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Mixed reaction trails $800m World Bank palliative for subsidy removal

Published

1 year ago

April 11, 2023

By Seun Ibiyemi

As Federal Government planned removal of subsidy on Premium Motor Spirit (PMS) known as Petrol and set to disburse $800 million World Bank palliative to stakeholders, mixed reactions have continued to trail the disbursement as stakeholders who spoke with Nigerian NewsDirect maintained different thoughts over the decision.

The loan which will be used to provide post-petroleum subsidy palliatives to over 50 million Nigerians, starting in June will help to mitigate the potential increase in transportation and goods costs that could arise from the removal of fuel subsidy.

The capacity to properly identify the needy in the Nigerian society will largely depend on accurate census exercise. Judging from antecedents and politicians’ inclination to distort census figures, it may prove dubious, the federal government’s capacity to accurately identify palliative-qualified Nigerians.

Recall that the Federal Government secured the sum of $800 million from the World Bank under the National Social Investment Programme as part of palliatives to cushion the negative effects of the plan to remove subsidy on the petroleum products by June 2023.

The Minister of Finance, Budget, and National Planning, Hajiya Zainab Ahmed, announced this last week while fielding questions from State House reporters after the Federal Executive Council (FEC) meeting at the Presidential Villa, Abuja.

She said the fund which had been secured was ready for disbursement.

Asked about the palliatives that would be put in place ahead of the removal subsidy on the premium motor spirit popularly known as petrol, the Minister said,“The second question on exit of fuel subsidy, this is a commitment in the Petroleum Industry Bill. There is a provision that says that 18 months after the effectiveness of the PIA that all petroleum products must be deregulated, that 18 months takes us to June 2023.”

In a swift response, the Chief Executive Officer of the Centre for the Promotion of Private Enterprises, Muda Yusuf, said fuel subsidy removal has enormous potential benefits.

“First, there is the revenue effect. The removal would unlock about N7 trillion into the federation account. This would reduce fiscal deficit, and ultimately ease the burden of mounting debt.

“Secondly, is the investment effect, currently it is extremely difficult to attract private investment into our petroleum downstream sector because of the unsustainable subsidy regime and the stifling regulatory environment.

“The subsidy removal will eliminate the distortions and stimulate investment. We would see more private investments in petroleum refineries, petrochemicals and fertiliser plants. Post subsidy regime would also unlock investments in pipelines, storage facilities, transportation and retail outlets.

“We would see the export of refined petroleum products petrochemicals and fertiliser as private capital comes into the space. Quality jobs will be created.

“There is a foreign exchange effect. This would result from the import substitution as petroleum products importation progressively decline. This would conserve foreign exchange and boost our external reserves.

“Increase in investment would translate into more jobs in the petroleum downstream sector;

“Smuggling of petroleum products across the borders will come to an end with a market pricing of refined products.”

He added that there must be palliatives, this should be segmented into immediate, short term and medium term deliverables.

Immediate and short-term options include wage review in public service, electronic cash transfers to the vulnerable groups in our society, designation of few retail outlets [maybe 10 per cent of the outlets] as subsidy stations while all others will sell at deregulated prices for a transition period of one year; introduction of subsidized public transportation schemes across the country and reduction in import duties on intermediate products for food related production to moderate food inflation.

In the medium to long-term, there should be accelerated efforts to upscale domestic refining capacity, driven by private investments; accelerated investments in rail transportation by government to ease logistics of fuel distribution across the country as well as domestic freight costs.

NECA faults $800m palliatives, insists on fixing local refineries

Also reacting yesterday, the Nigeria Employers’ Consultative Association, (NECA), faulted $800 million grant from the World Bank to the Federal Government for palliatives, saying among others, previous palliatives had proved not to palliate the economic woes of the citizens.

Speaking through its Director-General, Wale-Smatt Oyerinde, NECA said fixing local refineries must be the pre-condition for the removal of subsidy.

