Last week, I expanded the conversation on how macroeconomic growth, which has become increasingly evident in Nigeria following President Bola Tinubu’s reforms, can cascade to the microeconomic level and alleviate the reform-induced pains being borne by the critical mass of Nigerians at the bottom of the economic pyramid.
Unravelling the mystery of how macroeconomic gains can trickle down to the microeconomic level—which is the critical issue occupying the minds of most Nigerians grappling with prevailing economic hardship—has been the goal of this column. Consequently, gathering data, facts, figures, and models, both conventional and unconventional, that can help defeat poverty has been occupying my mind.
This week, I will take the conversation beyond wage increases as a means of helping Nigerians cushion the effects of the hardship triggered by the bold socioeconomic reforms the nation has undergone during the past three and a half years of President Tinubu’s stewardship.
I am mindful that a government-announced wage increase, should the administration choose that route, may directly benefit only workers under the umbrella of organised labour, such as the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC). Although these workers may account for no more than 2% of Nigeria’s population, firms in the organised private sector often follow the government’s lead. Consequently, a wage increase could have an immediate impact, enabling a significant number of Nigerians to heave a sigh of relief.
Of course, massive wage increases, such as the Udoji Award, triggered inflation in the 1970s. My recommendation, therefore, is an increase of just over 100%, from the current ₦70,000 to ₦150,000.
As may be recalled, the last minimum wage increase under the incumbent administration, two years ago, raised the figure from ₦30,000 to ₦70,000—a proportionately higher increase than the one I am proposing. Yet, that increase did not trigger a comparable inflationary spiral, partly because of the Central Bank of Nigeria’s (CBN) tight monetary policy.
In any case, the economy currently needs to be reflated to boost the purchasing power of the masses, which is at its lowest ebb. With purchasing power severely constrained, manufacturers of consumer goods face weak demand. Even if they had access to inexpensive credit, their products might, at worst, remain in warehouses and, at best, sit on retailers’ shelves if demand failed to improve. This situation would persist if the CBN maintained an excessively tight monetary stance.
The ongoing quantitative easing by the apex bank, alongside the initiative to introduce consumer credit firms, is also expected to help reflate the economy. This would provide welcome relief to the overburdened masses, who can hardly wait to exhale.
With respect to the private sector’s capacity to accommodate a wage increase, firms in banking and financial services, telecommunications, financial technology, oil and gas, as well as building and construction, may be better positioned to adjust wages upwards.
However, firms in the manufacturing sector may initially struggle to increase wages. But with the purchasing power of a significant number of Nigerians boosted by a new wage increase, sales could rise and production lines expand, thereby creating more jobs.
This, of course, comes with the caveat that all things remain equal, although all things rarely remain the same or equal for long.
Nevertheless, I am convinced that there are two kinds of subsidies in the life of a nation such as Nigeria: one feeds the car, while the other feeds the driver.
Remarkably, before President Tinubu emerged as the occupant of Nigeria’s highest seat of power at the Aso Rock Presidential Villa on May 29, 2023, the country had spent four decades choosing to feed the car rather than the driver.
This assertion is underscored by the fact that, for decades, Nigeria poured about ₦4 trillion annually—at least during the past decade—into the belly of the car: petrol. The car drank, belched smoke, and moved. But when the journey ended, nothing remained. No new knowledge was created, and no additional skills were developed to build and operate oil refineries at scale until Dangote Industries emerged roughly three years ago and began refining crude oil into petroleum products, without the bureaucratic bottlenecks that stymied the four government-established refineries, which are now largely moribund.
Under the petrol subsidy regime, the fuel was consumed, and the country was left poorer. The owner of a Lexus SUV who burned a hundred litres of petrol a week received a subsidy twenty times greater than that enjoyed by the young man who queued for five litres to power his keke.
Thus, we were subsidising consumption, and consumption, by its very nature, evaporates.
Today, President Tinubu has removed the petrol subsidy and invested some of the savings, estimated at about ₦10 trillion over the past three years, in education, roads, and other physical infrastructure.
Right now, following the announcement on October 8 by Taiwo Oyedele, Minister of Finance and Coordinating Minister of the Economy, of a petrol pump-price discount and price modulation, there is growing apprehension that the petrol subsidy removal policy, which had appeared to be signed, sealed, and delivered by the Tinubu administration, may be under threat. This concern is heightened by the International Monetary Fund (IMF), which, during its meeting in Southeast Asia, reportedly advised Nigeria against reversing the policy that has helped de-risk the Nigerian economy in multiple ways.
