In a new move to put an end to the lingering protest that has greeted the federal government’s moves to remove fuel subsidy, the Minister of Budget and National Planning, Mrs Zainab Ahmed said on Thursday that the government is planning to introduce transport subsidy.
The Minister, while describing fuel subsidy as a major waste and drain on the Nigerian economy that only benefits the rich, explained that temporarily replacing it with transport subsidy will minimize the impact fuel subsidy removal will have on the masses.
She announced the plan while speaking on the Channels Television’s Politics Today show, where she also explained that the government was considering the possibility of ending fuel subsidies before July 2022.
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While acknowledging the challenge the subsidy replacement will pose, Ahmed said that the federal government is engaging with the World Bank in designing a programme that will make the transition possible. The programme is expected to help cushion the effect of transport fare hike that will result from the fuel subsidy removal for a minimum of six months and a maximum of 12 months.
The World Bank has for long urged Nigeria to do away with fuel subsidies, as it undermines the country’s development. The Nigerian government is thus counting on the financial body to make the subsidy removal possible. Ahmed said if the government is able to get the funding for the transport subsidy, then the removal of the fuel subsidy would be earlier than planned.
“The Petroleum Industry Act that has been passed has a provision that says petroleum products should be deregulated, which means there should be no subsidy of any petroleum product. In making our plans, we assume that this deregulation would take effect from July 2022.
“It is important that we exit the subsidy. It is costing us a significant amount of resources that we could have applied for education, health and critical infrastructure. It is a major waste and drain on the economy.
“Who is benefiting from this subsidy? It is the people with a number of cars that they run. It is not the person entering a bus from the village to the market. If you look at those large mass transit buses, they run on diesel and diesel is deregulated.
“If you look at trucks that carry goods from farm to market, they run on diesel. What the common man use for cooking is kerosene; that also is deregulated. So, why should we continue to keep the subsidy for a product that is only benefiting the people that can actually afford the market price?
“We are looking at providing some palliatives for a large number of the population, in terms of a transport subsidy for a short period like six to 12 months. Transport subsidy that would be given straight to individuals.
“What is constraining us is the issue of registration. The national identity registration process is ongoing, and we want to make sure that this subsidy goes into the hands of the right people, that we can make transfers to people using their BVN, account number and NIN, and we know that it is has gone to the right people. That is part of the thing we are negotiating and working on,” she said.
While the move has been largely supported by advocates of fuel subsidy removal, concerns about the weight of economic hardship it would bring remain.
The Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) have stood in opposition to the idea for long, since the government has failed to provide a clear cut economic plan that will ameliorate the pains the subsidy removal will usher in.
Nigeria’s monthly minimum wage was recently reviewed N30,000 ($75) upward, with some states still sticking to the old N18,000 ($44). Inflation has been on a wild ride for years, spiking the cost of living for the majority of people living on the meagre salary. In addition, small businesses in the country depend on fuel to generate much needed electricity.
Against this backdrop, the fuel subsidy is regarded as the only thing the Nigerian government does for the masses, and removing it will exacerbate the plights of people already drowning in suffering as it would lift the cost of living.
Ahmed said the federal government’s transport subsidy plan will be implemented through BVN-verified fund transfer to poor Nigerians, but that poses another financial inclusion-based challenge. Nigeria has about 40 million unbanked people, mostly poor, who will be sidelined if the transport subsidy is implemented through banking services.
According to our not so smart finance minister, the people consuming over 50 million litres (according to NNPC) of petrol are our rich guys with plenty cars, and after making this uninformed statement, she did not tender her resignation letter immediately, for being so out of touch, yet she’s the finance person, and will get her November salary fully paid…
Somebody should remind our minister that Keke riders, small shuttle buses, the salon and barbershop operators, okada riders, and all the small guys, where overwhelming majority of Nigerians belong, use that petrol, she should have known this, because she wasn’t born outside this country.
The transport subsidy she’s fantasizing, has she thought of how to arrive at credible beneficiaries, or will she be sending money to people sitting at home, even when they are not entering buses and keke? And from her explanation, the fund for the transport subsidy would need to be sourced, not that they even have the funds.
You have a trio of Malami, Emefiele and Ahmed in one government, and you are still wondering why Nigeria is like this? Buhari must be a specialist, when it comes to assembling and working with misfits, and that tells you everything about the big man himself.
Spot on Fracis. You have said it all. Unfortunately, she will still receive November salary and 13th month.