By Michael Owhoko, PhD

The root cause of Nigeria’s problem is, unarguably, an inappropriate system of government.  Bad governance, poor economy, insecurity and corruption are just offshoots.  It is absurd to pool people characterized by ethnic nationalism with diverse regional allegiance, cultures, interests and vision together under a central government, and expect to make progress.  Nigeria’s political structure is incompatible with its plural composition.

As a multiethnic society, Nigeria has been struggling under a political framework that is unsuitable, anomalous, and inimical to its future, resulting in discordant policies and delivery setbacks. Until the political structure veiled in unitary configuration is discarded and replaced with federalism or, in the alternative, confederation, Nigeria risks collapse.

Nigeria is a hypothesis that has been undergoing experiments, which can now be confirmed to be unworkable due to an improper political system.  After careful evaluation of its complex diversity, nothing is suggestive that the country can ever overcome its challenges with the current system.  It is like using palm oil as a substitute for aviation fuel to power an aircraft, and expect it to fly.  The country is on the wrong trajectory, and incapable of producing any form of prospects, unless there is a change of system.

The 1999 Nigerian Constitution is in structure, content, spirit and intent, a unitary constitution when viewed against the backdrop of the Exclusive list which has 67 items and the Concurrent list with 13 items, an indication of a strong centre, and weak states.  The constitution is incompetent in resolving Nigeria’s unending woes.  It is antithetical to the essence of the country’s amalgamation, where hitherto different independent nations, now have their destinies determined and centrally regulated against their vision and values.

What Nigeria needs is a completely new Constitution with features of federalism, characterized by decentralization or devolution of powers to the federating units or regions, with authority over the control of natural resources in their domains, together with liberty to pursue their dreams and aspirations in line with their peculiar potentials, values and needs.  This will enable them to develop at their paces independently without any statutory interference from the centre.

Otherwise, the country can be restructured into a confederal system where the regions or federating nationalities should have an obligation to wholly manage their affairs, except for responsibilities relating strictly to the army, foreign affairs, currency, and perhaps, internal trade, which should be ceded to the central government to administer with full power and authority.  These options are the only way Nigeria can be saved from a looming catastrophe, as the elasticity of endurance is waning fast.

Self-determination by agitators of Biafra Republic, Oduduwa Republic/Yoruba Nation, Niger-Delta Republic, Arewa Republic, and even the recent display and hoisting of Russian flags during the “End-Bad Governance Nationwide Protest” that was held from August 1 -10, 2024 in northern parts of the country, is evidence of widespread discontent arising from the current system of government.

Besides, as a consequence of the unitary system, there is a growing feeling of ethnic and regional subjugation among ethnic nationalities, resulting in system disloyalty.  Policies enunciated by the government designed to reposition the economy, reform the political system, eradicate profligacies, and even eliminate terrorist organisations in the country are covertly frustrated with the complicities of persons from aggrieved regions or sections.

Put differently, differences in values, culture, heritage, tradition, history, language, geography and belief system, have led to clash of visions, interests, goals and priorities among federating units or regions, which have further thrown up centrifugal forces that have held the country hostage.  This is a complex inherent challenge and source of division in the country.

This portends danger, and a signal of emerging trouble, particularly within the context of the young generation of persons of various ethnic nationalities whose opportunities, talents and creativity are repressed by the quota system and intrinsic flaws in the unitary structure.  Running a country with people working clandestinely at cross-purposes to advance ethnic and regional agenda, offers no hope of achieving any deliverables beyond cosmetic progress.

Also, the unitary system breeds economic injustice among federating states or regions. Allowing some states or individuals to freely harness, harvest and utilise mineral resources and cash crops, including groundnuts, cocoa, rubber, palm oil and solid minerals n their domains while depriving other regions like the Niger Delta of resources in their territories, is a major flaw in the system.  It is not only unjust; it is a trigger for insurrection.

Specifically, to single out the oil and gas resources in the Niger Delta Region for expropriation through the obnoxious Petroleum Act of 1966 which now forms part of Section 44(3) of the 1999 Constitution is tantamount to robbing Niger Delta people of service other regions.  The government has used the law to legalise ownership, with proceeds shared among federating units or states, implicitly depriving the Niger Delta people of control over their resources.

