November 26, 2021

Of subsidy removal and N5, 000 palliative to poor Nigerians

Fuel price

By Peter Ojonugwa-Ameh

The quagmire confronting the poor masses of Nigeria is coming to its apex by the recent declaration of the Federal Government to remove petroleum subsidy by 2022.

The only possible shock absorber to the hardships this move will have on the already overburdened masses is the intention by the Federal Government to pay five thousand Naira monthly stipend to poor Nigerians in order to cushion the biting issues that will go with the high transport cost Nigerians are about to face in the coming year.

While this may be a welcomed development in other sane climes, Nigerians have had their bitter past experiences that point to everything but positive in this matter.

Should the government be removing subsidies on petroleum at this point in time? What better measures have been put in place to cushion the effects of this action on poor Nigerians? These are some of the questions begging for answers as it concerns this matter.

It is agreeable that some Nigerians see this as a welcomed development since the government spends an outrageous 1.8trillion Naira annually on petroleum subsidy – yet they borrow more from China and elsewhere.

However, the majority of Nigerians who feel this move will add to their suffering think otherwise. What then should be the way forward in this matter? Some of the concerns by Nigerians are that the government will only pay a stipend to the poor Nigerians, but who are these poor Nigerians? The government has estimated that about 20 to 40 million poor Nigerians will benefit from the subsidy stipend.

However, how did they arrive at this figure? Are the very poor in Nigeria not more than the figures given? According to reactions from some Nigerians on social media about this matter, one particular commenter on Facebook, Afolabi Faramade noted:

“How did the Minister of Finance arrive at 40 million poor people? This is a very wrong figure. Nigeria has not conducted national census for over a decade now. 40 Million is just 20% of the current population estimates. Meanwhile, more than two-thirds of 200 million Nigerians are living below poverty line. The so-called transportation grant is NOT practicable and dead on arrival.”

By this reaction, one is forced to ask if the APC-led government knows what they are actually doing with this given figure. Even if this figure is accurate, one is also forced to ask why only some selected Nigerians should benefit from the subsidy grant?

Will the petrol subsidy removal be biting on only some select Nigerians and exempting other Nigerians? Another Facebook reaction from Festus Alabuja observes: “Why only 40m citizen? Constitutionally, we are all equal. Let the subsidy be for all and not selected few.”

A combination of such reasoning as the ones above only points to the feeling that the subsidy grant will end in mass failure. As a matter of fact, one commenter, Herbib Temitaryor categorically says that:

“it’s just to deceive the masses, they just want to use it as a means to an end….they CAN’T PAY IT and even if it is approved they will be the one to embezzle, it won’t get to the poor”

These comments from Nigerians point to some salient issues that should be critically considered. Has the APC government of President Muhammadu Buhari forsaken Nigerians to the point of losing their complete trust in a matter as this? To answer this question, one needs to look back at the recent Covid19 palliative saga where the government promised to cushion the effects of the lockdown by paying some stipends and giving out food items to the poor masses.

The outcome of this declaration – even with the numerous donations from the World Bank and well-meaning Nigerians running into tens of billions of Naira – ended in some government officials and traditional heads hoarding the palliatives that should be given out to help Nigerians withstand the lockdown order.

The world is still at a surprise as to why food palliatives were not given out to the poor as claimed by the government, months after the biting hardships of the Covid19 lockdown. As for the monetary palliative promised to Nigerians by the Federal Government, the Finance Minister claimed that tens of billions were disbursed to the very poor Nigerians.

However, this writer spent the Covid19 lockdown period in a remote village in Benue state and did not see any such gesture from the government. Nigerians are yet to verify the authenticity of the minister’s claim. Is the petroleum subsidy grant going to be one of such disbursements from government that were only feasible on papers but not in practice?

How about the school feeding programmes where the Vice President’s office claims to have spent billions of Naira feeding school children? Matching the monetary figures to actual school feeding activities that are unverified in some quarters makes a mockery on the Buhari administration.

