Nigeria’s Debt Burden Absorbs Subsidy Reform Benefits

An economic advisory firm has warned that the financial gains from Nigeria’s fuel subsidy removal have been largely absorbed by rising debt servicing obligations, limiting the government’s capacity to fund development projects and social interventions.

The firm disclosed this during a forum assessing Nigeria’s economic outlook, noting that public debt levels are exerting significant pressure on government finances. According to its leadership, the redirection of subsidy savings has weakened the intended fiscal relief from the reform.

The firm observed that debt servicing now outweighs combined spending on critical sectors such as education, health, and security, describing the trend as a clear indicator of fiscal stress.

It added that persistent budget deficits, weak capital spending, and limited impact of social intervention programmes have intensified frustration among households and businesses, with the economy showing signs of high costs and weak confidence.

The advisory firm also cautioned that political pressures could complicate economic management and slow reform momentum. It called for stronger coordination across fiscal, monetary, trade, and industrial policies to achieve sustainable recovery.

As part of its recommendations, the firm urged the government to pursue asset sales, privatisation, and concessions to reduce debt pressure and unlock growth, stressing that reforms must support inclusive and productivity-driven development.