Estimated subsidy savings across the FederationShared across the Federal, States, Local Governments and other
statutory recipients.
₦20.4tn
Incremental Federal Government resourcesFederal Government subsidy savings, other incremental revenues
and incremental borrowing.
₦30.6tn
Incremental expenditure pressuresAdditional spending on wages, debt service, infrastructure,
electricity support, social programmes and other
obligations.
Follow the money
The numbers tell a financing story — not simply a “savings” story.
The ₦15.8 trillion commonly described as subsidy savings was not
retained by the Federal Government alone. It was shared across all
the tiers of government. The Federal Government’s estimated share
was ₦5.43 trillion. When combined with ₦3.12 trillion in other
incremental revenues and ₦11.85 trillion in incremental borrowing,
the Federal Government had approximately ₦20.4 trillion in
incremental resources.
Over the same period, additional expenditures amounted to
approximately ₦30.64 trillion. Subsidy removal therefore did not
create one large pool of cash available to the Federal Government.
It reduced a major fiscal burden and the amount of additional
borrowing that would otherwise have been required.
How to read the story: the supporting analysis
shows subsidy removal reduced the amount of borrowing that would
otherwise have been required rather than creating one large pool of
cash. It also links the broader post-reform revenue gains to
concurrent revenue and FX reforms. The sections below therefore
separate what was shared across the federation,
what the FG actually had,
how it was spent, and
what changed in the economy.
01
What Happened to the Resources Shared Across Government?
The fiscal impact of the reforms was not confined to the Federal
Government.
States and local governments received significantly higher
allocations through the Federation Account, increasing the
resources available to meet salaries, pensions, infrastructure and
other responsibilities at the subnational level that benefit the
people.
This distinction is important because many public services
Nigerians rely on are delivered by state and local governments.
Against the pre-removal monthly run-rate, states received about
₦9.17tn in additional allocations from June 2023
to December 2025.
Local governments received about ₦6.66tn in
additional allocations over the same period.
FAAC resources after subsidy removal
Hover over each bar for the exact figure. The “additional” view
compares actual post-removal receipts with what each recipient
would have received if the pre-removal monthly run-rate had simply
continued.
02
How Were the Estimated Subsidy Savings Shared?
The ₦15.8tn estimate was distributed across different tiers.
Federal Government — ₦5.43 trillion
States — ₦6.52 trillion
Local Governments — ₦3.88 trillion
States collectively received the largest effective share of the
estimated subsidy savings.
Share of estimated subsidy savings
Hover over a segment to see both the naira amount and its share of
the total.
03
What Resources Did the Federal Government Actually Have?
The Federal Government’s incremental resources came from three
principal sources:
Federal Government's share of subsidy savings₦5.43tn
+
Other incremental revenues₦3.12tn
+
Incremental borrowing₦11.85tn
=
Total₦20.40tn
04
How Was the Money Spent?
Additional expenditures over the period amounted to approximately
₦30.64 trillion.
₦9.39 trillion Wage adjustments: minimum wage
increases, wage awards, allowances and related personnel costs.
₦9.37 trillion External debt service —
exchange-rate impact: the additional naira cost of meeting
existing foreign-currency debt obligations following exchange-rate
depreciation.
₦6.47 trillion Strategic infrastructure
development: investment in major transport, housing, agricultural,
security and other strategic infrastructure.
₦3.14 trillion Electricity subsidy: additional
government support to cushion the impact of electricity tariffs on
consumers.
Incremental expenditure — ₦30.64tn
Government also increased spending on security and made various
payments, refunds and reimbursements connected to states and other
statutory obligations.
05
If Revenue Improved, Why Did Government Still Borrow?
Because the additional expenditure pressures were larger than the
additional resources available.
Incremental spending₦30.64tn
Incremental resources₦20.40tn
Existing revenue base₦10.24tn
Approximately two-thirds of the additional spending was funded from
incremental resources, while the remaining one-third had to be
absorbed within government’s existing revenue base. Subsidy removal
therefore resulted in less borrowing than would otherwise have been
required, rather than eliminating the need to borrow. Government
borrowing remains subject to National Assembly approval and the
applicable fiscal and debt-management framework.
06
What Social Programmes Were Funded?
The reforms created additional fiscal space for programmes
intended to support households, students and access to finance.
