Atiku’s Fuel Subsidy Promise: A Long March to Enrich Friends?

By Charles Marindoti Oludare

In the run-up to the 2019 presidential election, Atiku Abubakar made one of those political statements that refuse to disappear.

“I am not going to enrich members of my family but my friends,” he said, before adding that there was nothing wrong with his friends becoming richer provided there was no corruption.

There is an extraordinary political symbolism to this remark.
Did he misspeak or bespeak? This statement inadvertently capture a philosophy of government called crony capitalism in which access to state policy becomes another means through which those already closest to wealth and power become even wealthier?

Those questions have returned because of Atiku’s latest intervention in the petrol-subsidy debate.

Although his recent comments have been clarified to mean that he favours a limited subsidy connected to domestic refining rather than simply restoring every feature of the old imported-PMS subsidy regime. This mere distinction while matters, does not resolve the fundamental question:
Why should petrol consumption be the preferred mechanism for transferring public resources to Nigerians?

That is where the arithmetic becomes uncomfortable. I have repeatedly described universal petrol subsidy as welfare for the wealthy.

That does not mean poor Nigerians receive no benefit from cheaper petrol. They clearly do.

When petrol becomes cheaper, transportation can become cheaper. Some food-production and distribution costs can fall. Families running small generators may receive some benefit.

But there is a fundamental rule that cannot be escaped: the direct benefit of a petrol subsidy follows the litre.
If I consume ten litres of subsidized petrol and you consume one hundred litres, you receive ten times as much direct subsidy as I do.

The subsidy does not ask who is poor.
It asks who consumed the petrol.
That immediately creates an enormous distributional problem.

Only about 10% of Nigerian households own a car or truck, according to the 2024 Nigeria Demographic and Health Survey. In rural areas, ownership is 5%.

Think about what that means.

The poor farmer walking to his farm in my village in Ondo State or Atiku’s village in Adamawa State does not receive a direct subsidy on petrol he never purchased.
The poor household cooking largely with firewood receives nothing from a litre it never bought.

The worker travelling in a commercial bus shares the fuel consumed by that vehicle with perhaps ten or fifteen other passengers.

Compare that with a wealthy Nigerian household with several SUVs, drivers, generators and businesses consuming hundreds or thousands of litres.
Both are told that petrol subsidy exists “for Nigerians.”

But they clearly do not receive the same benefit.

The subsidy follows consumption.
And consumption follows wealth.
At petrol prices around ₦1,200 to ₦1,300 per litre, filling a large 100-litre SUV can cost roughly ₦120,000 to ₦130,000.
Nigeria’s statutory minimum wage is ₦70,000.

In other words, the amount required to fill one large luxury vehicle can exceed what a minimum-wage worker earns in an entire month.

That should immediately tell us something about the distributional absurdity of an untargeted fuel subsidy.

The owner of that vehicle can receive more direct subsidy during repeated refuelling than a poor Nigerian household may ever receive from the programme.
And wealthy Nigerians rarely own only one petrol-consuming asset.
There are several cars.
There are generators.
There are drivers.
There may be fleets attached to companies and households.
So when politicians speak romantically about “bringing back subsidy for the masses,” Nigerians should insist on a more serious question: which masses consume the litres?

Consider a subsistence farmer in a village in Oka Akoko.
He walks to his farm.
He owns no SUV.
He owns no large generator.
His children attend a poorly equipped public school.
The nearest health centre lacks basic equipment.
The road leading to his community is deteriorating.

Now consider a billionaire with homes across Nigeria, several cars, generators, large businesses and extensive personal transportation needs.

If government spends ₦1000 subsidising every 10 litres consumed, which of these two Nigerians receives the greater direct benefit?

The arithmetic answers the question.
Yet the poor farmer is often used as the political justification for subsidising the billionaire’s litres.

That is what makes universal petrol subsidy such a peculiar welfare programme for the wealthy.
The poorer you are and the less petrol you consume, the less direct assistance you receive.

The wealthier you are and the more petrol-consuming assets you possess, the larger your absolute benefit becomes.
The administration that took office in May 2023 confronted two major price distortions.

The first was petrol subsidy.
The second was the subsidised exchange-rate system under which politically connected or privileged actors could obtain dollars at rates unavailable to ordinary Nigerians.

The consequences of changing both policies became intertwined.
That is why it is misleading to look at today’s petrol price and attribute the entire increase to the removal of PMS subsidy.
Part of the increase reflects the exchange rate.

If the dollar still traded at approximately ₦500 and every other assumption remained unchanged, the naira cost of petroleum products would obviously be one-third of it is today. ₦400 instead of ₦1200.

But the more important question is why ₦500 to the dollar became increasingly impossible to sustain.

For that, Nigeria must look backward.
Godwin Emefiele became Governor of the Central Bank of Nigeria in 2014 and remained in office through almost the entirety of Muhammadu Buhari’s administration.

During that period, Nigeria experienced an enormous expansion of its money supply.
Broad money, M2, was approximately ₦20 trillion at the end of 2015.
By the end of 2023 it had risen to about ₦78 trillion.

That is almost a fourfold increase.
Nigeria did not simultaneously produce four times as much rice.
It did not produce four times as much electricity.

It did not build four times as many houses.
Its farms did not suddenly become four times as productive.
Its factories did not manufacture four times as many goods.
Yet the number of naira claims circulating through the economy expanded enormously.

This is where Milton Friedman’s famous statement becomes relevant:
Inflation is always and everywhere a monetary phenomenon.
Money is ultimately a claim on goods and services.

