Wale Edun, the Minister of Finance and coordinating Minister of the Economy, has disclosed that the country’s decision to remove the petrol subsidy and adopt market-based pricing for foreign exchange has saved the nation an estimated $20 billion.
Edun revealed this at an event in Abuja marking the first 100 days in office of Esther Walso-Jack, Head of the Civil Service of the Federation.
He said the subsidies used to cost five percent of Nigeria’s Gross Domestic Product (GDP), noting that things have now changed.
“Between them, they were costing five per cent of GDP,” Edun explained.
He emphasised the significance of these savings, breaking down their potential impact. “If you say GDP was on average, let’s say $400 billion, we all know what five per cent of that is – $20 billion of funds that could be going into infrastructure, health, social services, education.”
Edun also said that these funds, which had previously been drained through subsidies, are now being redirected into the government’s coffers for critical developmental sectors.
On the transformative nature of these economic reforms, Edun added: “The real change that has happened with the measures of Mr President is that nobody can wake up and their target for the day or for the week or the month or the year is to get access to cheap funding, cheap funding exchange from the central bank, which they can now flip.
And overnight, they become wealthy from no value added for doing virtually nothing, except you know the right people.”
The minister also said that inefficiencies in the petrol subsidy system, which previously allowed individuals to profit significantly with minimal contribution to the economy.
“Similarly, they can no longer try and be part of a new peak market and very inefficient petrol subsidy regime as a way of making money overnight,” Edun added.