The supporting analysis identifies approximately
₦423.8 billion in incremental social-welfare
initiatives.
NELFUND — ₦223.8 billion Supporting access
to tertiary education through Nigeria’s student-loan programme.
MOFI Real Estate Investment Fund — ₦150 billion Supporting access to affordable housing finance.
CREDICORP — ₦50 billion Supporting expanded
access to consumer credit.
Incremental social-welfare programmes
Hover over a programme for the exact amount and share of the
₦423.8bn total.
These interventions sit alongside other social transfers and
programmes targeting vulnerable households.
07
Where Did Strategic Infrastructure Spending Go?
Approximately ₦6.47tn in additional expenditure
was directed towards strategic infrastructure development.
Major areas include:
Lagos–Calabar Coastal Highway
Sokoto–Badagry Superhighway
Trans-Sahara Superhighway
The objective is to use improved fiscal capacity to address
infrastructure constraints that limit investment, productivity and
economic growth.
Selected strategic infrastructure payments
The chart shows selected named projects from the schedule rather
than every project. Hover for the payment amount.
11 Key Economic Reforms
The reform agenda is broader than subsidy removal.
Fuel Subsidy Reform
Reducing a major fiscal burden and changing how resources are
distributed across the Federation.
Foreign Exchange Market Reform
Moving towards a more transparent and market-reflective
foreign-exchange system and improving access to FX.
Revenue Mobilisation
Increasing tax revenues and strengthening remittances from
government-owned enterprises.
Tax Reform
Creating a simpler and more growth-friendly tax system while
protecting low-income earners and small businesses.
Monetary Financing Discipline
Reducing reliance on unchecked Ways and Means financing and
restoring greater monetary and fiscal discipline.
Debt Management
Managing borrowing within approved fiscal and legislative limits
while improving debt sustainability.
Wage and Pension Support
Implementing minimum-wage increases, wage awards and improved
payment of salaries, pensions and gratuities.
Social and Consumer Finance
Expanding access to student finance, consumer credit, mortgages
and social support.
Infrastructure Investment
Increasing investment in transport, housing, agriculture,
security, digital infrastructure, and other strategic projects.
Energy Reform
Improving fuel availability, supporting electricity-sector
reform and strengthening energy security.
Investment and Growth Reforms
Restoring confidence, attracting capital and creating the
conditions for stronger private sector-led growth.
What Has Changed — and What Could Have Been Worse?
Explore the economic reform scorecard.
The reforms imposed significant short-term costs, particularly
through higher prices and exchange-rate adjustment. However, a
number of key economic indicators have strengthened.
Baseline
→
Current position
What Do the Reforms Mean for Average Nigerians?
Connect the macro story to everyday life.
Higher wages and more timely payment of salaries and
pensions
Higher minimum wages, wage awards and greater fiscal capacity to
meet personnel obligations.
Settlement of pension arrears and gratuities
Greater capacity to meet obligations owed to retirees.
Wealth creation through the capital market
The significant increase in stock-market capitalisation has
created wealth for millions of investors and strengthened
companies’ ability to raise capital.
Transformative infrastructure development
Greater investment in roads, housing, agriculture, security and
other critical infrastructure.
Student loans and affordable credit
NELFUND is expanding access to education financing, while
CREDICORP and other programmes are expanding access to consumer
and SME credit.
Housing and social support
Mortgage initiatives, housing programmes and social transfers
are expanding support to households.
Agricultural interventions and food security
Government interventions are supporting agricultural production,
value chains and efforts to improve food security.
Fuel availability and energy security
The reforms are intended to create a more sustainable energy
market and reduce the recurring scarcity associated with the
previous subsidy system.
Renewed investor confidence
Improved external stability and macroeconomic conditions are
supporting stronger domestic and international investment.
A friendlier tax environment
Low-income earners and small businesses benefit from exemptions
and reforms intended to reduce inappropriate taxation and
simplify compliance.
What Harm Did the Reforms Seek to Prevent?
Without corrective reforms, Nigeria faced significant risks.