Regrettably, the people of the region alone suffer from the hazardous effects of oil exploration.  The ecosystem of the region has been destroyed, as agricultural and fishery activities are no longer generative.  This is further compounded by the depletion of their lands which have been constantly acquired by government and allocated as oil blocks to individuals and organisations.

Unitary system in a plural society like Nigeria encourages high-stakes investments in politics induced by unhealthy ethnic and regional competition among politicians in an effort to grab power at the centre or federal level, and in turn, use it to control and distribute resources and appointments for ethnic and regional advantage.  Such unwholesome quest for power has no place in federalism, where power is decentralized to federating units.

Under the unitary system, states and local governments are appendages and dependents of the federal government.  They rely on monthly revenue allocation from the federal government for survival, which encourages laziness and docility with weak creative capacities for revenue generation.  This promotes subservient corporatism and inefficiency.

Besides, system contradictions inherent in the unitary system put a wide gap between the people and the central government, and this makes it difficult to hold leaders at the federal level accountable, particularly over breach in governance ethics.  But a regionalized or decentralized system will bring people closer to power, and leaders can be held accountable for their actions and inactions.

Nigeria’s stunted growth as reflected in the country’s continued decline in general indices, including misery index, is direct consequence of the centralized system, which has caged destinies, and by extension, capacities of the federating nations to develop independently. Therefore, political leaders must be courageous enough to think beyond personal interests and deep-rooted prejudices to support a system that will give the federating units the freedom to drive and manage their aspirations.

After all, a pluralistic country like India with diverse cultural differences can co-exist in peace because of a suitable system of government – Cooperative Federalism.  Besides, Scotland, Wales, England and Northern Ireland which make up the United Kingdom, separately pursue their dreams and even compete for laurels at the Olympics and World Cup, while maintaining their status as members of the United Kingdom.  Why can’t Nigeria be unbundled and recreated to make it work, so that federating regions can achieve their goals within the context of their distinct cultural aspirations?

The current Nigeria’s system is a catalyst for division, unable to foster unity, a necessity required to drive the country in one direction.  The four attributes of Unity, Faith, Peace, and Progress as contained in the country’s coat of arms, have failed to inspire confidence and loyalty, as they barely exist in the minds of Nigerians.

In the absence of impaired vision, those opposed to a change in status quo (unitary system) are doing so because of entrenched interests arising from benefits their regions or ethnic groups derive from the subsisting configuration.  Nigeria’s political structure as encapsulated in the 1999 Constitution (as amended) cannot deliver on the country’s dream of prosperity, other than unending insecurity, ethnic rivalry, strife, nepotism, poverty, stunted development and corruption, which sadly, have become part of Nigeria’s trade mark and identity.

Therefore, until the country is unbundled and reconstructed, using a new constitution that devolves powers to regions, which allows them to run independently within the context of their separate cultural and economic aspirations, Nigeria risks dismemberment.

Dr. Mike Owhoko, Lagos-based public policy analyst, author, and journalist, can be reached at www.mikeowhoko.com and followed on X (formerly Twitter) @michaelowhoko.

Professor Maurice Okoli

Moving forward with women’s empowerment, exhibiting female leadership and entrepreneurial capabilities, Director-General Ngozi Okonjo-Iweala confirmed as the sole candidate for the World Trade Organization arguably represents the voice of the Global South and concretely the voice of Africa. Okonjo-Iweala brings unique strengths that complement traditional notions of female leadership, casting away outdated stereotypes and embracing a future full of aspirations for the powerful World Trade Organization.

By her leading roles at the WTO underscores, in many ways, the assertiveness and ability of what women could contribute in their professions to the development of society, especially in the spheres of global trade. Despite these attributes, Okonjo-Iweala as head of WTO highlights the fact that women possess the same abilities to perform with effectiveness in the field of economic and trade diplomacy.

As nominations for the next Director-General closed in early November, and Okonjo-Iweala was ultimately confirmed as the sole candidate, it offers practical grounds, at least, to celebrate her previous first-term satisfactory progress and milestone achievements on the global stage as an African, as a Nigerian citizen. Her typical African name alone resonates across the global landscape, not only portraying her distinguished career but also exposing diverse experience in fostering multifaceted trade partnerships and its associated challenges between the organization’s members in the world.

