THE Federal Government’s pro poor policies could suffer a huge setback on the back of an unsustainable petrol subsidy which drains the country’s financial resources, Governor Kayode Fayemi of Ekiti State said.
Fayemi said this in an NTA-monitored programme last Tuesday, stressing that the Federal Government was in a dilemma, with rising subsidy payment in gasoline gulping N120bn monthly.
“There are issues that must enable us to have a clear-sighted and consistent economic position. If we insist that we’re going to deregulate, there are implications to that in terms of those that may want to spur us,” he said.
The governor, who doubles as the Chairman of the Nigerian Governors Forum, explained that the unsustainable subsidy had deeper implications for government’s anti-poverty strategy, noting that the expected resources would be adversely affected with upsurge in subsidy payment.
“Today, the Nigerian National Petroleum Corporation (NNPC) tells us it is subsidising N120bn monthly on the gasoline. That is the money that should have gone to the federation account for disbursement,” he said.
The governor, who confessed the government’s dilemma in the development said, ”In order to tackle that poverty that we consider a major priority for our government to deal with, it is a question of whether we’re going to keep up with the subsidy, for the people are ultimately going to be the losers.”
The Nigerian government is yet to settle rift with labour on the payment of subsidy on gasoline, a step that has kept spiraling subsidy payment in the country. More so, the government is yet to effect a cost-reflective tariff on electricity as prescribed by the Multi Year Tarrif Order (MYTO) of the Electricity Power Sector Reform Act of 2005, which has seen it sustain subsidy in the power sector over time through bridging shortfall gaps in the sector.
Is subsidy really supporting the Nigerian poor?
The Social Investment Programme is aimed to support the poor and place them on financially inclusive class. The scheme is made up of the School Feeding Programme, Conditional Cash Transfer, N-power programme, and Government Enterprise Empowerment Programme.
Some industry analysts have argued that the government needs to rethink its strategy on pro-poor policies, arguing that they have failed to lift people out of poverty. Nigeria has 105 million extremely poor people, according to 2020 World Poverty Clock report.
Chairman of Major Oil Marketers Association (MOMAN) Adetunji Oyebanji argued that the subsidy payment concerns were more about eating the future and not having enough money to plough back into infrastructural development benefiting more Nigerians, with more socio-economic impact.
“While we pay billions in subsidy, we borrow to fund infrastructure. How does this make an economic sense to our economic managers?” he asked.
The present administration has blamed the economic distress suffered in its early years on the inability of the previous administrations to save for the rainy day. However, informed analysts told The ICIR that the current administration could be making the same mistake by failing to ride on the positives of rising oil prices to shore up the economy and provide foreign exchange support for real sector operatives.
“The money we made from oil is being used to pay for subsidy. It’s affecting lots of our economic planning and savings for the future. We must be circumspect and make choices that do not leave us admitting regrets in the near future. This is the time to deregulate so that we could benefit maximally from our rich oil resources, ” oil sector governance expert Henry Ademola Adigun told The ICIR.
Government’s plan to lift 100 million out of poverty, how far ?
The Federal Government said it planned to lift 100 million people out of the poverty net, making it one of the hallmarks of the administration. However, rising unemployment rate at 33 percent, according to the National Bureau of Statistics (NBS), has stretched government’s plans, fuelling concerns
With the concerns raised by Governor Kayode Fayemi, analysts want the Federal Government to focus on the real sector to drive economic growth, rather than commercialising solution to its problems.
“We tend to commercialise our solution in most of our problems. People are poor, and you just give them money. Our power sector is not working, the Central Bank just supports with funds. You find out that throwing in funds have failed to solve our problems, ” Senior Lecturer at Baze University Sam Amadi told The ICIR.
Amadi stressed that Nigeria must ride on the rising global oil price of above $66 per barrel and restoration of global economy to reset its economy with bold reforms to create more economic opportunities for the people.
Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.