The Minister of Finance and Coordinating Minister of the Economy recently stated that savings from the removal of fuel and foreign exchange subsidies have been redirected to fund debt servicing, the new national minimum wage, student loans, and other critical government obligations.

While these fiscal adjustments explain where the savings went, they raise a critical question about whether the average Nigerian worker is actually better off under the current economic realities.

Wage Growth Versus Currency Depreciation

Although the national minimum wage rose from N30,000 to N70,000, representing a 133% increase in the government's wage bill, the purchasing power of this income has been severely diluted. During the same period, the official exchange rate moved from N460 to N1,400 per US dollar, marking a 204% depreciation.

In an import-dependent economy like Nigeria, this currency decline has significantly driven up the cost of essential goods, including fuel, food, medicines, and machinery. Consequently, the nominal wage increase has struggled to keep pace with the rising cost of household necessities.

Fiscal Gains From Exchange Rate Liberalisation

Interestingly, the depreciation of the naira has significantly bolstered government revenues. Since Nigeria receives a substantial portion of its oil revenue in US dollars, converting these earnings into naira yields far more than before.

For instance, at the previous rate of N460/$, US$1 billion in oil revenue yielded N460 billion. At the current rate of N1,400/$, that same US$1 billion generates N1.4 trillion, representing a 204% increase in naira-denominated revenue. This indicates that exchange-rate liberalisation, alongside subsidy removal, has greatly expanded the government's spending capacity.

The Impact of Rising Fuel Costs

For Nigerian households, the reality is defined by soaring expenses. Prior to the reforms, petrol sold for N198 per litre, but pump prices have since stabilised around N800 per litre, representing a 304% increase.

This sharp rise in fuel costs has driven up transportation expenses, which has subsequently inflated the prices of food, housing, and healthcare. Aguolu Kenechukwu, FCA, a chartered accountant and business analyst, points out that the nominal wage increases have been largely eroded by these inflationary pressures.

Kenechukwu emphasizes that economic reforms should ultimately be judged by improvements in real incomes and purchasing power rather than larger government expenditures. Strengthening worker welfare through lower inflation, affordable housing, and better public transportation remains essential for sustainable economic growth and social stability.