He said,“We commend the efforts of the Federal Government in its bid to provide support to millions of Nigerians who would be affected by the eventual subsidy removal. We must also commend the World Bank for considering Nigeria worthy of the grant.

“It is without a doubt that an abrupt removal of the subsidy without any aid to cushion the hardship this would heap on the masses, especially the most vulnerable in the society, could lead to extreme forms of poverty.

‘’The cost of living is already at a pace inconsistent with household incomes and the disposable income of workers and Nigerians, in general, has been eroded significantly by myriads of challenges. These issues also affect employers considerably and significantly.

“While we support the removal of fuel subsidy and also commend the support of the World Bank, we believe government should not shy away from the fundamental issues. These issues include fixing the refineries as a pre-condition for the removal of subsidies.

“The questions that successive governments have refused to answer are, why can’t the refineries work? If millions of dollars had been expended on Turn Around Maintenance, TAM, why are the refineries still not working?

“Why is it difficult to prosecute those that have collected money for the TAM and refused to fix the refineries? These questions beg for urgent answers.

“It is worthy of note that over the past eight months, Nigerians have been buying petrol at different prices far above the approved price. We, on several occasions, had called on the government to fix the refineries and be deliberate about establishing the right institutional and policy framework to keep them running. We had hoped this would have been given attention first.

“We cannot over-emphasize that government must stop using scarce resources to fix policy problems. It is both unrealistic and unsustainable. The subsidy regime is a scam and has not in any way benefit the so-called “vulnerable” citizens.

Therefore, it makes no economic sense to inject cash in the form of palliatives into an economy that is already beset with unending inflationary pressures.

“The $800 million at best is equivalent to about N360 billion and when you divide this by the targeted 10 million households, that amounts to approximately N36,000. What significant or tangible effect would this have on anyone, irrespective of status?

“We will only end up adding more woes to our shrinking economy. What we request is a more all-encompassing institutional structure to manage the gradual removal of subsidies after fixing the refineries and not the proposed palliatives.

“It is worthy of note that previous palliatives had proved not to palliate the economic woes of the citizens.

“We would, again, reiterate that the government must fix all the refineries. If the government is truly interested in doing this, which appears to be the most important palliative it can provide to the citizenry, then all those who have continued to sabotage every effort at fixing and having them function at optimal capacity must be held culpable.

On subsidy removal palliatives, FG on its own — TUC

Reacting in a similar vein, the Trade Union Congress, (TUC), also rejected both subsidy removal and the government’s $800million palliative to cushion its effects, saying the Federal Government was on its own.

TUC’s Secretary General, Nuhu Toro, said organised Labour never had any discussion with the Federal Government on palliatives.

He said,“This is another neocolonialism tactic by the World Bank to hold Nigeria, the hostage. It is shocking to hear that the Federal Government has secured $800 million for the so-called palliatives.

“The government did not discuss with Organised Labour palliatives. The government is on its own.

“It is instructive to note that social dialogue is undermined in this circumstance. Over the years, Nigeria has been misled by the International Monetary Fund, IMF, and World Bank. It is unacceptable to us.

“There is no doubt that our country’s debt burden and high-interest rate will be worsened by this development. We have made it clear that the government must fix our refineries and address the issue of the local refining capacity of Nigeria.”

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Minimum wage negotiations hit deadlock as Labour Unions reject FG’s proposed N48,000

Published

23 hours ago

May 16, 2024

NewsDirect

…FG’s proposal an insult to Nigerian workers — NLC President

…Fulfill your promise to Nigerian workers — Ajaero tasks Tinubu on living wage pledge

By our correspondents

The Tripartite National Minimum Wage meeting resumed on Wednesday, but negotiations reached a deadlock due to the government’s perceived unwillingness to engage in fair discussions with Nigerian workers.

The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) expressed deep disappointment and frustration at the turn of events.

According to NLC National President, Joe Ajaero, the government’s proposal of N48,000 as the new minimum wage is an insult to Nigerian workers.