Creating more claims does not automatically create more goods.
One of the most controversial components of that monetary expansion was the extraordinary growth of CBN Ways and Means financing to the Federal Government.

The CBN Act permitted temporary advances to cover shortfalls in government revenue, but those advances were subject to statutory restrictions.
The amount outstanding was supposed to remain within a small percentage of the previous year’s actual federal revenue and was supposed to be repaid.

Instead, accumulated Ways and Means obligations eventually reached approximately ₦23 trillion before securitisation.

That represented a staggering expansion of central-bank financing of government expenditure.
Government continued paying obligations.
Contractors were paid.
Public employees received salaries.
States remained dependent on federally distributed resources.

Nominal money continued moving through the system.
But the real economy had not expanded at anything approaching the same pace.
That is where the money illusion begins.
People see more naira.

They do not immediately see that each naira represents a progressively smaller claim on the country’s available goods and foreign exchange.
For years, Nigeria tried to suppress part of the consequences through exchange controls.

The official naira exchange rate did not fully reflect the monetary pressure beneath it.
Instead, the pressure appeared through FX scarcity, import restrictions, card limits, rationing and an expanding parallel-market premium.

The naira appeared stronger officially than the price at which Nigerians could freely obtain dollars.

The eventual float did not create every underlying weakness in the currency.
To an important extent, it exposed accumulated weakness that already existed.

That does not mean floating the currency was painless.
It produced genuine additional inflation through exchange-rate pass-through.
Imported machinery became more expensive.

Medicines became more expensive.
Raw materials became more expensive.
Transportation and production costs increased.

But Nigerians should distinguish between creating an imbalance and exposing it.
The monetary expansion helped create the imbalance.
The controlled exchange rate obscured part of it.
The float exposed it.
The current administration has also committed an enormous communication error.
It repeatedly talks about “subsidy savings.”
That phrase invites Nigerians to imagine that there is some giant bank account somewhere into which money previously spent on subsidy is now being deposited.
Naturally, people then ask:
Where are the savings?
But that is not the best way to describe what happened.

Subsidy was an expenditure.
Government was borrowing heavily while financing its expenditures.
If a father borrows ₦10,000 monthly to indulge in his beer parlor habit and subsequently abolishes that ruinous habit; does that mean he has now “saved” ₦10,000 monthly to spend on his household?
This answer is “No”, he had only eliminated the need to borrow that money.
The better description is:
Nigeria stopped borrowing as much to finance an expenditure it could no longer afford.

You cannot save what you never had.
You can stop digging yourself into a debt hole to pay for what you cannot afford. Like the first rule of the hole goes “when in a hole, stop digging”.

That distinction should have been explained from the very beginning.
Nigeria cannot afford schools without roofs while subsidising the fuel burned by people with ten cars.

Nigeria cannot afford primary-health centres without basic equipment while subsidising generators in wealthy compounds.

Nigeria cannot afford children unable to read after completing 6 years of secondary school while pouring scarce public resources into reducing the cost of petrol for those who consume the greatest volumes.

Nigeria cannot afford roads that destroy vehicles and take lives while designing welfare around ownership of petrol-consuming assets.

And Nigeria certainly cannot afford to pretend that an untargeted subsidy is progressive merely because everybody is theoretically permitted to buy the subsidised product.

A benefit available to everyone is not necessarily distributed equally.
This is why Atiku’s 2019 remark remains relevant.

It gives Nigerians every reason to interrogate the motive behind the policies that transfer enormous public resources through consumption patterns dominated disproportionately by wealthier citizens(e.g. himself and his friends).

If Nigeria has scarce resources available for welfare, it should not be channelled through litres of petrol at the expense of classrooms, hospitals, roads, mass transit, electricity, nutrition programmes and targeted assistance. These are the alternative forgone that representing opportunity cost of Atiku’s choosing.
Those alternatives can be designed deliberately to favour the poor.

A petrol subsidy cannot escape the fact that its largest absolute beneficiaries will generally be its largest consumers.
The poorest Nigerian should not have to own an SUV before the state notices him.
He should not have to own a generator before government assistance reaches his household.

He should not need fifty litres of petrol before he receives fifty litres’ worth of public support.
There is an old political temptation to offer voters an immediately visible benefit while obscuring who ultimately captures the greatest share and what public services must be sacrificed to finance it.
Cheap petrol feels tangible.

A properly staffed rural health centre is less immediately visible to the motorist.
A functioning school laboratory may not produce the instant emotional satisfaction of seeing the pump price fall.

But development is precisely the process of choosing long-term public good over superficially attractive transfers whose largest absolute benefits accrue to those already best positioned to consume them.
Atiku and Nigeria’s billionaire political class are entitled to propose whatever economic model they believe will work.

Nigerians are equally entitled to ask who ultimately receives the money.
They should especially resist being reduced to Korisne budale (useful idiots): instruments through which elite interests acquire a populist justification
The poor Nigerian should not be deployed as the moral argument for a subsidy whose biggest cheques are effectively written to the biggest consumers.
If the objective is truly welfare, then welfare should follow need, not litres.
And if anyone asks Nigerians to march behind another subsidy regime, the first question should not be how cheap petrol will become.

It should be: who gets the largest benefit, who pays for it, and what do the poorest Nigerians surrender in return?
To be of not to be; That is the question every politician proposing subsidy return must answer.

*Oludare is Convener, Social Rehabilitation Group (SRG)