By Ibiyemi Mathew
The Chartered Institute of Bankers of Nigeria (CIBN) and KPMG Nigeria have enumerated the benefits of the removal of fuel subsidy.
Recall that President Bola Ahmed Tinubu announced the end of the petrol regime in his inaugural speech on May 29 causing the prices of PMS, goods and services to skyrocket across the country.
At an advocacy dialogue forum organised by the Chartered Institute of Bankers of Nigeria via its Centre For Financial Studies themed, “Fuel Subsidy Removal: Opportunities for Individuals, Businesses, and the Way Forward,’’ the President/Chairman of Council (CIBN), Dr. Ken Opara said the institute views the removal of fuel subsidy as an opportunity rather than a disaster.
According to Opara, “Of course, there will be challenges, but what we make of it and the opportunities it presents is essential. It is important to note that from 2016 to 2023, Nigeria spent over N11.7trn on fuel subsidy.
“Taking this into perspective, in 2022 alone, Nigeria spent N4.3trn on subsidy. This fact represents over 15 per cent of the import figure of the country and almost 25 per cent of the budget of 2022, no country can continue running this way.”
Meanwhile, Partner and Chief Economist at KPMG Nigeria, Dr. Yemi Kale, said the net benefits of the subsidy removal are positive, but noted that there would be disruptions arising from a direct increase in energy prices, inflation rate, and transportation fares.
He said, “This disruption has an indirect impact on the increase in food prices and consumer demand. This is so because their purchasing power is weakened; consumer demand also shrinks unless the government provides some kind of relief to cushion the effect.
“In addition, households would begin to cut their expenditures, leading to businesses recording decreases in demand amid rising costs of operation increases. This is particularly going to affect the Micro-Small and Medium-sized Enterprises, and this would eventually birth lay-offs, hence increasing unemployment rate and insecurities.”