By revoking fuel subsidies, the Nigerian government made a bad economy even worse.

Every Sunday morning, Modupe Olorunkosebi and her grandchildren walk to a nearby church located at the Mokola roundabout in Ibadan, the capital of Oyo State, in the southwestern part of Nigeria. They attend the service which typically concludes around 11 a.m., after which Modupe sends the children home to wait—hungrily—until she returns from her sojourn on the streets.

Having seen her grandchildren safely on their way, the 66-year-old widow discreetly changes out of her church attire into a weathered gown. She then heads toward the Heritage Mall near the iconic Cocoa House in Dugbe Ibadan to beg for alms.

When I interviewed Modupe, beside the stairwell of the Heritage Mall, she disclosed that she was once a small-scale shop owner, selling provisions in her community. However, her trade has been decimated by the unforgiving grip of Nigeria’s faltering economy.

The ripple effects of fuel subsidy removal on small businesses

Nigeria’s economy is intrinsically tied to crude oil. Hence, any disruption in oil production or refining reverberates across all sectors. Put simply: as fuel costs rise, the populace sinks deeper into recession.

Since the 1970s, fuel subsidies have acted as economic stabilizers, aimed at reducing fuel costs by providing direct financial assistance to oil companies, and in turn, reducing the price burden on Nigerian citizens. Yet, the $14 billion subsidy removal enacted by former President Muhammadu Buhari has brought only burgeoning national debt and economic misery to Nigerians.

When asked about the hardship instigated by Buhari’s policy, Modupe said, “I started coming here to beg for alms two years ago during the second term of Muhammadu Buhari when my business collapsed.”

The continuation of a controversial policy

Since being sworn in as Nigeria’s 16th president, Bola Ahmed Tinubu has followed the same failed economic strategies. During his inaugural address, he declared, “Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care, and jobs that will materially improve the lives of millions.”

Within 24 hours of this announcement, the price of gasoline skyrocketed from $.33 to $.83 per liter. Inflation surged, triggering nationwide protests led by the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC), as citizens demanded economic relief from the government.

This economic downturn led to workforce downsizing in private businesses, indirectly exacerbating the country’s unemployment crisis. Even those who retained their jobs faced wage cuts. Modupe noted that her children, too, have been rendered jobless, hindering them from providing for the family.

“Some of my children died or left behind their children to take care of. The ones still alive are now out of work because of this economy and they cannot provide. And for me to feed my grandchildren, I had to beg for alms,” she confided.

Recently, the federal government allocated 100,000 bags of rice and other food items—totaling $6 million per state—as emergency relief. Yet Modupe insists these provisions are mere stopgaps. “All these cups of rice the government called palliative cannot last more than a week. There is no way I can put food on the table without going out there to beg.”

One feasible strategy for economic rejuvenation is to bolster consumer purchasing power. This could be achieved by significant governmental investment, ensuring that the economic cycle remains in motion. Furthermore, targeted financial assistance to small and medium-sized businesses could rejuvenate the business landscape.

In summary, the formulation of robust and effective policies could be a crucial lifeline for an economy teetering on the brink of collapse.