Oyedele: Savings from Subsidy Removal Not Enough to Transform Nigeria’s Economy

•Says under-$50bn federation budget can’t power a 200m-person economy

Deji Elumoye in Abuja

Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has said savings generated from the removal of fuel subsidy since 2023 were grossly inadequate to fund the country’s huge development goals.

Oyedele spoke yesterday in Abuja while delivering a keynote address at a one-day capacity building training on the Nigeria Tax Act (2025) for members of State House Press Corps.

He insisted that Nigeria must embrace a comprehensive tax reform agenda to reposition the economy for sustainable growth.

According to him, Nigeria’s total annual budgetary outlay — covering the federal government, 36 states, the Federal Capital Territory (FCT), and all 774 local government areas — is less than $50 billion. He described the figure as insufficient for a country of over 200 million people.

Oyedele stated, “Even if you remove corruption and waste completely, the resources at our disposal are not enough to transform Nigeria. Subsidy savings alone cannot deliver the level of infrastructure and services required. Our fiscal space is simply too small.”

Oyedele said the subsidy regime had left the federation on the brink of collapse, with the Nigerian National Petroleum Company Limited (NNPCL) not only withholding remittances but also leveraging future crude production as collateral to pay for petrol imports.

He said the recently debated five per cent fuel surcharge was not a new tax, but a provision that had existed in the Federal Roads Maintenance Agency (FERMA) Act since 2007.

Oyedele explained that the new Tax Reform Law transferred the surcharge to a broader fiscal framework, with safeguards for transparency.

He stated, “This surcharge will not commence automatically in 2026. It requires a commencement order from the Minister of Finance, duly published in the Gazette. The intent is to ensure openness and accountability in application, unlike in the past.”

Oyedele added that more than 150 countries dedicated fuel-related levies to road maintenance, stressing that Nigeria cannot continue to depend on printed money to fix its infrastructure.

He stated that while South Africa boasted an infrastructure-to-GDP ratio of 85 per cent, Nigeria was struggling at around 30 per cent, a gap that directly undermined productivity and growth.

“You cannot grow an economy when people and goods cannot move around efficiently. The reality is that we need dedicated funding for roads and infrastructure. Subsidy savings will not cover this gap,” Oyedele said.

On concerns about the introduction of a new tax identification system, Oyedele clarified that there will be no fresh card or registration exercise.

According to him, “We are not creating another layer of bureaucracy. What we have done is to harmonise identification. If you already have a National Identification Number (NIN) or Bank Verification Number (BVN), you need not worry. These will serve as tax IDs. The objective is simplification, not complication.”

He explained that the new tax reforms were designed to provide relief to the majority of Nigerian workers and entrepreneurs. Under the law, small businesses with an annual turnover of less than N100 million will enjoy 0 per cent corporate tax, while low- and middle-income earners — representing about 97 per cent of the workforce — are exempted or relieved from several tax burdens.

The chairman further emphasised that essential goods and services, such as food, education, and healthcare, had been classified as zero-rated for Value Added Tax (VAT), allowing producers to reclaim input VAT paid in the production process, thereby lowering overall production costs and stabilising consumer prices.

Oyedele raised concerns about Nigeria’s history of policy inconsistency, warning that constant reversals have cost the country trillions of naira and undermined reforms.

He cited the demolition of toll gates in early 2000 and the reversal of government refinery privatisation as examples of policy missteps that drained national resources.

Oyedele stated, “The simple question at the time was not how to stop leakages at toll gates, but why we did not build systems to ensure accountability.

“Because of that reversal, we are now back to discussing tolling and fuel surcharges more than two decades later. The same thing with refineries — if we had not reversed the sales, Nigeria would have saved over N20 trillion and created jobs.”

He urged the National Assembly to support constitutional amendments that will safeguard fiscal reforms against reversal, including provisions to criminalise arbitrary levies at the subnational level.

He said, “Our democracy must be structured to outlive political cycles. Otherwise, we waste sacrifices, and the country pays a heavy price. Reform is not about one administration; it must be institutional.”

Oyedele urged Nigerians, particularly the mass media, to report the reforms with responsibility and objectivity, emphasising that negative narratives risk undermining reforms that are in the public interest.

He said, “We must focus on facts. The subsidy removal stopped an imminent economic collapse, but it is only the beginning.

“The wider tax reforms are meant to create fairness, remove multiple taxation, and provide sustainable funding for infrastructure. If we stay the course, the benefits will begin to manifest at the household level from 2026.”