Subsidy removal: Tinubu’s juicy interventions must prove Nigeria’s policy norm otherwise
Since the nascent President Bola Tinubu administration came up on board, a struggle for the government has been an attempt to convince Nigerians on the sense behind the removal of subsidy payment on premium motor spirit (PMS), popularly called petrol. The first strike of the administration was the announcement by President Tinubu on the decision to end subsidy on petrol. The government has since then been caught in the necessity to convince Nigerians on the rationale behind the decision. While the administration has made efforts repeatedly to convince Nigerians, yet it would have to deal with the plight of the masses, whom the decision has come to worsen for them an already excruciating socioeconomic condition.
The removal of subsidy without a doubt has further put before Nigerians more difficult situations to grapple with; difficulties with unbearable hike in prices of good and services, higher cost for production, hike in transportation, and the likes. It would only mean the government would have a lot to do to convince Nigerians that removal of subsidy would benefit them, particularly when past policies of previous governments (let’s say for instance, the privatisation policies) never brought respite to the conditions of socioeconomic standards.
For instance, in an effort to convince the masses, President Tinubu following the need to wind down the threat of a nationwide strike by the organsied labour had said in his Monday night national broadcast speech tagged ‘After darkness comes the glorious dawn,’ “I want to talk to you about our economy. It is important that you understand the reasons for the policy measures I have taken to combat the serious economic challenges this nation has long faced.
“For several years, I have consistently maintained the position that the fuel subsidy had to go. This once beneficial measure had outlived its usefulness. The subsidy cost us trillions of Naira yearly. Such a vast sum of money would have been better spent on public transportation, healthcare, schools, housing and even national security. Instead, it was being funnelled into the deep pockets and lavish bank accounts of a select group of individuals.
“This group had amassed so much wealth and power that they became a serious threat to the fairness of our economy and the integrity of our democratic governance. To be blunt, Nigeria could never become the society it was intended to be as long as such small, powerful yet unelected groups hold enormous influence over our political economy and the institutions that govern it.
“The whims of the few should never hold dominant sway over the hopes and aspirations of the many. If we are to be a democracy, the people and not the power of money must be sovereign. The preceding administration saw this looming danger as well. Indeed, it made no provision in the 2023 Appropriations for subsidy after June this year. Removal of this once helpful device that had transformed into a millstone around the country’s neck had become inevitable. Also, the multiple exchange rate system that had been established became nothing but a highway of currency speculation. It diverted money that should have been used to create jobs, build factories and businesses for millions of people. Our national wealth was doled on favourable terms to a handful of people who have been made filthy rich simply by moving money from one hand to another. This too was extremely unfair. It also compounded the threat that the illicit and mass accumulation of money posed to the future of our democratic system and its economy.
“I had promised to reform the economy for the long-term good by fighting the major imbalances that had plagued our economy. Ending the subsidy and the preferential exchange rate system were key to this fight. This fight is to define the fate and future of our nation. Much is in the balance.
“Thus, the defects in our economy immensely profited a tiny elite, the elite of the elite you might call them. As we moved to fight the flaws in the economy, the people who grow rich from them, predictably, will fight back through every means necessary.
“Our economy is going through a tough patch and you are being hurt by it. The cost of fuel has gone up. Food and other prices have followed it. Households and businesses struggle. Things seem anxious and uncertain. I understand the hardship you face. I wish there were other ways. But there is not. If there were, I would have taken that route as I came here to help not hurt the people and nation that I love.”
Part of the measures the President noted his government is bringing on board to address the present unpleasant situation include to spend N75 billion between July 2023 and March 2024 to strengthen the manufacturing sector. According to him, the investment is aimed to increase the sector’s capacity to expand and create good paying jobs. The objective, he said, is to fund 75 enterprises with great potential to kick-start a sustainable economic growth, accelerate structural transformation and improve productivity. “Each of the 75 manufacturing enterprises will be able to access N1billion credit at 9 per cent per annum with maximum of 60 months repayment for long term loans and 12 months for working capital,” he said.
In addition, is also to energise micro, small and medium-sized enterprises (MSMEs) and the informal sector with N125 billion. According to the President, out of the sum, N50 billion will be spent on Conditional Grant to 1 million nano businesses between now and March 2024. The target is to give N50,000 each to 1,300 nano business owners in each of the 774 local governments across the country.
Tinubu had averred that “ultimately, this programme will further drive financial inclusion by onboarding beneficiaries into the formal banking system.” He had also disclosed that the government will fund 100,000 MSMEs and start-ups with N75 billion. Under this scheme, each enterprise promoter, he said, will be able to get between N500,000 to N1million at 9 per cent interest per annum and a repayment period of 36 months.
On agriculture, he had said that to further ensure that prices of food items remain affordable, in the short and immediate terms, the government will ensure staple foods are available and affordable, having ordered release of 200,000 Metric Tonnes of grains from strategic reserves to households across the 36 states and FCT to moderate prices.
“We are also providing 225,000 metric tonnes of fertilizer, seedlings and other inputs to farmers who are committed to our food security agenda,” he had said.
According to him, the plan is to support cultivation of 500,000 hectares of farmland and all-year-round farming practice remains on course. Specifically, he stated that N200 billion out of the N500 billion approved by the National Assembly will be disbursed as follows: invest N50 billion each to cultivate 150,000 hectares of rice and maize; while N50 billion each will also be earmarked to cultivate 100,000 hectares of wheat and cassava.
According to him, the expansive agricultural programme will be implemented targeting small-holder farmers and leveraging large-scale private sector players in the agric business with strong performance record. Further speaking on the intervention measures, he said, the expertise of Development Finance Institutions, commercial banks and microfinance banks will be tapped into to develop a viable and an appropriate transaction structure for all stakeholders.
Also, the President said he had approved Infrastructure Support Fund for the States. This new Infrastructure Fund will enable States to intervene and invest in critical areas and bring relief to many of the pain points as well as revamp decaying healthcare and educational Infrastructure. According to him, the fund will also bring improvements to rural access roads to ease evacuation of farm produce to markets. “With the fund, our states will become more competitive and on a stronger financial footing to deliver economic prosperity to Nigerians,” he had said.
“We will get out of this turbulence. And, due to the measures we have taken, Nigeria will be better equipped and able to take advantage of the future that awaits her,” the President had boasted.
He had noted that in a little over two months, since subsidy was removed, the government has saved over a trillion Naira “that would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters.” “That money will now be used more directly and more beneficially for you and your families,” he had said.
Although the President had said the Federal Government is working closely with states and local governments to implement interventions that will cushion the pains of people across socio-economic brackets, it is pertinent to make such engagement more concrete. One outcry of the Organised Labour which has informed their nationwide strike is the fact that the government of the day have not had elaborate consultation with firm engagement with Labour stakeholders before reeling out its intervention plans.
The provisions to strengthen the manufacturing, MSMEs and agriculture sector as reeled out by the President make good appeals, but it is not to say that it in itself a sure solution to the prevailing socioeconomic woes in the country. Administrations of past governments have also had excellent and alluring policies. However, what will only distinguish the Tinubu-led administration from others is if and only it would effect the implementation of the interventions reeled out in the proper flow with an efficient mechanism to achieve the expected objectives. Nigerians are invariably tired of intervention plans, but what they demand and desire is result. Hence, the only way the government of the day can convince Nigerians it and its policies are for the people, is to ensure the interventions are effectively tailored to yield the desired result in concrete affirmation in the shortest term possible with lasting impacts. Such results are outcomes offsetting their plight.
