ABUJA, NIGERIA – The Nigerian Federal Government is set to allocate a substantial sum of N3.27 trillion in palliatives and loans aimed at alleviating the repercussions of the fuel subsidy removal, according to an investigation by Findwhosabi.
The removal of fuel subsidies on May 29, 2023, by President Bola Tinubu triggered soaring fuel prices, causing a ripple effect on the economy, which was already grappling with high inflation rates. In response to mounting concerns about economic hardship, the government introduced a range of support measures.
The comprehensive N3.27 trillion package includes provisions such as N100 billion for the acquisition of 3,000 units of 20-seater Compressed Natural Gas (CNG) fueled buses, N200 billion to bolster agriculture production, N75 billion for manufacturers, N125 billion earmarked for micro, small, and medium-sized enterprises (MSMEs) and the informal sector, N185 billion designated as palliatives for states, N1 trillion for student loans and various other programs.
Additional allocations comprise N315 billion to pay federal workers’ N35,000 allowance for six months, N1.13 trillion to assist 15 million households with N25,000 per month over three months from October to December 2023, N70 billion in support for lawmakers, and a N75 billion loan facility catering to 1.5 million market women.
The World Bank, in response to the subsidy removal, warned that if the Nigerian government did not provide adequate compensation or palliatives, 7.1 million Nigerians could be pushed into poverty, taking the total number of impoverished Nigerians to 100.9 million.
The immediate impact of the subsidy removal has been an increase in prices, particularly of petrol, which has nearly tripled in price. The poor and economically insecure households that directly purchase or use petrol, such as those with motorcycles and generators, are disproportionately affected by these price hikes.
In response to these dire circumstances, President Tinubu announced a N500 billion palliative plan, with a portion allocated for the acquisition of CNG-fueled buses, agriculture, manufacturers, MSMEs, and the informal sector. The agricultural plan aims to support the cultivation of 500,000 hectares of farmland and encourage all-year-round farming, particularly in rice, maize, wheat, and cassava production.
The Federal Government also allocated N5 billion as palliative measures for each state of the federation, further enhancing the measures to cushion the effects of the subsidy removal.
To address the economic challenges, N75 billion will be disbursed to 75 manufacturing enterprises, and N125 billion is designated for micro, small, and medium-sized enterprises and the informal sector, with conditional grants for one million nano businesses.
The government has also committed to making education more accessible through a N1 trillion investment in student loans and other educational programs.
Following pressure from organized labor and trade unions, the Federal Government has agreed to spend N315 billion to pay federal workers their N35,000 allowance for six months, as part of the palliative measures.
Furthermore, the government intends to provide N1.13 trillion in financial support to 15 million households at N25,000 per month for three months from October to December 2023.
In a bid to cater to the welfare of vulnerable and poor households, the Senate approved a $800 million loan from the World Bank. This loan is intended to fund the National Safety Net Programme.
However, a controversial N70 billion allocation to lawmakers for improved working conditions has sparked criticism from some quarters.
The Federal Government also announced a N75 billion loan facility for 1.5 million market women, aimed at improving their capital and expanding their businesses. The Iyaloja Fund is set to be launched on October 17.
In total, the Federal Government has pledged N3.27 trillion in palliatives and loans to mitigate the effects of the fuel subsidy removal.
Despite these measures, oil marketers have warned that the government may spend about N1.68 trillion on petrol subsidies between September and December 2023 due to the non-adjustment of fuel prices since August. The Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry have called for further action to offset the impact of the subsidy removal, including reevaluating import duty for production inputs and denoting gas prices in the local currency.
These measures aim to cushion the impact of the fuel subsidy removal and provide relief to millions of Nigerians affected by the economic challenges it has brought.