In November 2021, the Nigerian government, through its Minister of Finance, Ms Zainab Ahmed, announced plans to introduce a transportation grant as an aftermath of fuel subsidy removal.
According to media statements credited to her, 30 to 40 million persons who formed the country’s poorest population would be targeted.
The government’s decision did not go down well with notable bodies such as the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC), who vehemently opposed the move. The NLC was quoted as saying that such move was an invitation to “unrest and revolt.”
Nigeria’s subsidy removal dilemma did not start in 2021 or the year before. Notably, in 2012, when the subsidy removal decision was announced by former President Goodluck Jonathan, a protest tagged “OccupyNigeria” was held across the country, forcing the then government to halt its plan.
The government’s plan to stop fuel subsidies by mid-June 2023 has shifted discussions to not just removal but the country’s post-petrol subsidy future.
One of the arguments for subsidy removal asides the cost of fuel subsidies is that the rich and the political class benefit more from fuel consumption than the poor. The rich drive many cars, use several generators and own industries – which the poor cannot afford.
The public discourse was awoken again when the Nigerian government, through Zainab Ahmed, announced that a $800 million facility was secured from the World Bank to ameliorate pains that could arise from fuel subsidy removal.
The government announced that it was targeting 50 million vulnerable Nigerians for cash transfer, a decision that has led to a series of debates.
It is still being determined whether the facility from the World Bank is a direct fuel subsidy removal facility or borrowed under its social safety net program.
This is based on the project details published on the World Bank’s website. Regardless, the government has announced a direction, noting that “the money is fuel subsidy removal loan, and 50 million vulnerable Nigerians are the targets.”
Who are the vulnerable persons?
According to the Inter-agency Network for Education in Emergencies, vulnerable groups are physically, mentally, and socially disadvantaged people who may be unable to meet specific basic needs and therefore need assistance.
It is at the moment unclear if Nigeria’s definition of vulnerability or poverty in this instance is solely cash-based or multi-dimensional. It is unclear regarding the class of people referred to by the government as vulnerable or poor.
However, according to the National Bureau of Statistics (NBS)’s 2020 data, 82.9 million Nigerians live below the poverty line of N137,430 naira per year.
The National Safety Nets Coordinating Office, the program under which the fund was disbursed, said it had identified 15.374 million poor and vulnerable households.
Despite these figures posed by the National Bureau of Statistics and the National Safety Nets Coordinating Office, there have been allegations of corruption and absence of accurate data in the country’s previous attempts at cash transfers, raising critical concerns about the ability of the “post-fuel subsidy transfers” to reach the intended vulnerable population.
Civil society organisations have noted that Nigerians were shortchanged in the earlier cash transfer schemes, stressing that the schemes were fraught with poor accountability.
It is still unclear if the data expected for use in pioneering the $800 million cash transfer scheme is the same as those used to distribute earlier cash transfer programs laden with corruption allegations.
While the government noted that it was targetting 50 million Nigerians belonging to the country’s most vulnerable group, the money based on today’s exchange rate of N460.83 per dollar is equivalent to N368.664 billion. It would mean that the amount to be given to a vulnerable person will be N7373.
According to Programme Director, Centre for Journalism Innovation and Development (CJID), Akintunde Babatunde, the money was was intended for transport grants and palliatives. It could be invested in good roads and ease of public transportation, he said, noting that Nigeria lacked data to capture who the poor persons really were.
He said that the long-term solution for subsidy removal was to provide a national identity system so that the administration of post-subsidies policies would be easier.
Nigerians on social media also expressed their views on the government’s decision.
A policy expert, Ronke Onadeko, told Dataphyte that programs such as giving stipends to Nigerians were bound to fail even before commencing. She argued that the money meant to help Nigerians get stipends could be invested in education and infrastructural development.
At Dataphyte’s Twitter Space held on Friday, the organisation’s Program Director, Adenike Aloba, who also served as the discussion’s moderator, noted that the Nigerian government might be prepared to end subsidies this time around in the light of the $800 million loan .
Founder of Budgit and lead speaker, Oluseun Onigbade, said while subsidy benefited the rich more than the poor, the poor in Nigeria might be more affected by the subsidy’s inflationary effects.
He also emphasised the need for the Nigerian government to demonstrate that it could be relied upon and that its actions would have positive consequences for the country’s economy, adding that no matter how much work was put into palliative system, the issue of identifying the poor still posed a serious challenge.
An economist and Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, advised the incoming government to “remove petrol subsidy with minimum shocks to the economy and the citizens.” He had earlier canvassed that subsidy removal should be phased to reduce shock impacts on the economy.
A professor of Energy Economics at Nnamdi Azikiwe University, Uche Nwogwugwu, said total removal of subsidy would be a step in the right direction.
He said the amount being spent on petrol subsidies was enough to set up local refineries, noting that Nigeria should have removed subsidy in 2012 when former President Goodluck Jonathan had proposed it.
“We can’t be spending those amounts on petrol subsidies when education, infrastructure and security are suffering. It is simply a waste of money,” he noted.