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Special Report: Maximising measures to cushion effects of fuel subsidy removal in Nigeria, by experts

*As the Federal Government and the Organised Labour intensify discussions and negotiations on resolving socio-economic issues arising from the fuel subsidy removal, business leaders, analysts, and industrial relations experts have proffered various practical measures that workers, and other Nigerian consumers can adopt for daily survival in the West African country

Gbenga Kayode | ConsumerConnect

Following the Federal Government’s recent affirmation of an end to the controversial fuel subsidy removal in the economy, Nigerians from all walks of life have brought to the fore the urgent need for the citizenry to adjust the ensuing realities of termination of petrol subsidy in the economy.

President Bola Ahmed Tinubu, Monday, May 29, 2023, had announced termination of petrol subsidy in the Nigerian petroleum industry.

President Bola Ahmed Tinubu, GCFR

Tinubu, while delivering his inaugural speech at the Eagle Square venue of the Presidential Inauguration ceremony, in Abuja, FCT, had said, “fuel subsidy is gone.”

However, some economic, business leaders, and industrial relations experts have proffered a number of practical measures, which workers and other millions of Nigerian consumers can adopt to survive the post-subsidy economy in the West African country.

Complaints, demands of Organised Labour

ConsumerConnect reports Nigerian workers, especially under the aegis of the Organised Labour, including the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) have also complained about the welfare of their members.

More concerned about the remunerations of the members of the various  Labour Unions, the Organised Labour particularly, have demanded an improvement in workers’ welfare, upward review of the National Minimum Wage, and immediate suspension of petrol subsidy removal.

The leadership of the Labour Unions have also argued their list of demands is based on the need to relieve the workers of hardships and discomfort being experienced as a result of the fuel subsidy removal just announced by the Federal Government.

After the first meeting of the Labour and Government’s representatives had ended in a deadlock, the Organised later threatened to go ahead with a planned nationwide strike Wednesday, June 7.

However, in a suit instituted by the Federal Government against the Labour over the proposed industrial action, the National Industrial Court (NIC), sitting Monday, in Abuja, in a ruling restrained the workers from proceeding on a strike Wednesday.

Resolutions at meeting of Government’s representatives, NLC and TUC

However, in a renewed move to reach an amicable resolution of the fuel subsidy-induced industrial dispute, the meeting between the Federal Government and the Labour unions later ended Monday, June 5 with a resolution to reconvene June 19 in order to agree on the implementation framework on resolutions reached.

Earlier, Mr. Dele Alake, Spokesperson of the Federal Government told the State House Correspondents, that the Government would look at the TUC’s specific demands and their implications in figures, consider the burning issue of the Minimum Wage, and set up a tripartite Committee embracing the Federal Government, the Labour and the Private sector players to arrive at an acceptable solution to the reported impacts of the removal of subsidy.

Similarly, Rt. Hon. Femi Gbajabiamila, Speaker of the House of Representatives and newly-appointed Secretary to the Government of the Federation (SGF), who led the government side, disclosed this development at the end of a meeting between labour and government representatives held in the Presidential Villa, Abuja.

Dr. Muda Yusuf, CEO of CPPE 

Gbajabiamila also noted the meeting agreed on a seven-point resolution to cushion the effects of the subsidy removal on Premium Motor Spirit (PMS), otherwise known as petrol on Nigerians.

He stated: “The Federal Government, the TUC and the NLC to establish a joint committee to review the proposal for any wage increase or award and establish a framework and timeline for implementation.

“The Federal Government, the TUC and the NLC to review World Bank Financed Cash Transfer scheme and propose inclusion of low-income earners in the programme.”

The Speakers of the House of Representatives further said: “The Federal Government, the TUC and the NLC to revive the CNG conversion programme earlier agreed with Labour centres in 2021 and work out detailed implementation and timing.”

Some strategies for consumers’ survival in post-subsidy economy

In making recommendations on how millions of Nigerians can successfully cope with the realities of the petrol subsidy removal, Dr. Muda Yusuf, an economic and business growth expert, Director and Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), while featuring on a recent morning programme on a private Radio station in Lagos, said “subsidy is not sustainable,” saying, the country’s economy could collapse, if subsidy payments continued.

Yusuf, who is the immediate past Director-General of the Lagos Chamber of Commerce and Industry (LCCI), noted that some socio-economic palliatives and clear-cut implementation framework ought to have been put in place ahead of the Presidential Inauguration and announcement of an end to fuel subsidy.

He, nonetheless, suggested a number of practical cushioning measures the government could adopt to bring some relief to consumers.

He said the government could improve the power generation, supply and distribution value chain to accelerate productive activities in the real sector.

According to him, there should be some form of support for transporters/motorists while the government can have some designated filling stations for the less-privileged citizens to get fuel at a reduced cost.

The CPPE Chief Executive also recommended that businesses, companies and organisations that can afford it could buy staff buses to convey their employees to and from workplaces, while encouraging employers of labour to be considerate in this regard.

Yusuf further noted it is high time Nigerians began to consider workplaces that are relatively close to where they live.