Ajaero stated that despite their best efforts to reach a reasonable agreement, the government and organised private sector’s actions have led to a breakdown in negotiations.

The labour unions are demanding a higher minimum wage to reflect the current economic realities and alleviate the suffering of Nigerian workers. The stalemate in negotiations may lead to industrial action, which could have far-reaching consequences for the economy.

He said, “Government’s proposal of a paltry N48,000 (forty-eight thousand Naira) as the Minimum Wage does not only insult the sensibilities of Nigerian workers but also falls significantly short of meeting our needs and aspirations.”

Ajaero noted that in contrast, the Organised Private Sector proposed an initial offer of N54,000.

“Though it is worth noting that even the least paid workers in the private sector receive N78,000 as clearly stated by the OPS, highlighting the stark disparity between the proposed minimum wage and prevailing standards further demonstrating the unwillingness of Employers and Government to faithfully negotiate a fair National Minimum Wage for Workers in Nigeria.

“Furthermore, the Government’s failure to provide any substantiated data to support their offer exacerbates the situation. This lack of transparency and good faith undermines the credibility of the negotiation process and erodes trust between the parties involved.

“As representatives of Nigerian workers, we cannot in good conscience accept a wage proposal that would result in a reduction in income for federal-level workers who are already receiving N30,000 (thirty thousand Naira) as mandated by law, augmented by Buhari’s 40 percent Peculiar allowance (N12,000) and the N35,000 wage award, totalling N77,000 only. Such a regressive step would undermine the economic well-being of workers and their families and is unacceptable in a National Minimum Wage Fixing process.”

Ajaero stated that the Labour Unions were forced to withdraw from the negotiations due to the government’s unsatisfactory proposal, but he emphasised that the Congress remains steadfast in its commitment to fighting for the rights and interests of Nigerian workers.

“In light of these developments, and to prevent the negotiation of a wage deduction, the Nigeria Labour Congress and Trade Union Congress have decided to walk out of the negotiation process. We remain committed to advocating for the rights and interests of Nigerian workers and will continue to engage in reasonable dialogue with the Government if they show serious commitment to find a fair and sustainable resolution to this impasse.”

He also called upon the Government to reconsider its position and come to the negotiation table with, “clear hands that reflect the true value of the contributions made by Nigerian workers to the nation’s development and the objective socioeconomic realities that confront not just Nigerian workers but Nigerians today as a result of the policies of the federal government.”

…President Tinubu must fulfill pledge of ensuring a living wage for Nigerian workers — NLC President

He further urged the government to work alongside Labour to finalise the N615,000 minimum wage as proposed by Labour.

“Together, in a reasonable dialogue, we can work to give Nigerian workers an N615,000 National Minimum wage as proposed by us based on evidence and Data. This will be in keeping with the pledge of the President; his Excellency Senator Bola Ahmed Tinubu’s pledge to ensure a Living wage for Nigerian workers.”

Recall that on January 30, 2024, President Bola Tinubu, conveyed by Vice-president Kashim Shettima, addressed a 37-member panel at the Council Chamber of the State House in Abuja.

This panel, comprising representatives from federal and state governments, the private sector, and organised labour, is tasked with recommending a new national minimum wage for Nigeria. Shettima emphasised the importance of swift deliberations, urging members to expedite the process and submit their reports promptly.

“This timely submission is crucial to ensure the emergence of a new minimum wage,” Shettima said.

VP Shettima also urged collective bargaining in good faith, emphasising contract adherence and encouraging consultations outside the committee.

The 37-man committee is chaired by the former Head of the Civil Service of the Federation, Goni Aji.

The committee had the terms of reference to ‘consult all stakeholders on the issue of national minimum wage and recommend a realistic and practical national minimum wage to the government.’

The Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have proposed various figures as a living wage for workers across the country.

This was made known during zonal public hearings held simultaneously on March 7, 2024, in six locations – Lagos, Kano, Enugu, Akwa Ibom, Adamawa, and Abuja.