These included:
Hyperinflation caused by unchecked monetary financing
A deeper collapse in the value of the naira
Fuel scarcity and widespread disruption to economic activity
Greater poverty under a disorderly economic crisis
Worsening insecurity driven by economic stress
More business failures and job losses
Continued corruption and arbitrage in FX allocation and fuel
subsidy administration
Bankruptcy risk for more states and local governments
Significantly higher interest rates
A proliferation of taxes that could deepen the taxation of poverty
FAQs
Your most important reform questions — answered simply.
By early 2023, the fiscal position had run out of room. A full
year of petrol subsidy in 2023 was projected to cost about ₦6.7
trillion, about 70% of the Federal Government’s actual revenue.
The 2023 budget had provided for only six months of subsidy, an
explicit indication that removal was already the planned
trajectory. Various assessments found the benefit of fuel
subsidy accrued overwhelmingly to wealthier households and to
cross-border smuggling, rather than to the poor. The subsidy was
consuming the resources that should be deployed into building
the roads, schools and clinics.
Phased removal is
desirable in principle, but it requires a fiscal runway the
country no longer had; a slow transition without pre-funded
safety nets would have delivered the same household pain at
greater cumulative cost to the treasury. Government therefore
paired removal with cushioning measures: a temporary monthly
wage award, palliative support to every state, conditional cash
transfers, student loans through NELFUND and a CNG transport
programme, while the fiscal savings now flow transparently
through the Federation Account rather than through opaque
under-recovery against federation crude oil revenue.
The objective was not devaluation but the end of the economic
distortion and a multiple-window exchange-rate system in which
the gap between the official and parallel rates had become a
patronage channel: those with access to cheap official dollars
resold them at street rates for guaranteed profit, while
manufacturers, exporters and Nigerians with legitimate FX demand
were starved of the foreign exchange they needed. With net
reserves critically low and unmet FX obligations above US$7
billion, defending the official rate had become unsustainable.
On 14 June 2023 the CBN collapsed the windows into a single
willing-buyer, willing-seller market: a choice between managed
adjustment and eventual collapse.
The short-term
costs, a sharp fall in the naira and higher import prices, were
anticipated and are not in dispute. But a market-reflective rate
restores investor confidence and rebuilds reserves rather than
depleting them. Since the float, gross external reserves have
recovered to over US$52 billion, capital inflows have risen
sharply, and a single, transparent market has restored the flow
of foreign exchange to manufacturers, importers and investors.
Headline collection figures are gross Federation Account
revenue, shared constitutionally across the Federal Government,
36 states and 774 local governments. Strong headline numbers do
not accrue solely to the FG. The Nigeria Revenue Service
exceeded its 2025 target, about ₦28.3 trillion against a ₦25.2
trillion target, but the Federal Government received less than
it needs to meet recurrent expenditure, infrastructure,
statutory transfers and debt service.
Borrowing
bridges that gap. The 2026 budget of ₦68.32 trillion is set
against ₦36.87 trillion of projected revenue, a ₦31.46 trillion
deficit, within which capital expenditure is the single largest
block at ₦32.29 trillion, ahead of debt service at ₦15.8
trillion. The more important question is whether borrowed funds
are invested in projects that grow the economy. The 2025 tax
reform is designed to widen the revenue base faster than debt
service.
On internationally accepted metrics Nigeria’s debt remains
sustainable, though real fiscal risks warrant vigilance. Total
public debt was ₦159.28 trillion, about US$111 billion, at 31
December 2025. Much of the dramatic rise in the naira figure
reflects recognition of about ₦30 trillion of historical Ways
and Means advances and exchange-rate revaluation of existing
dollar-denominated debt. On the DMO’s debt sustainability
analysis the debt remains sustainable, and debt-to-GDP is around
36% on the rebased national accounts.
The binding
constraint is the cost of servicing debt against low revenue.
Debt service is expected to claim more than 40% of projected
federal revenue in 2026, about ₦15.8 trillion against ₦36.87
trillion of revenue, crowding out health, education and security
spending. The structural root cause is Nigeria’s low
revenue-to-GDP ratio and the temporary interest-rate hike to
tackle inflation, not excessive borrowing.
This concern is real and the government is focused on
accelerating how the macro gains translate to meaningful impact
for households. Reforms work through a phased transmission:
first correcting macroeconomic imbalances and restoring
stability; then rebuilding investor confidence and attracting
productive capital; and gradually translating growth into jobs,
incomes and living standards. The World Bank puts Nigeria’s
poverty rate at about 63% in 2025, roughly 140 million people,
even as inflation has begun to ease and the exchange rate has
stabilised. These reforms did not create Nigeria’s poverty; they
collided with it during the adjustment.