According to reports, Ambassador Petter Ølberg of Norway, Chair of the General Council, informed WTO members on 9th November that no further nominations for the position of Director-General had been received by the deadline of 8th November and that the incumbent Director-General, Ngozi Okonjo-Iweala, is therefore the only candidate for the role.

Director-General Okonjo-Iweala confirmed her willingness to serve a second four-year term. Okonjo-Iweala’s current term comes to an end on 31 August 2025, as the first woman, the first African is the seventh Director-General of the WTO. The WTO formally commenced the process of appointing its next Director-General, with members given until 8 November to submit nominations.

In July 2024, Okonjo-Iweala garnered unprecedented support to serve a second term at the 164 member states trade organization. In an official media release after the July 22 meeting, the WTO General Council indicated that fifty-eight (58) of the 164 member states of the World Trade Organisation (WTO) have voiced support for a proposal from the African Group backing incumbent Director-General, Okonjo-Iweala, to serve a second term.

As stipulated by the guidelines, the Director-General can serve two terms. Almost all members pointed to all the efforts and qualities of Okonjo-Iweala and her contributions to the organization which enhanced a lot of progress and development. Okonjo-Iweala, whose tenure as the DG due to end on 31st August 2025, revealed her plans to work with other members of the organization to restructure the global trade body.

“The African Group requests that the current Director-General make herself available to serve a second term, and has proposed that the process of reappointing the Director-General should be started as soon as possible,” according to the statement by the world trade body.

“Fifty-eight members, several speaking on behalf of groups of members, took the floor to comment and express their support for the African Group proposal. They called on DG Okonjo-Iweala to make her intentions regarding a second term known as soon as possible. Most of these members praised the DG’s hard work and her achievements during her first term,” it further added.

Okonjo-Iweala’s First-Term Achievements

(i) In the current emerging situation, the WTO’s task of changing the world’s trade is fraught with existing challenges and further hindered by geopolitics mostly by the key players. A classical example is the United States and China trade war, better considered as an economic conflict between two powers has persisted since January 2018 when Donald Trump, began setting tariffs and other trade barriers on China to force it to make changes to what the U.S. described as longstanding unfair trade practices and intellectual property theft. Washington has imposed tariffs on more than $360bn of Chinese goods, and China has retaliated with tariffs on more than $110bn of US products. WTO’s trade advocacy has had little influence in resolving this bilateral agreement initially signed by and binding on the United States and China.

(ii) As already know, the United States and Europe have a number of disagreements over economic relations between Russia and the former Soviet republics in the entire region. It was, however, expected that the trade organization work seriously and systematically to guarantee a rules-based international trading system. Despite the impasse in trade negotiations, and ways to modernize WTO rules and address the impending misunderstandings, much, unfortunately, remains to be reviewed. The European Union, for instance, continues to play a leading role in the WTO’s ongoing reform process, which was launched at the 12th WTO Ministerial Conference (MC12) in June 2022. Okonjo-Iweala has to address these persistent conflicts during her second term in office beginning in 2025.

(iii) The situation with the Asia-Pacific Economic Cooperation (APEC) and the Association of Southeast Asian Nations, or ASEAN is not different from other regions. Okonjo-Iweala’s accession to the leadership of WTO four years ago was viewed as a turning point in the process of the Asian region’s integration, under the export-oriented growth regime, into the world’s trading landscape. Without mincing words here, it has to be noted that APEC and ASEAN play a major role in the world’s biggest trading bloc, and are at the centre of addressing emerging economic challenges facing the global trading system, to develop actionable policy recommendations, because more than 60% of the collective trade are targeted towards western and European markets.

(vi) On July 26, 2024, during the meeting of BRICS Economy and Foreign Trade Ministers in Moscow, representatives of BRICS economies agreed to coordinate their policies within the WTO. BRICS economies are increasingly moving towards coordinating their policies on the international stage, including in the World Trade Organization (WTO).

