One of the arguments that pre-dates the President Bola Ahmed Tinubu administration is that of sustenance of the subsidy regime or otherwise. Economists have argued that removal of subsidy, mostly in oil and gas sector would free funds to be invested into education, healthcare, housing and other social services.
Quite frankly, over the last two decades, the burden of subsidy payments have severely hampered the dividend of democracy to Nigerians. Hence, there has been a consensus on inevitability of removal of fuel subsidy if Nigeria’s economy must breathe again.
However, the challenge has been who will bell the cat. Administrations that have come and gone preferred to thread on the side of caution by not tampering with the subsidy regime. Sadly, Nigerians benefit the least from the humongous subsidy funds. While the privileged class and oil merchants are swelling their bank accounts, ordinary Nigerians were languishing in penury.
Seeing that the Nigerian economy was between the devil and the deep blue sea, President Tinubu decided to bell the cat. In the Nigerian parlance, there’s a saying that “something must kill a man.” Agreed that the implementation of the policy came with a lot of initial economic upheaval, we are beginning to see a light at the end of the tunnel.
Last week’s announcement by the Minister of Finance and Coordinating Minister of the Economy, Mr. Wale Edun, outlining how key reforms in the downstream petroleum sector and foreign exchange (forex) market would unlock more than N10 trillion to build infrastructure, is a soothing relief. Now we are beginning to see the real essence of subsidy removal.
Needless to remind Nigerians that due to humongous funds expended on sustaining subsidy regime, our infrastructures have suffered untold neglect. The last administration of President Muhammadu Buhari struggled throughout its tenure and was almost entirely borrowing to finance budgets. However, with the removal of petrol subsidy by the man who got the gut, good resources is becoming available to the three tiers of government to share.
For instance, the Federation Account Allocation Committee (FAAC), at its August 2024 meeting chaired by the finance minister, shared N1,358.075 trillion to the three tiers of government as federal allocation for July, 2024, from a gross total of N2,613.791trillion. Similarly, N1.203 trillion was shared to the three tiers of government as federal allocation for August, 2024 from a gross total of N2.278 trillion.
The communiqué released by the FAAC from the October meeting also showed that the gross monthly revenue disbursements shared among the three tiers of the government amounted to roughly N1.3trn (US$793.8m) from September 2024 revenue.
In all these, President Tinubu is taking the bullet for everything. Worse still is the fact that instead of governors to join the president in sensitising Nigerians on the short, medium and long terms benefits of subsidy removal, they’ve decide to politicise it, accusing the president of implementing harsh economic policies.
Despite the astronomical rise in the resources available to governors, instead of using it to better the lives of the people so that the pressure on the center will reduce, most governors have nothing to show. About 22 state governors are said to have squandered extra funds of about N13bn following fuel subsidy removal, and no one is asking questions. And instead of keeping quiet, they’re the ones throwing tantrums everywhere in the name of bad politics.
Let it be known that effective leadership is built on the foundation of accountability. This principle is especially crucial for governors, who are entrusted with managing significant funds on behalf of their constituents. In this context, justifying the 27% monthly allocation for states, and 20% accruals to the local governments is not only necessary but also imperative.
Accountability promotes transparency, ensures responsible decision-making, and fosters trust between leaders and their constituents. When leaders are accountable, they demonstrate their commitment to serving the people and upholding the values of good governance. In contrast, a lack of accountability can lead to mismanagement, corruption, and erosion of public trust.
Given the significant funds at their disposal, governors must provide clear explanations for how these resources are being utilised. This includes detailing expenditures, outlining development projects, and showcasing tangible outcomes. The federal government’s efforts to judiciously manage its funds, as evidenced by landmark projects like the Lagos-Calabar Coastal Highway and the planned N10 trillion infrastructure investment, set a positive precedent.
The federal government, under President Tinubu, launched an initiative to alleviate food insecurity by sending trailers of rice and other essential food items to states for distribution to vulnerable citizens. Reports have emerged of trailers loaded with rice and other food items intended for distribution to Nigerians at the grassroots level being diverted, rebagged, and sold in open markets.
Investigations reveal that some unscrupulous individuals and groups have hijacked the palliative supplies, rebagging and selling them in open markets. This diversion undermines the purpose of the initiative, leaving many Nigerians at the grassroots level without access to the intended support.
As citizens, we must stand up and demand to know where public funds are being syphoned. Instead of roaming about on chattered flights from one country to another including, embarking in foreign trips that do not benefit the common man, our governors must give account of their stewardship. Some states can’t even pay full salaries.
Even palliatives, fartlisers and other interventions by the Tinubu administration have been hijacked. Families and friends are cashing out on federal allocations. Yet, they are busy questioning the legality of anti-graft agencies like the EFCC, ICPC and NFIU, and everyone is watching without calling out the state governments
With the surplus from fuel subsidy removal, the Tinubu administration has introduced several palliatives and infrastructure development initiatives aimed at easing the hardships faced by Nigerians. One of them is the New National Minimum Wage. A review of the national minimum wage of N70,000 has been effected. The icing here is that this has opened the way as several states have joined suit.
The Renewed Hope administration has generated N103.7bn from cash transfer. Also, the Student Loans Scheme is one of the many initiatives of Tinubu to take burden off parents. Over N1 trillion saved from fuel subsidy payments will be channeled into providing student loans for higher education.
Transportation Infrastructure is getting better attention. The government will invest N100 billion to purchase 3000 units of 20-seater Compressed Natural Gas (CNG) fuel buses. Presidential CNG Initiative aims to provide cheaper and cleaner fueling alternatives for Nigerians, with plans to deploy 200,000 new CNG buses and tricycles across Nigeria by 2027.
In the area of health, the Tinubu government is accelerating the Second National Action Plan on Antimicrobial Resistance (AMR). The government has launched a plan to combat antimicrobial resistance, outlining strategies for improving antimicrobial stewardship, enhancing surveillance and detection capabilities, promoting research and development, and strengthening healthcare systems.
N125 billion has been pledged to support Micro, Small, and Medium-Sized Enterprises (MSMEs), with N50 billion allocated to provide grants to 1 million nano businesses. A new infrastructure fund will be available to states for healthcare and educational infrastructure upgrades, as well as transportation route improvements. Rehabilitation of the eastern rail line to enhance transportation and economic development in the region.
Additionally, Food Price Stabilisation is receiving attention. The government plans to release 2000 metric tons of grains from strategic reserves to households across all 36 states and the Federal Capital Territory. These initiatives demonstrate President Tinubu’s commitment to addressing the country’s economic and social challenges, improving the lives of Nigerians, and promoting sustainable development.
As I conclude, let me restate that the Tinubu administration has taken a bold step in removinq fuel subsidy, unlocking over N10 trillion for infrastructure development and social services. This move has the potential to transform Nigeria’s economy and improve the lives of its citizens.
While challenges persist, including the need for accountability and effective management of resources, the benefits of subsidy removal are beginning to manifest. The federal government’s initiatives, such as the New National Minimum Wage, Student Loans Scheme, and funding for MSMEs, demonstrate a commitment to addressing the country’s economic and social challenges.
Effective leadership, transparency, and collaboration among tiers of government will be crucial in ensuring the success of these initiatives and securing a brighter future for Nigeria.
On our part, my fellow Nigerians, let’s pray that the World Bank and IMF give Nigeria soft landing in terms of loans. We all know our president is a chartered accountant by profession and a true democrat. There is no doubt that he will turn out to be the Nigerian leader we’ll all refer to as the international financial game changer.
