The discussion about subsidies in Nigeria has become unnecessarily narrow because, for many people, a subsidy means petrol is sold below market price. I am not saying that Nigerians want the government to cease supporting all sectors. Rather, I believe many people refer to subsidies as if they were inherently undesirable, even though they operate in industries that might already benefit from subsidized electricity, infrastructure, or financing. In many cases, they fail to see those benefits as subsidies.
For a long time, I thought government support meant getting something direct, like money, a cheaper product, or a clear benefit. But in a public finance and budgeting course at Northwestern University, I learned that support doesn’t always mean receiving something physical. The government can pay on your behalf or reduce a cost, and the economic effect is the same. This changed how I understood subsidies, tax incentives, and other types of public support.
A subsidy happens when the government covers part of a cost that consumers or producers would usually pay. This can include direct payments, price support, cheaper loans, guarantees, or public infrastructure. Tax incentives are different because they lower taxes through exemptions, deductions, credits, or special treatment. Both help reduce business costs, but in different ways. Nigeria’s electricity market is a clear example of a real subsidy.
In the third quarter of 2025, the Nigerian Electricity Regulatory Commission said the Federal Government spent ₦458.75 billion on electricity subsidies, down from ₦514.35 billion in the previous quarter. This means the government covered part of the gap between the real cost of electricity and what consumers paid. Businesses using this electricity benefit from the subsidy, even if they never get a cheque from the government. Similar indirect support exists in telecommunications infrastructure.
The Universal Service Provision Fund in Nigeria provides subsidies for telecom infrastructure in areas with insufficient service. This helps businesses deal with the challenges of expanding networks to places where private investment would not be profitable. Because public funds partly pay for this infrastructure, businesses may get the subsidy without realizing it. Government-backed financing works similarly.
The Federal Government and the Bank of Industry offer MSME loans at a 9 percent annual rate, with up to three years to repay. When government-backed loans are cheaper than what a business could get from a commercial bank, the borrower gets a real economic benefit. Some business owners may still dislike subsidies because these benefits do not look like the petrol subsidy people often discuss. Even though the method is different, the government still lowers a business’s costs.
To boost investment in agriculture, manufacturing, digital infrastructure, and other sectors, Nigeria offers tax credits, exemptions, and duty concessions. These measures reduce the taxes a business owes, rather than paying part of its costs directly. This way, businesses can get significant public support without ever receiving money from the government. That is why many people do not realize how much government support shapes the economy.
Someone might say they oppose subsidies but still run a business that benefits from government support for electricity, infrastructure, or financing without knowing it. This happens because most Nigerians still think of subsidies mainly as petrol-related, not as the many other ways the government can lower private costs. The main point is this: before calling subsidies a problem, people should think about how much their own industries depend on them.
Abidemi Adebamiwa is the Managing Editor @ Newspot Nigeria.