The Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, has introduced the Accelerated Stabilization and Advancement Plan (ASAP), aimed at tackling key economic challenges and stimulating development across various sectors.
This announcement comes amidst revelations that the government is still subsidizing premium motor spirit (PMS), commonly known as fuel, despite its earlier reiterations that the subsidies have been totally eliminated.
The ASAP document reveals, in what appears to be the first official acknowledgment of ongoing fuel subsidies, that the government continues to support downstream fuel consumption. The document projects that “At current rates, expenditure on fuel subsidy is projected to reach N5.4trillion by the end of 2024. This compares unfavourably with N3.6 trillion in 2023 and N2.0 trillion in 2022.”
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The presentation of the ASAP to President Bola Tinubu on Tuesday follows Mr. Edun’s recent television interview, where he hinted at a forthcoming stabilization package. The plan, which comes with an accompanying Executive Order to enhance its effectiveness, addresses the numerous economic challenges threatening the administration’s reform initiatives.
ASAP, which was accelerated following the nationwide strike by organized Labour, is designed to advance President Tinubu’s eight priority areas related to the economy and is structured into several sub-committee plans, including Agriculture and Food Security, Energy (Oil, Gas, and Power), Health and Social Welfare, and Business Support.
The executive summary of ASAP highlights the urgent need to mitigate the “difficult economic conditions threatening to unravel bold reforms undertaken by Mr. President.” The plan identifies persistent high inflation, high interest rates, and volatile exchange rates as major issues disrupting economic activity and business operations.
Sectoral Challenges and Recommendations – Oil Sector
The oil sector faces significant problems, including extensive pipeline vandalism, high production costs with a 40% premium above other jurisdictions, and production levels at 1.4 million barrels per day (mbpd), below the budgeted 1.78 mbpd.
These issues strain the country’s fiscal position and necessitate continued government support for downstream consumption. ASAP recommends the immediate implementation of presidential directives, such as removing signature bonuses to attract investments and achieve Final Investment Decisions (FID) for key projects by 2024 and beyond.
Business Support
Businesses are struggling with high inflation, elevated costs of raw materials, high interest rates, reduced consumer purchasing power, foreign exchange volatility, and limited access to finance. To address these challenges ASAP proposes a N1 trillion stabilization fund for light and heavy manufacturing to ease asset utilization gaps and inventory refinancing.
Additionally, a value chain financing fund of N200 billion is recommended, offering lower interest rates and short-term financing for MSMEs in sectors like food processing, pharmaceuticals, agriculture, and wholesale and retail trade.
The plan also prescribes the accelerated disbursement of the N200 billion Intervention fund (N75 billion for manufacturing and N125 billion for MSMEs) announced in 2023.
Macroeconomic Strategies
Mr. Edun is expected to provide advice on the macro-fiscal position of the plan, considering options such as prioritizing initiatives to reduce supplementary budget requirements, pursuing a supplementary budget as a partial funding source, reallocating the current budget, and selling government assets, although the latter would have a time lag.
President Bola Tinubu is expected to sign an Executive Order on ASAP after thorough consultations and fine-tuning of the draft presented by the Minister. This executive action aims to ensure the effective implementation of the plan, addressing the critical economic challenges facing Nigeria and paving the way for sustainable development.
This development was propelled by growing concerns over Nigeria’s economic stability, with high inflation and interest rates posing significant challenges to businesses and consumers.
The more things change, the more they remain same. Magically, you are being told that the sacrifices you have been making for one year amount to basically nothing. Yea, “subsidy is gone”, he thundered. But subsidy did not go anywhere, instead it increased, and you are now paying multiples of what you used to pay. If this whole thing is not head turning, I don’t know what is. Neither the subsidy gimmick nor the naira floating produced or is producing the goodies, rather your conditions went from bad to worse.
Now you are being dazed with a new acronym called ASAP, yea as soon as possible, if you wish, but you are not getting a breather sooner. One year down, year two begins with ASAP, and it’s not clear where they are taking you to, in case you start scratching your head by this time next year.
Ladies and gentlemen, this is the greatest time to be alive, because the unraveling is getting more interesting by the hour, and you cannot afford to blink or go anywhere. You are destined to witness this moment, and you must not take it for granted…
Like Apostle Paul said, dead or alive, he’s for Christ. For us, good or bad, we are with Nigeria. We keep going. May you live in interesting times.