According to reports, the NLC and TUC proposed different figures for each zone, citing the current economic realities and the need for a living wage. In the South-West, the NLC proposed N794,000, while the TUC suggested N447,000.

In the North-Central zone, workers demanded N709,000 as the new national minimum wage, while the South-South stakeholders proposed N850,000. In the North-West, N485,000 was proposed, and in the South-East, stakeholders demanded N540,000 as the minimum wage.

After considering the various proposals, the Organised Labour is set to recommend N615,000 as the new living wage for Nigerian workers. This move is aimed at ensuring that workers earn a wage that reflects the current economic realities and enables them to meet their basic needs.

The proposal is expected to be presented to the government for consideration and implementation.

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Foreign remittances: CBN grants license to 14 IMTOs

Published

23 hours ago

May 16, 2024

NewsDirect

As part of concerted efforts to increase the foreign-currency remittance inflow, the Central Bank of Nigeria (CBN) has granted licenses to 14 new International Money Transfer Operators (IMTOs).

The licenses which are Approval-in-Principle (AIP) were disclosed in Abuja on Wednesday by the Bank’s Acting Director of Corporate Communications, Mrs. Hakama Sidi Ali.

The Bank argues that the initiative will help increase the sustained supply of foreign exchange in the official market by promoting greater competition and innovation among IMTOs to lower the cost of remittance transactions and boost financial inclusion.

According to the Apex Bank, “This will spur liquidity in Nigeria’s Autonomous Foreign Exchange Market (NAFEX), augmenting price discovery to enable a market-driven fair value for the naira.”

It will be recalled that the CBN Governor, Mr. Olayemi Cardoso, had recently declared, “We’ve set ourselves a target to double remittance flows into Nigeria within a year, a goal I firmly believe is within reach.

“We are wasting no time driving progress to remove any bottlenecks hindering flows through formal channels permanently. We have a determined pathway and a sequenced approach to tackling all challenges ahead, working hand in hand with key stakeholders in the remittance industry.”

The Apex Bank also viewed increasing formal remittance flows— one of the major sources of foreign exchange, accounting for over 6 percent of GDP—as a means of reducing the historical volatility in Nigeria’s exchange rate caused by external factors, such as fluctuations in foreign investment and oil export proceeds.

The increase in the number of IMTOs is one of the primary actions initiated by the CBN’s remittance task force, overseen by Governor Cardoso as a collaborative unit pulling together specialists to work closely with the private sector and market operators to facilitate the ease of doing business in the remittance ecosystem in Nigeria.

The task force was established as a direct result of an executive learning session with IMTOs during the World Bank/IMF Spring Meetings held in Washington DC, United States of America, in April 2024.

The task force will meet regularly to implement strategy and monitor the impact of its measures on remittance inflows.

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He was an armour bearer – Sanwo-Olu mourns late aid at 55

Published

23 hours ago

May 16, 2024

NewsDirect

By Sodiq Adelakun

The Lagos State Government has announced the passing of its Deputy Chief of Staff, Mr. Gboyega Soyannwo.

According to a statement signed by the Commissioner of Information and Strategy, Mr. Gbenga Omotoso, Soyannwo died on Wednesday after a brief illness at the age of 55.

Governor Babajide Sanwo-Olu expressed his condolences to the Soyannwo family, describing the late Deputy Chief of Staff as a “brother and a servant of the people.

According to the statement, “In deep sorrow, the Lagos State Government announces the passing of the Deputy Chief of Staff (DCoS) to Mr. Governor, Mr. Gboyega Soyannwo.

“Soyannwo died today after a brief illness. He was 55.

“Mr. Governor, Babajide Sanwo-Olu, on behalf of the Government and people of Lagos, sends his condolences to the Soyannwo family.

“I have lost a brother and a servant of the people,” Mr. Governor said while breaking the news to the Executive Council (EXCO) meeting,

“After a minute’s silence in respect of the late DCoS, Mr. Governor ended the EXCO meeting.”

The late Gboyega Soyannwo is survived by a wife and two children.