This, perhaps, explains why some Nigerians are skeptical about the recent declaration to pay subsidy grants to the poor – after all, experience is the best teacher, they say.

What then is the way forward in all of this? The following points are worth considering by any sane government:

First of all, petroleum subsidy has consumed about 70billion Naira monthly and 1.8trillion Naira annually according to the Federal Government. What is the rationale behind replacing these figures with 200billion Naira monthly and 2.4trillion Naira annually in subsidy grants to the poor? Does the payment of five thousand Naira subsidy grant to the poor help reduce the financial burden on government or further increases it?

Secondly, won’t the payment of five thousand Naira subsidy grant to some select Nigerians be a case of stealing from Peter to pay Paul? What happens to the rest of Nigerians who will be left out of the subsidy grant? Are they not also victims of the subsidy removal?

Again, what is the rationale behind the idea that just five thousand Naira subsidy grant would solve anything meaningful for the poor Nigerians who will benefit?

Will the rising cost in pump price due to the subsidy removal not lead to increase in the costs of transportation, goods and services that would put additional financial burdens on the already suffering masses? How will 5k grant help? Former Senator Shehu Sani in his Twitter post succinctly notes this when he said that:

“when the pump price rises to N340, salaries or wages will be worthless, landlords will increase the rent, the schools will increase the tuition & parents must pay; food prices, transport, water & electricity bills will jerk up.

They live in Mars & think 5K can solve all these problems”

This reaction goes to show that the government is far from the people they claim to govern as the purported amount to be paid as stipends will end up not solving anything for the very poor the government is looking forward to assist.

The problem may not be removing petroleum subsidy but what the government intends to do with the funds that should have served such a purpose. According to reports from Daily Trust, the World Bank advised the Nigerian government that the removal of subsidy must be accompanied by ‘aggressive reform effort’ that could contribute more to economic growth than a sustained period of high oil prices.

This implies that funds from subsidy should be better channeled into viable economic projects that will sustain the economy and add value to the lives of all Nigerians. The following suggestions would exemplify this:

For one thing, building new refineries and revamping the already dilapidated ones is a major step in the right direction. How long will Nigerians endure the biting hardships that will be imposed on them buy high prices in petroleum products? This is especially so because virtually the prices of all goods and services in the country are tied to the prices of petroleum products.

To solve the high cost in the standard of living for most Nigerians would mean solving the problem of high pump price. If the government invests the over 200trillion-Naira-annual-subsidy funds in building refineries, one cannot imagine the number of refineries that will be accomplished in the next 5 to 10 years. The gains of Nigeria refining its own oil is innumerable – not to mention the mass jobs that will be created in the process.

Another thing is that even if the government thinks that building refineries is a wild elephant project that they do not have the financial capacity to embark upon for now, why not inject the subsidy funds into other ventures that will better the lots of Nigerians. Investing in domestic industries to expand and create jobs for the teeming youths won’t be a bad idea.

How about upgrading our schools to international standards to cater for the future of tomorrow’s leaders? After all, poor education will contribute more negative impacts to the country than any other issues we are currently facing.

More so, there are numerous major roads that can boost our economy which have been dilapidated for years such as the Abuja/Lokoja, Porthacourt/Imo/Anambra, Delta/Kogi, Lagos/Ibadan, highways, etc. Undoubtedly, these roads see to much economic activities that their importance cannot be overlooked.

The government should revamp and upgrade these roads while building more economically viable ones. The rail way lines are yet to connect to major cities across the country. One cannot over emphasize the importance of having train stations across the 36 states of the federation.

Five thousand Naira subsidy grant is the least of Nigerians’ worry at the moment. The government of President Muhammadu Buhari should look inward to more critical issues that they can solve with these funds rather than embarking on another failed policy that further puts Nigeria in the ranks of the poorest countries of the world.

High Chief Ameh, National Secretary, CUPP, Lives in Abuja.