The early
signals are measurable: the economy grew 3.89% year-on-year in
Q1 2026 and headline inflation has been on a downward path.
Government is running social investment alongside the macro
correction through cash transfers, CREDICORP, NELFUND and tax
changes that exempt small businesses and zero-rate essential
food, medicines and educational materials.
External reserves are foreign-currency assets held by the
Central Bank to meet external obligations, including external
debt service and letters of credit for manufacturing inputs,
equipment and medicines, and to stabilise the naira against
shocks. They sit in a different pool from the naira-denominated
federal budget or Federation Account. Nigeria has felt the cost
of depleted reserves before: in 2015–16, low reserves tipped the
economy into recession, and the poor bore the heaviest
burden.
Reserves have recovered to over US$52
billion, a multi-year high, and that buffer is itself the
mechanism behind naira stability and recent disinflation.
Drawing reserves down to fund government spending would
depreciate the currency and reverse those gains. Relief is
correctly financed through the budget, alongside cash transfers,
wage awards, student loans and support to states.
The premise overstates the FG’s position. Federation revenue is
shared by constitutional formula across all three tiers, and in
practice the federal share is not dominant. In March 2025, for
example, the FG received about ₦528.7 billion from a gross FAAC
pool of ₦2.41 trillion, almost identical to the roughly ₦530.4
billion shared among the 36 states, with local governments
receiving about ₦387 billion. Once VAT and derivation are added,
the Federal Government effectively receives less than 40%
share.
Within its own share, the FG has been shifting
decisively toward capital: capital expenditure rose to about 35%
of the federal budget in 2025 and 47% in 2026, while overhead is
around 4%. The task is to raise revenue and convert capital
appropriations into completed projects, while continuing to
publish implementation reports so citizens can hold institutions
to account.
This is a normal pattern in the early phase of a reform rebound.
Portfolio capital moves first because it is liquid and responds
quickly to improved macro signals; FDI follows once investors
are convinced reforms are durable and that infrastructure, rule
of law, sanctity of contract and policy continuity are in place.
Capital importation hit a record US$10.37 billion in Q1 2026,
with foreign direct investment of over US$4 billion.
Investor
confidence has returned and is rising. The metric to watch is
the composition of inflows, and shifting it toward productive
FDI is the explicit aim of initiatives in the oil sector,
public-asset optimisation and sector reforms in power, security
and logistics. Portfolio inflows confirm that phase one is
working; a rising FDI share will confirm that phase two is
delivering.
The momentum is real and measurable. On the official rebased
national accounts, nominal GDP climbed from about US$250 billion
in 2024 to roughly US$291 billion in 2025 and is rising further
in 2026. Nigeria has its youngest large population and the
continent’s biggest proven gas reserves. The US$1 trillion goal
is the anchor that sets the pace.
The roadmap is
investment-led and multi-pillar, anchored in the National
Development Plan (2026–2030): fiscal and tax reform to raise
domestic revenue, industrialisation policy, power-sector reform
and security to unlock production, public-asset optimisation to
release dormant value, and human-capital investment to lift
productivity. Progress will show in 7%-plus growth, formal jobs,
diversified exports and falling poverty.
The right answer is a mechanism, not a list of promises: a short
set of specific, dated, independently-sourced indicators,
published on a fixed calendar whether or not the reading is
favourable. Citizens are entitled to demand that they appear on
schedule, in plain language, through institutions Nigeria
already funds.
A defensible core set includes
headline inflation, real GDP growth, debt-service-to-revenue,
federal capital-budget execution, external reserves, FDI share
of inflows, non-oil revenue-to-GDP and the monetary policy rate,
each with a named source, baseline, direction or target,
frequency and source.
Ask the Ministry
Have a question about Nigeria's public finances?
Choose the area that best matches your enquiry so it can be routed
to the appropriate team.
Email:info@finance.gov.ng
Watch the briefing
The reform story, in the Ministry's own words.
Watch the latest public briefing and hear how the numbers connect
to Nigeria's economic reform agenda.
