The pain of reform is real, but reversing an unsustainable system may cost more than sustaining it
Countries often learn an old economic lesson only after considerable pain: you cannot reconstruct an economy without disturbing the arrangements that held the old one together. Serious reforms frequently impose immediate costs before their benefits become visible. The difficulty is that the pain is immediate and personal, while the benefits are often delayed and difficult to attribute. Nigeria’s renewed debate over petrol subsidy, following former Vice President Atiku Abubakar’s declaration that he would restore subsidy if elected president in 2027, therefore deserves to be treated as an economic question rather than another partisan quarrel. Indeed, the emergence of a serious policy debate this early around a forthcoming presidential election may itself be one of the encouraging signs that Nigeria’s democracy is gradually developing, as voters increasingly encounter competing ideas about how the economy should be managed rather than only competing personalities.
The Pain Is Real, But So Is the Economics of Reform
The hardship Nigerians have experienced since subsidy removal is real and should not be minimised. Transport costs increased, production costs rose, food prices absorbed higher logistics expenses, and household purchasing power weakened. Scholarly research confirms these effects. Okorie and Wesseh (2024), in their research titled Fossil Fuel Subsidy Removal, Economic Welfare, and Environmental Quality under Alternative Policy Schemes, used a computable general equilibrium model of Nigeria and found that subsidy removal increased prices and reduced economic welfare under their baseline scenario. Shittu et al. (2024), in their study titled Assessing the Compensation and Reinvestment Plans for Fuel Subsidy Rationalization in Nigeria: A Dynamic Computable General Equilibrium Approach, similarly found that a complete and immediate removal produced severe economic headwinds and significant welfare losses, although compensation and reinvestment substantially improved the outcome.