In an analytical report, Yaroslav Lissovolik, Founder of BRICS+ Analytics, believes that key priorities are necessary for the creation of a BRICS platform within the WTO include supporting the organization’s viability and effectiveness in resolving trade disputes (given the challenges faced in the operation of the WTO Dispute Settlement Body) as well as in countering rising protectionism. The creation of a common platform in the WTO should contribute to greater economic policy coordination for BRICS economies in the trade sphere and will also allow developing economies to play a greater role in the organization’s decision-making.

Advocating further for greater policy coordination and backing away from a long-standing call to action, which has been in process and discussions since 2017, “BRICS+ countries could … form alliances in other international organizations, including the WTO, where a BRICS+ group in negotiations could complement other South-South alliances.” Indeed, “after Russia’s WTO accession all BRICS members are now in the WTO and can create partnerships within the organization to defend national interests, advance sustainable development issues and counter the spectre of rising global protectionism.”

Another area of cooperation for BRICS in the WTO may be the provision of assistance to those BRICS core economies and partners of the grouping that have not yet secured full-fledged WTO membership. While until 2023 all BRICS core economies were members of the WTO, after the 2023-2024 core expansion two new BRICS members, namely Ethiopia and Iran, were still outside of the trade organization. A number of potential members of the BRICS partnership status, such as Belarus or Algeria, are also not yet full members of the WTO. In this respect, the WTO could target coordinated measures to support the accession process of those who have not yet secured WTO membership.

WTO and the African Union

WTO members and leading reputable investors have consistently been looking forward to exploring several opportunities in the African Continental Free Trade Area (AfCFTA), a policy signed by African countries to make the continent a single market. The AfCFTA, the world’s largest new free trade area, is the flagship of the African Union, and its significance cannot be overstated.  It certainly promises to increase intra-African trade through deeper levels of trade liberalization and enhanced regulatory harmonization and coordination. Moreover, it is expected to improve the competitiveness of African industries and enterprises through increased market access, the exploitation of economies of scale, and more effective resource allocation.

In fact, this should be one potential area of focus for Okonjo-Iweala as she heads for the second term unopposed. During her first term, she unreservedly expressed interest in dealing with these issues of strengthening partnerships and widening stronger trade relationships with Africa from the external players, and members of the WTO. There still exists controversy between the WTO and AU’s AfCFTA. A more consolidated approach to the continent’s trade policy may strengthen the role of the developing countries, especially the majority of those in Africa, in the WTO and advance the agenda of the Global South. With the emerging multipolar arrangement, it is necessary to facilitate external trade for Africa. This particularly has important positive implications for its inclusion into the world system, supports its economic power and ultimately raises its economic status closer to the Asian and Western world, and the G20.

The Group of Twenty (G20)

Over the past years, G20 economies, however, continued to introduce wide-ranging trade-facilitating measures, and increasing evidence points to enforcing unilateral trade policy decisions. Warning that these measures are creating uncertainty for the world economy, WTO Director-General Ngozi Okonjo-Iweala called on G20 governments to refrain from adopting new restrictions that could worsen the global economic outlook.

Potential investors have also indicated several times, trade facilitation and called for smooth pathways into the African continent, their involvement could be beneficial to them, including in sectors like pharmaceuticals, automobiles, agro-processing and financial technology. The G20 and Africa, regulated by the WTO policies could offer sustainable growth and symbolize an integral part and essential component in the emerging multipolar economic architecture.

Professional Experience Matches Responsibility?

In these changing times, Okonjo-Iweala’s official thoughtful testimony to pursue WTO’s Director-General responsibilities, as outlined prior to her engagement, has become uttermost necessary to review outstanding challenges and their consequences for the African continent’s development, and those in the Asia-Pacific region within the entire global trading system. Vying for Director-General, for the second term, should not be considered a ceremonial position, but entails promoting transformation, through increased market access, and increasing the relationship between Africa and Asia (South-South) in global trade, and the rest of the world.

She served two terms as Finance Minister of the Federal Republic of Nigeria (2003-2006 and 2011-2015) under the political leadership of President Olusegun Obasanjo and President Goodluck Jonathan, respectively. She also briefly acted as Foreign Minister in 2006, the first woman to hold both positions. The skilled negotiator had a 25-year career at the World Bank as a development economist, rising to the number two position of Managing Director of Operations.