The concern is a response to Minister Oyedele’s directive of October 8, announcing a petrol pump-price discount accompanied by a complicated price-modulation methodology. This has raised fears that Nigeria may be on the verge of reversing the giant strides President Tinubu has made to liberate the country from the economic straitjacket in which it had been trapped for far too long.
If the reversal of the petrol subsidy removal announced by Tinubu on May 29 ,2023, happens, it will be a déjà vu, echoing the experience of military President General Ibrahim Badamasi Babangida (IBB), who, in 1986, accepted the introduction of the International Monetary Fund (IMF)-inspired policy known as the Structural Adjustment Programme (SAP).
Remarkably, even IBB, with his military jackboot and autocratic style of leadership, could not fully implement the reforms without facing significant resistance. He eventually stepped aside in 1993, following a prolonged period of political turmoil, leaving the mantle of leadership to an interim civilian administration headed by Chief Ernest Shonekan, then chairman and chief executive officer of the United African Company (UAC), a British conglomerate.
However, Shonekan was quickly toppled by another military dictator, General Sani Abacha.
In a similar vein, BMI, a Fitch Solutions agency involved in analysing economic trends and advising businesses and governments, reportedly advised on October 19 that Nigeria should not contemplate a return to petrol subsidies.
According to its estimates, Nigeria could spend about ₦1.77 trillion funding the petrol pump-price discount and modulation policy announced on October 8, which, at the time of writing, had yet to produce any significant discernible impact, if indeed it was being implemented.
To put the distinction between consumption subsidies and production-oriented investments into perspective, we will use the Nigerian Education Loan Fund (NELFUND) as a case study.
NELFUND represents a philosophical shift. We are now feeding the driver.
A litre of petrol serves its purpose for a few hours. A graduate can contribute to national productivity for forty years. The former is consumed, making petrol subsidies a form of consumption expenditure. The latter builds human capital, reinforcing the age-old maxim that knowledge is power.
Furthermore, fuel subsidies created opportunities for importers at Apapa in Lagos, smugglers in Illela, Sokoto State, and Idiroko in Ogun State.
Education loans, on the other hand, will help produce the engineers who will repair and maintain our refineries, the doctors who will remain in our hospitals, and the agronomists who will help our farms yield three times their current output.
In other words, petrol subsidies represent expenditure, while NELFUND represents investment.
To emphasise the distinction further, one disappears with the exhaust fumes, while the other can repay itself and generate resources to support another beneficiary.
As we would all agree, however, even investment requires wisdom. We must invest in what Nigerians actually ride.
Thankfully, the Federal Government, in its wisdom, earmarked about $1 billion for compressed natural gas (CNG) buses, which were scheduled for a high-profile rollout on October 1. It also urged state governments to adopt a similar approach.
The initiative was noble in intent but alien in design; hence, it failed to materialise as envisaged. The simple reason for this tepid outcome is that, even if the buses had been rolled out on the massive scale originally planned, the average Nigerian commuter does not live along a bus rapid transit (BRT) corridor.
Instead, he lives in the narrow alleys of Agege, the undulating hills of Enugu, the dusty lanes of Gusau, and the erosion-ravaged banks of the River Niger and the Benue. To such a commuter, the CNG bus remains a distant prospect, photographed for the news. His everyday reality is the keke, the okada, and, in riverine communities, fishing boats.
Let us be honest: keke and okada are Nigeria’s equivalent of trains. Europe subsidises its trains, yet we neglect our own informal transport systems. These vehicles carry millions of Nigerians, according to various transport-sector assessments, and reach places buses cannot. They keep moving while much of the country sleeps.
What if, instead of purchasing a thousand large buses for government-operated transport schemes, we leased 500,000 small electric vehicles to Nigerians?
An electric keke does not require ₦8,000 worth of petrol. It may need only ₦500 for a battery swap and could travel up to 100 kilometres, depending on the vehicle and operating conditions. The economics of compassion is simple: when energy costs fall, transport fares can fall. When fares fall, food and other goods move more cheaply. When distribution costs decline, inflationary pressures ease.
Give Musa, Emeka, Akin, or Ejiro an electric keke on a lease-to-own basis, with daily payments of ₦3,500 made by phone, the vehicle’s location tracked by satellite, and ownership transferred after two years. You have not merely given that person a job; you have helped create a capitalist. You have transformed someone who might otherwise be vulnerable to recruitment by criminal groups into an asset-owning entrepreneur in the city.
