The federal government of Nigeria is set to remove the subsidies on fuel products and replace it with a five thousand naira transport allowance allotted to “Poor Nigerians” for a duration of 6 – 12 months. This announcement was made known to the public by the Minister of finance, Mrs. Zainab Ahmed earlier this week. This new development has been reviewed by various economic professionals stating that, the total removal of the fuel subsidy would be favourable to the economy, as its financial value can be used in strengthening other aspects of the economy.
It is important to note that during the Occupy Nigeria socio-political protest against the federal government of Nigeria on the removal of fuel subsidy in 2012 under the presidency of Goodluck Ebele Jonathan, the economy experienced major downing in its structure which led to uncontrolled inflation in the prices of commercial products as well as the price of petroleum products. This caused a nationwide clap back from the citizens causing a disruption in the daily running of the country.
According to the World Bank, Nigeria is the only country that offers universal fuel subsidy, which is expected to aid the development of a sustainable economy in the coming years. Following the effective removal of the subsidy, the Minister of Finance announced that a segment of the Nigerian population will be financially reimbursed with the sum of 5,000 naira monthly grant as transportation allowance for a minimum of 6 months and a maximum of 12 months.
Knowing the impact of the removal of fuel subsidy on the development of the nation and its effect on community workers, will the provision of the five-thousand-naira transport allowance to the selected 30 – 40 million individuals called the poor Nigerians in the population serve as a cushion for the removal of the fuel subsidy? Citizens are also wondering how the federal ministry of finance aims to achieve transparency and accountability during the electronic distribution of the funds, considering what happened with the funds and palliative allocated to citizens during the COVID-19 lockdown.
The answers to these questions remain a puzzle to Nigerians as Mrs. Esther, a commercial trader during our interview stated that the current strength of the economy cannot withstand the removal of the subsidy as many Nigerians will go hungry due to inflation. Also, Pastor Michael Amadi stated that many Nigerians won’t be able to afford basic needs as the removal of fuel subsidy will lead to an increase in the cost of commodities and the five-thousand-naira allowance would not be effective in cushioning the effect of the removal.
Other well-intentioned Nigerians voiced their concerns, claiming that removing the fuel subsidy will cause the Nigerian system to collapse. The president of the National Association of Nigeria Students (NANS) shared this insight earlier this week. Many people also expressed concern that removing the fuel subsidy in 2022 would increase insecurity threats in various communities across the country.
Hearing the opposing views of the public and the federal government we can only hope that the government comes to a workable compromise as the removal of the subsidy will lead to cracks in various aspects of the economy such as education, transportation, market pricing, etc. Understanding that the aim of the government is to boost the gross domestic product (GDP) of the country by 2022, the immediate removal of fuel subsidy will be devastating if structures and policies are not in place to regulate its economic impact. Ensuring the local production of fuel by optimizing the country’s refinery for fuel production would be a great start and ensuring that market forces are not responsible for the constant inflation in the price of commodities.
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