Biographical records show she was born into a royal family in Delta State, her father Professor Chukwuka Okonjo became the Eze (King) from the Obahai Royal Family of Ogwashi-Ukwu. With high aspirations, Okonjo-Iweala studied at prestigious Harvard University, graduating magna cum laude with an AB in Economics in 1976. In 1981, she earned her PhD in Regional Economics and Development from the Massachusetts Institute of Technology (MIT) with a thesis titled Credit Policy, rural financial markets, and Nigeria’s agricultural development. She received an International Fellowship from the American Association of University Women (AAUW) that supported her doctoral studies.

Selection Procedures

On 28-29 November, the General Council will convene a special meeting aimed at advancing the process for selecting the next Director-General. Chaired by Ambassador Petter Ølberg of Norway, the meeting follows the announcement made on 9th November that no candidates for the position of Director-General had emerged by the 8th November nomination deadline other than the incumbent Director-General, Ngozi Okonjo-Iweala.

In his communication to members, Ambassador Ølberg said that, based on his contacts with delegations, and as has been done in past instances where the incumbent Director-General was the only candidate, he intends to convene a special formal meeting of the General Council on 28th and 29th November.

The first day of the General Council meeting would allow members to hear a presentation from DG Ngozi Okonjo-Iweala on her vision for the WTO, followed by a question-and-answer session. The second day could then provide an opportunity for members to make a decision on the appointment of the next Director-General. Okonjo-Iweala confirmed her willingness to serve a second four-year term in a letter on 16th September.

An Insight into WTO’s Future

With a solid education and broad experience, combined with her performance during the first term, 58 member-states of the WTO have already thrown their support behind her to head the Geneva-based body. The WTO is the only global international organization dealing with the rules of trade between nations. The goal is to ensure that trade flows as smoothly, predictably and freely as possible. It currently has 164 members, monitoring each other’s practices and regulations against a set of standard trading rules to improve transparency and avoid protectionism.

In addition, WTO works to build the trading capacity of developing and least-developed countries, helping them integrate and benefit from the multilateral trading system. This is an essential part of the work. The trading system has to be inclusive, with the benefits of trade reaching as many as possible around the world, particularly in the poorest countries.

The WTO provides its members with a tried and tested system of shared rules and principles to support economic cooperation and thereby boost growth, development and job creation around the world. It provides a forum for members to raise, discuss and potentially solve the complex problems that they face. The organization deals with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. There is huge value in the system of the World Trade Organization.

Professor Maurice Okoli is a fellow at the Institute for African Studies and the Institute of World Economy and International Relations, Russian Academy of Sciences. He is also a fellow and lecturer at the North-Eastern Federal University of Russia. He serves as an expert at the Roscongress Foundation and the Valdai Discussion Club.

As an academic researcher and economist with a keen interest in current geopolitical changes and the emerging world order, Maurice Okoli frequently contributes articles for publication in reputable media portals on different aspects of the interconnection between developing and developed countries, particularly in Asia, Africa, and Europe. With comments and suggestions, he can be reached via email: markolconsult (at) gmail (dot) com.

By Peace Otonihu

The removal of fuel subsidies has been a recurring policy issue for many countries, including Nigeria and India. While both nations face similar challenges in the petroleum sector, their approaches to fuel subsidy reforms differ significantly. 

In a newsletter published by Outlook Planet and updated in November 2024, India has since 2010 had a “fossil fuel subsidy policy” which has undergone several reforms since then. However, in Nigeria, the subsidy was removed through the president’s inaugural speech where he announced that “Subsidy is Gone!”. 

This announcement since May 2023 has led to a surge in the price of petrol nationwide, an increase in the cost of goods and services as well as other ripple effects on the economy being a resource-dependent economy, without clear policy frameworks to mitigate the impact. In contrast, India’s gradual and research-driven approach to subsidy removal offers lessons in strategic planning and implementation that can be beneficial to consider. 

The Background of Fuel Subsidies in Nigeria

A simplified definition of fuel subsidy is the portion of the total fuel price paid for by the government on behalf of its citizens. According to Zinami (2024), Fuel subsidies in Nigeria date back to the 1970s when they were introduced to reduce the burden of fuel costs on citizens. 

