When the Minister of Finance and Coordinating Minister of the Economy explained that savings from the removal of fuel and foreign exchange subsidies had been used to fund debt servicing, the new national minimum wage, student loans and other government obligations, he addressed an important public concern.

However, while the explanation accounts for where much of the fiscal savings went, it does not fully answer another question Nigerians continue to ask: Is the Nigerian worker actually better off?

The national minimum wage rose from N30,000 to N70,000, increasing the government’s wage bill by about 133 per cent. From a fiscal standpoint, that represents a significant commitment. Yet, what matters to workers is not the amount printed on a payslip but what that income can buy.

During roughly the same period, the official exchange rate moved from about N460 to approximately N1,400 per US dollar—an increase of about 204 per cent. In an import-dependent economy like Nigeria, this depreciation significantly increased the cost of fuel, food, medicines, machinery and other essential goods, reducing the purchasing power of households.

Ironically, the same exchange-rate movement strengthened government finances. Since Nigeria earns a substantial portion of its oil revenue in US dollars, every dollar now converts into far more naira. At N460/$, US$1 billion yielded about N460 billion. At N1,400/$, the same revenue generates roughly N1.4 trillion—an increase of about 204 per cent in naira revenue.

This suggests that while subsidy removal undoubtedly created fiscal space, exchange-rate liberalisation also substantially expanded the government’s spending capacity. Consequently, attributing the implementation of the new minimum wage mainly to subsidy savings does not fully capture the broader fiscal picture.

The experience for households has been very different. Before the reforms, petrol sold for about N198 per litre. Before recent global oil market pressures, pump prices had broadly stabilised around N800 per litre; an increase of approximately 304 per cent. The higher cost of fuel pushed up transportation expenses, which filtered through to food, housing, healthcare and other essential goods. As a result, much of the nominal increase in wages has been eroded by inflation and the rising cost of living.

This is not an argument against economic reforms or higher wages. Rather, it underscores the need to judge reforms by improvements in real incomes and purchasing power, not merely by higher nominal salaries or larger government expenditure.

Economic reforms achieve their true purpose only when they improve the lives of ordinary citizens. Strengthening workers’ welfare through lower inflation, better public transportation, affordable housing and higher productivity is not just social policy—it is sound economic policy. Workers with stronger purchasing power are more productive, businesses benefit from stronger consumer demand, and the nation enjoys greater economic growth, social stability and security. Ultimately, the real measure of reform is not how much government spends, but how much better Nigerians live.

  • Aguolu Kenechukwu, FCA is a chartered accountant, business analyst, and project management professional.