the problem; rather, the critical issue is what the borrowed funds are used for. According to him, borrowing to finance productive infrastructure can strengthen economic activity and generate long-term benefits, while borrowing without clear productive outcomes could worsen the country’s fiscal challenges. He cited major infrastructure projects, including the Lagos-Calabar Coastal Highway, as an example of the type of investment that could provide justification for borrowing if properly executed and economically productive.
Ibrahim further pointed to the gap between government revenue and expenditure as a major challenge, noting that while revenue has reportedly increased compared with the previous year, expenditure ambitions have also risen, particularly with higher capital-spending plans. He identified lower-than-projected oil production as another constraint on expected government revenue. Against this backdrop, he reiterated the need for transparency in accounting for subsidy savings, saying Nigerians should be able to determine which projects and interventions are being financed specifically from those savings and which are funded through other revenue sources or borrowing.
COURTESY: lagostelevision.com
