N400 billion saved from fuel subsidy: Experts caution Tinubu on N8,000 stipend for poor Nigeriansqq
As the Federal Government basks in the euphoria of saving over N400 billion since it scrapped the fuel subsidy regime, economic experts have advised that the money should not be disbursed as cash to “vulnerable Nigerians.”
Instead, they advised President Bola Tinubu to channel the money into fortifying Nigeria’s decrepit infrastructure, with special focus on education, health and transportation.
This is coming as the Tinubu administration said that it would transfer N8,000 to 12 million poor and vulnerable households for six months to absorb the economic shocks triggered by fuel subsidy removal. This would be funded from an anticipated $800 million World Bank loan designed for the national social safety net programme.
According to the analysts, the phrase “vulnerable Nigerians” has become a cliché used by dubious government officials to siphon intervention funds under a wonky Conditional Cash Transfer (CCT) template.
They argued that CCTs have never been a potent solution to addressing social needs of the masses, as over 133 million Nigerians (60 per cent of the population) sank into multi-dimensional poverty in 2022, despite billions of naira reportedly spent on various CCT programmes by the Federal Ministry of Humanitarian Affairs, Disaster Management and Social Development.
Industry sources insisted that the Federal Government spent over N20 billion daily on petrol subsidy payouts, before President Tinubu courageously scrapped it on May 29, to end decades of economic haemorrhage amid a tormenting revenue generation challenge.
In August 2022, former Finance Minister, Mrs Zainab Ahmed, told legislators that N18.39 billion was spent daily on petrol subsidy petrol payments.
Former President Muhammadu Buhari allocated N3.6 trillion to fund fuel subsidy for the first half of the year 2023, but the NNPCL, as the sole importer of petrol, claimed it never got a penny from that fat allocation to pay for the subsidy.
Nonetheless, Prof Uche Uwaleke, Nigeria’s first professor of the capital markets and former Finance Commissioner, Imo State, said that the government should not entertain any advice that suggests disbursing cash to “poverty-stricken Nigerians” as it is likely to fail like past efforts.
“Conditional cash transfers have never worked in Nigeria, so I don’t support it.
“Any money saved from subsidies should be kept in a special fund like the SURE-P intervention programme. Then, it can be deployed for specific purposes like infrastructure, health and education.
“Let people of impeccable character in public and private sectors manage that fund. People insulated from the government’s influence. We should have a model that is similar to SURE-P.
“The money saved from subsidy removal should not be used to finance budget deficits. Not at all.
“In terms of addressing transportation challenges, I recommend that we have mass transit vehicles that will be managed in collaboration with the private sector.
“If you talk to Innoson and other vehicle assembly companies, they could give the FG a credit line and design a payback period and all that,” he told Sunday Sun.
For the Group Managing Director of the Nigerian National Petroleum Company Limited (NNPCL), Mr Mele Kyari, the removal of subsidy has finally buried the era when the government “smoked the naira”.
He said: “Subsidy was like smoking our currency. Like you light a cigarette and smoke off billions daily. That’s how I describe it.
“But all that is gone now. We at the NNPCL welcome the bold move of Mr President to end subsidy payouts.
“Rather than using all our money to pay subsidies, we now have more funds to carry out other critical investments needed to unlock the economic fortunes of the petroleum industry. A lot of options are on the table and we are working with the presidency to give Nigerians the best dividends”, he said at the just-concluded 22nd edition of the NOG Energy week in Abuja.
Also commenting on the development, an economic analyst, Mr Odilim Enwegbara, noted that disbursing cash to the so-called vulnerable Nigerians was a veiled way of enriching the politicians.
Rather than disbursing N8,000 to indigent Nigerians monthly, he suggested that the government should invest in cheap transportation and hurriedly establish new refineries. He also advised the government to quickly address the insecurity nightmare to enable farmers to go back to farms and ultimately crash the price of foodstuff.
Enwegbara further stated that the N400 billion so far saved from subsidy should be invested in critical infrastructure instead of using it to enrich more politicians and pushing more Nigerians into the pit of desolation.
“Let the government increase the number of refineries in Nigeria. Two, the government should invest in transportation. Innoson Motors is there. Let’s invest in Innoson Motors and ask Innoson Motors to produce about 1,000 vehicles, if not more.
“These vehicles should use gas. They should make these vehicles available. Government must invest more in transportation and not handing N8,000 to Nigerians.
“This is another way of helping politicians because they will now say that they have given money to a million people when they have given to nobody. Sometimes, they give less and say that they have given more.
“How do we make sure that the money has a trickle-down effect? Eight thousand naira is no money in Nigeria, even to a beggar. So, what is the rationale of giving N8,000 a month? The government should ensure that small businesses are up and running.
“They (government) should create a security system to enable people to move around in their farms and bring in products from the farms and things like that. That is what the government should be doing, not just handing money to people like that. It will encourage people to be lazy and to become beggars.
“It’s an insult to Nigerians. For me, I can spend N8,000 in three hours” he stated.
Also reacting, social critic and activist, Senator Shehu Sani, on his verified twitter handle, noted that the N8,000 monthly stipend proposal by the Tinubu administration will not have any impact other than worsening the level of poverty in Nigeria.
He said: “People who collected Buhari’s N10,000 ended up in deeper poverty. Pray before you collect the next N8,000. It is ‘Almajirinization’ of the country.”
In his submission, Phrank Shaibu, an Atiku Abubakar Spokesman said: “A Nigerian household as at 2019 counted on an average of 5.06 members. So, with Tinubu’s uninspiring plan, each individual in a household will get N1,600 per month or N53 per day.
What should they do with it? Use the money to buy sachet (pure) water or a cup of boiled groundnut?” he queried.
The Chief Executive Officer of Connected Development, Hamzat Lawal, at a television interview, described the petrol subsidy era as a time the country bled to subsidise the rich, while and poor bore the brunt.
He said: ”We were subsidizing the rich, not the poor. The poor are actually bearing the brunt. And we spent over N50 billion every day subsidizing the rich people who can actually afford it.”
