As the announcement by the Federal Government that it will give N5,000 each to 40 million “deserving” Nigerians beginning from July next year when it plans to end fuel subsidies continues to generate reactions, analysts at CSL Research have expressed doubts over government’s ability to remove subsidies on the proposed date.
In a report obtained by New Telegraph yesterday, the analysts said their scepticism was based on 2022 being a pre-election year, stating that “government may be forced to retain the subsidy to avoid any clash with the populace.” The analysts also faulted government on its plan to cushion the impact of subsidy removal on the populace, contending that the monthly grant of N5,000 may not be adequate and that Nigeria’s lack of reliable data may make it difficult for government to effectively implement the plan.
As the analysts put it, “the deregulation of the downstream oil sector remains a politically sensitive discourse. Deregulating the downstream sector, which would at times of rising international price of crude oil involve raising the pump price of petrol, constitutes a challenge for a country where the subsidy on petrol prices is seen as the only source of social security.
“Thus, we opine that the July 2022 commencement date for the plan might not come to fruition. For one, 2022 is a pre-election year and the government may be forced to retain the subsidy to avoid any clash with the populace. Again in our view, the plan to provide monthly grant of N5,000 might not provide the needed cushion by the time the effect of the removal reflects on the overall consumer wallet.
Also, it appears almost impossible to effectively execute given Nigeria’s poor population data.” The analysts noted that while, with the emergence of COVID-19, it has become clear that government could no longer continue with the fuel subsidy regime especially, given that the Nigerian economy in the past decade has been grappling with constrained capacity to generate enough revenue “an attempt to revise the price to suit current realities will be strongly resisted by the populace who have been hard hit by two recessions and a pandemic in the last five years amidst rising food and utility costs.”
Meanwhile, Bloomberg reported the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, as saying that the N5,000 cash transfers to poor Nigerians will happen over a period of six to 12 months.