Dangote Industries, some time ago, offered Nigerians the opportunity to drive its trucks for 36 months and own them thereafter. Thousands of people, including PhD holders, reportedly applied.
One can only imagine what Nigerians could make of a similar opportunity to lease kekes and okadas and eventually own them.
Recently, Nigerian micro-entrepreneurs reportedly outcompeted Uber, the globally acclaimed ride-hailing company, in Nigeria by offering similar services more competitively. This demonstrates the energy and entrepreneurial spirit of Nigerians when they are given the right environment and incentives to thrive.
A further comparison between kekes and okadas, on the one hand, and CNG buses, on the other, reveals an important distinction. CNG-powered buses require substantial government funding and supporting infrastructure to operate at scale, whereas electric kekes could rely on battery-swapping networks and electricity generated from various sources, including solar power. In suitable operating conditions, the former may perpetuate dependence on government funding, while the latter could promote greater sustainability and private-sector participation.
A billion dollars invested in buses might employ a few thousand drivers. The same amount invested in kekes and okadas could potentially support hundreds of thousands of owner-operators and improve mobility for millions of people daily.
Remarkably, the bridge between macroeconomic growth and microeconomic prosperity need not be a long, winding flyover on which prosperity takes twenty years to trickle down. Sometimes, that bridge is a keke or an okada.
The reality that should jolt us into action is that we spent years feeding the car, yet the car took us nowhere. Let us now feed the driver.
The latest World Bank data on Nigeria show that a substantial proportion of the population still lives in rural areas. Yet the CNG initiative, which is intended to help cushion the effects of the bold reforms, risks leaving many Nigerians underserved because its focus on buses and commercial vehicles does not adequately address the transportation needs of people who depend on okadas and kekes.
Below are World Bank figures that help illustrate the point.
In 2024, an estimated 44.97% of Nigerians lived in rural areas, representing approximately 104–105 million people out of a total population of 232.68 million.
About 55.03% lived in urban areas, marking the first time in Nigeria’s history that the urban population exceeded the rural population.
How the rural population has changed:
* 1960: 84.59% lived in rural areas.
* 2023: 45.72% lived in rural areas.
* 2024: 44.97% lived in rural areas.
The average rural population share between 1960 and 2024 was approximately 68%.
Thus, although fewer than half of Nigerians now live in rural areas, the World Bank notes that about 70% of the country’s poor live in rural communities, while the rural poverty rate stands at 75.5%.
In effect, many poor Nigerians in urban areas are also inadequately served by the CNG initiative, which focuses on buses and commercial vehicles that may remain unaffordable to low-income commuters whose preferred means of transport are okadas and kekes.
I highlight this point not to indict the operators of the Presidential CNG Initiative, but to draw attention to the critical mass of poor Nigerians in both rural and urban communities whose transportation needs remain inadequately addressed.
In my view, with more than 70% of Nigerian cities with populations exceeding 250,000 reportedly relying on motorcycles and kekes as their primary means of intra-city transport, and 78% of low-income commuters reportedly identifying kekes as their most accessible mode of transport, subsidising 500,000 electric kekes would not be a fringe intervention. Rather, it would mean supporting a mode of transport on which a substantial proportion of the population depends.
Although the above figures are not drawn from a National Bureau of Statistics (NBS) survey, four peer-reviewed studies published between 2024 and 2026 reportedly converge on similar findings.
A recent youth employment survey also reportedly revealed that more than 60% of unemployed Nigerian youths could find economic opportunities in the commercial motorcycle sector.
This provides the justification for my recommendation that, alongside its focus on CNG buses and other transport vehicles, as well as the proposed petrol-price discount and modulation policy announced by Minister Oyedele, the government should make okada and keke mobility a centrepiece of its intervention to ease the burden of high transportation costs on the masses.
I do not envisage the administration resisting this compelling proposition.
Next week, I will further elaborate on how socioeconomic development can cascade more rapidly from the macroeconomic to the microeconomic level.
Magnus Onyibe is an entrepreneur, public policy analyst, author, democracy advocate, and development strategist. He is an alumnus of the Fletcher School of Law and Diplomacy at Tufts University, Massachusetts, USA, a Commonwealth Institute scholar, and a former commissioner in the Delta State Government. He sent this piece from Lagos.