They became institutionalized in 1977 under the Price Control Act promulgated by the military regime of Olusegun Obasanjo, which regulated prices of essential items, including fuel. Over the decades, subsidies grew to cover a significant portion of government expenditures. 

By 2013, Nigeria was listed among the top 20 countries subsidizing fuel consumption, according to the International Energy Agency (IEA) as cited in (Soile & MU, 2015). Despite being one of Africa’s leading oil producers, Nigeria’s inability to maintain functional refineries forced it to rely heavily on imported refined petroleum products. This paradox has made subsidies unsustainable, leading to mounting fiscal pressures and limited development benefits.

In May 2023, President Bola Tinubu’s inaugural speech led to the abrupt removal of fuel subsidy triggered an immediate spike in petrol prices and a ripple effect on goods and services, reflecting Nigeria’s heavy reliance on petroleum for economic activity. A public announcement during an inaugural speech alone does not constitute a comprehensive fuel subsidy reform. India has faced challenges in the petroleum sector similar to those in Nigeria. According to the U.S. Energy Information Administration (“EIA”) 2022, India was the world’s third-largest energy consumer, following China and the United States, as of 2021. 

The increasing demand for petroleum products, driven by economic growth, has been compounded by limited domestic production capacity, necessitating fuel imports. Like Nigeria, India has historically seen substantial government involvement in its petroleum sector.

In Nigeria, the most notable reform following the removal of the fuel subsidy is the reallocation of funds previously used for subsidies to sectors such as public infrastructure, education, healthcare, and job creation—areas intended to improve the lives of millions. 

It is interesting to note that prior to President Tinubu’s inauguration, the Nigerian government spent approximately ₦400 billion (around $500 million) per month on subsidizing petroleum imports, as noted by Mele Kyari, the CEO of the Nigerian National Petroleum Company Limited (NNPCL), which is authorized to operate in Nigeria’s oil sector. 

While redirecting these funds could theoretically represent a significant reform, its effectiveness remains uncertain if the impacts are not clear, and neither do they directly improve the standard of living or the cost of living of Nigerians who have to bear the brunt of subsidy removal. 

For example, the 2024 budget allocated ₦1.54 trillion to the education sector, representing only 6.39% of the total budget. There was no notable increase in the education budget when compared with previous years which shows the rechannelling of fuel subsidy funds. This limited visible improvement suggests a lack of proper planning and insufficient research into the specific needs of Nigerians.

However, unlike Nigeria, India’s fuel subsidy reforms were guided by a thorough assessment of cost-benefit analyses and economic impacts, resulting in more effective outcomes for its economy. In India, fuel subsidy reforms were shaped by the work of government-appointed committees conducting extensive research and analysis. 

Through these reform initiatives, India significantly reduced its fuel subsidy burden from $24.6 billion in 2013 to just $1.16 billion in 2017—a remarkable 95.28% decrease. This was achieved by deregulating the prices of LPG, DPK, and AGO, illustrating the importance of systematic and research-driven reform strategies.

India’s Fuel Subsidy Reforms: A Gradual and Comprehensive Approach

India has pursued fuel subsidy reforms through a gradual, well-planned, and research-driven process since 2010. Ranking as the third-largest energy consumer in the world after China and the United States, India faced challenges like Nigeria, such as growing demand for petroleum products, heavy government involvement in the energy sector, and limited domestic production capacity necessitating fuel imports.

To address these challenges, India formed multiple expert committees to guide subsidy reform policies:

1. Rangarajan Committee Report (2006) – Recommended the use of global market prices to determine the market price for petrol and diesel in the country while limiting subsidized kerosene to families below-poverty-line (“BPL”) and increasing retail prices for LPG.  
2. Parikh Committee Report (2010): Advocated for complete liberalization of petrol and diesel prices at both the refinery and retail levels, targeting subsidized public distribution system (“PDS”) kerosene for households below-poverty-line with annual price increases tied to agricultural Gross Domestic Product (“GDP”) growth, kerosene sold outside the subsidized public distribution system was set close to the price of diesel, annual quantity limit of six 14.2 kg cylinders on subsidized LPG for each household, and using direct cash transfers or quantity rationing for subsidized LPG.  
3. Nilekani Task Force Interim Report (2011) – Recommended replacing in-kind fuel and fertilizer subsidies with direct cash transfers using the Unique identification (“UID”) system to reduce fiscal costs by eliminating duplication and ghost beneficiaries.  
4. Kelkar Committee Report (2012) – Outlined a fiscal consolidation plan involving phased elimination of diesel subsidies over two years, full deregulation by 2014, gradual removal of LPG subsidies over three years, and a one-third reduction in politically sensitive kerosene subsidies within the same timeframe.

