Stakeholders may persuade FG to raise subsidy removal funding

Adebayo Obajemu

The Federal Government may be compelled to spend far more than the $800 million (N371.2 billion) it budgeted due to an expansion in the range of stakeholders’ negotiations currently on-going.

This hint was dropped by the Finance Minister, Zainab Ahmed, while briefing the Nigerian media contingent at the just concluded World Bank and International Monetary Fund, IMF, 2023 Spring meetings in Washington DC, USA.

The Federal Executive Council, had earlier this month concluded the budget with an estimate of N371 billion to be raised as loan from the World Bank for palliatives in respect of cushioning the effect of fuel subsidy removal on the low income households totaling about 10 million with a headcount estimate of 50 million people.

The budget which has now been tabled before the National Assembly for approval, also estimated N5,000 per month, per household.
However, speaking at the media briefing, Ahmed said, ‘‘The initial design is to disburse cash transfers of N5,000 per month per household for a period of six months. So, whether this is enough is an assessment that we are undertaking with the transition team.
‘‘If it’s not enough, the country has to raise additional resources to be able to cover more people, extend the period or increase the amount; whichever is finally negotiated upon.
‘‘When the subsidy is removed, there would be additional revenue that would now accrue to the Federation Account. One of the things we are working on is how this incremental revenue would be used. The money belongs to the Federal, State, and local governments. So, we need another decision of how to use this.
‘‘We hope that we’ll be able to still fence this incremental revenue and apply it to measures that will help to ensure that the fuel subsidy removal is actually sustained so that it won’t be another start-and-stop program.
‘‘But this has to be a collective decision. The current administration and the incoming administration are working on a plan to make sure that we have a consensus on how to use that incremental revenue’’.
Reinforcing the inconclusive state of the palliative funding, she also stated: ‘‘On the issue of other palliatives beyond the transport sector, again it would be part of the consensus; so depending on what the various stakeholders’ positions would be we’ll be engaging with, including what the organised labour will be asking for, we will reach the final decision.
‘‘So there will be a consideration of whether some of the support to the transport sector will be directly or indirectly; but again it’s not a decision that has been taken yet on how to deploy the incremental palliative because it has to be a consensus between the various stakeholders and these stakeholders include the states, different unions, the incoming administration as well as the outgoing administration’’.
On the loan acquisition and administration process, Ahmed stated: ‘‘The $800 million has been negotiated and approved by the Federal Executive Council and we now have a request before the parliament for approval. And once the parliament approves it, we roll.
‘‘We’ve also been doing preparatory work side by side along the approval process, and that includes the building of the social register which will be used for the electronic transfers of the funds.
‘‘We needed to have this ready because when the government eventually removes the fuel subsidy, there will be an immediate transport palliative that will be provided to the most vulnerable members of our society who have been identified, registered, and now contained in our national social register.