These reforms significantly reduced India’s fuel subsidy burden from $24.6 billion in 2013 to just $1.16 billion by 2017—a decrease of over 95%. This achievement was facilitated by deregulating LPG, kerosene, and automotive gas oil prices, adopting direct cash transfers, and targeting subsidies only to vulnerable populations.

Key Lessons for Nigeria from India’s Reforms

India’s approach underscores several key elements that Nigeria could adopt to make subsidy reforms more effective:

1. Research-Based Policy Formulation: India’s reforms were guided by thorough research and committee recommendations. By contrast, Nigeria’s abrupt announcement lacked a well-defined policy framework, creating economic shockwaves without providing adequate support mechanisms for affected populations.
2. Targeted Support Measures: India implemented targeted subsidies for vulnerable populations and used direct cash transfers to eliminate waste and duplication. In Nigeria, the promise to redirect subsidy savings toward social sectors like education and healthcare has not translated into visible improvements, hence, there is need for better-targeted and transparent support mechanisms.
3. Gradual Phasing-Out: The gradual removal of subsidies in India allowed time for the economy to adjust. Nigeria’s sudden subsidy removal led to a surge in fuel prices and widespread economic distress. A phased approach, with well-planned timelines and support measures, could have mitigated the shock.
4. Public Consultation and Transparency: India’s reforms involved extensive consultations with stakeholders, enhancing public understanding and acceptance. Nigeria’s unilateral decision-making process limited public buy-in, leading to widespread dissatisfaction.

The Way Forward for Nigeria

For Nigeria, merely redirecting funds from subsidies to infrastructure, education, and healthcare is insufficient if the impact is not measurable or transformative. Effective reform requires clear policies, transparency, and targeted initiatives to ensure that savings translate into tangible benefits. Learning from India, Nigeria should focus on:

• Enhanced transparency and accountability to track and measure the impact of redirected funds.
• Support mechanisms such as direct cash transfers or targeted subsidies to shield vulnerable populations.
• Comprehensive planning and phased implementation to minimize economic shocks.
• Stakeholder consultations to build public support and ensure policy acceptance.

Conclusion

India’s experience with fuel subsidy reforms demonstrates that effective policy changes require a structured approach involving research, planning, public consultation, and targeted social programs. While Nigeria’s recent subsidy removal represents a necessary step toward fiscal stability, the lack of a comprehensive policy framework undermines its potential benefits. In contrast, India’s reforms led to measurable improvements that directly impacted the country’s economy. Through extensive consultation, policy formulation, and research, the Indian government increased access to clean cooking solutions for the rural poor through subsidized LPG. Additionally, direct cash transfers to low-income households helped mitigate the negative effects of subsidy removal, while deregulation allowed oil companies to operate more freely, boosting revenue generation.

This contrast between India’s carefully planned, research-driven reforms and Nigeria’s fewer tangible outcomes highlights the importance of adopting a more structured approach in Nigeria. By doing so, Nigeria can achieve meaningful reforms that balance fiscal responsibility with social equity, ultimately leading to sustainable development and improved well-being for its citizens.

Peace Otonihu is a seasoned investment banking analyst at a top-tier investment bank in Africa. Her expertise lies in policy analysis,  financial advisory,  project and development finance, focusing on critical sectors such as oil and gas, energy, mining, transportation, and infrastructure. She is a political scientist, policy analyst, and researcher having co-authoured a research publication in a reputable journal while also exploring medium.

She is a certified chartered accountant from the Institute of Chartered Accountants of Nigeria (ICAN), with keen interest in public policy analysis, public-private partnerships, financial advisory and developing infrastructure projects. She was also a Pioneer student of the School of Politics, Policy and Governance, an unconventional school of politics designed to produce a new generation of political leaders.