Aside from these, he urged the authorities to introduce socio-economic measures as food palliatives for Nigerian consumers to cushion the effects of the post-subsidy era.

According to the expert, in this era of Information and Communications Technology (ICT), companies should adopt the use more of ICT tools to run their operations instead of making workers to report for work in workplaces everyday.

Yusuf as well recommended the government grants tax waivers to companies and organisations to be able support their employees in coping with the impacts of  subsidy removal in the West African country.

Following Kwara, Edo States’ example on workdays per week

Analysts and Nigerians have commended the Kwara State Government on its decision to reduce workdays to three in a week for the state’s public servants as a temporary measure to cushion the effects of subsidy removal on the workers in the state’s employ in regard to high transportation fares.

Murtala Atoyebi,  Chief Press Secretary, Office of the Head of Service (OHOS) in a circular issued Monday, June 5, 2023, stated Mrs. Susan Modupe Oluwole, Kwara State Head of Service (HoS), announced the development Monday.

Mrs. Oluwole noted Governor Abdulrahman Abdulrazak of Kwara State had directed that the work days be reduced from five days to three days per week for every worker.

The HoS further explained the measure was to relieve the state workers of the hardship being experienced as a result of the fuel subsidy removal announced by the Federal Government.

Governor Abdulrahman Abdulrazak of Kwara State

She also directed all Heads of Ministries, Departments and Agencies in the state to immediately work out a format indicating the alternating work days for each worker under them.

Oluwole, however, cautioned the workers to not abuse the magnanimity of the Governor in this regard.

The regular monitoring of MDAs by her office would be intensified to ensure strict compliance with the directive, said the Head of Service.

Likewise, Governor Godwin Obaseki of Edo State has followed suit by approving N40,000 as the Minimum Wage for public servants to cushion the impacts of petrol subsidy removal in the state.

The governor also okayed about three or four workdays per week for state government workers in line with the socio-economic realities of the citizens of the state in the post-subsidy era, according to report.

Fiscal measures to boost manufacturing, rail transport system, others -MAN Chief

In his contribution to possible survival strategies after the apparent end to the fuel subsidy regime in the economy, Mr. Segun Ajayi-Kadir, mni, Director-General/CEO of the Manufacturers Association of Nigeria (MAN) spoke to several media platforms on the impacts of and coping strategies for Nigerian consumers.

Ajayi-Kadir, who is a policy advocate, strategist, analyst and government relations expert, while reacting to the highlights of President Tinubu’s inaugural address, noted that his speech resonated with the manufacturers in particular and the business community in general.

Among other measures to cushion the effects of petrol subsidy removal on consumers, the Federal Government needs to expand the intra and intercity mass rail transportation system.

He specifically mentioned how the Nigerian Railway Corporation (NRC) could increase the number of trips, especially in the newly constructed Lagos-Ibadan rail transport corridor in order to accelerate the movement of people and goods per day.

Others have equally called for full utilisation of the rehabilitated rail system for improved mass transportation of commuters and goods across the country.

On the need to boost economic cum productive activities in the real sector of the economy, Ajayi-Kadir also said: “Even though we have to critically consider the inaugural speech of Mr. President, I would like to make the following comments as our immediate reaction.

“It is, therefore, highly commendable and an assurance of better days ahead to hear the president saying that his industrial policy will utilise the full range of fiscal measures to promote domestic manufacturing and lessen import dependency.

“For me, this is a positive development. It is an unmistakable indication of a far-sighted strategic choice.”

The Director-General of MAN also advocated the Federal Government should address the issues of multiple and “often times punitive taxation; conflicting and contradictory fiscal and monetary policy measures; skewed and poor management of the Foreign Exchange (Forex) regime, and the long overdue stoppage of the fuel subsidy.

“I believe they resonate with manufacturers in particular and the business community in general,” ThisDay report said.

He as well touched on the need to ask the Central Bank of Nigeria (CBN) to have a unified exchange rate.

“I am glad that Mr. President was very clear on this. We also expect that, in line with his promise to enable a supportive fiscal policy regime, Mr. President will order a reversal of the unwarranted violation of the government’s three-year excise escalation roadmap on alcoholic beverages and tobacco.

“As we have shown, the latest hike as contained in the 2023 Fiscal Policy Measures is not only going to ruin the affected sectors, it will be counterproductive for government revenue in the near future.

“Our infrastructure has remained inadequate and so the ongoing efforts of the government have to be intensified” as contained in President Tinubu’s inauguration speech.

Ajayi-Kadir also noted besides “pursuing the unification of the exchange rate, the CBN should be prevailed upon to take effective action to give priority to the allocations of foreign exchange to the productive sector, particularly to manufacturers to import raw materials, spares, and machinery that are not locally available.

Improved electricity generation, distribution and supply to homes and businesses

The government also should “direct the NERC (Nigerian Electricity Regulatory Commission) to admit all qualified applicant companies into the Eligible Customer Scheme, in order to allow them access to power as stipulated in the Electric Power Sector Reform (EPSR) Act 2005.”

The policy advocate, analyst and government relations expert stressed the need for the new administration to “direct all relevant agencies of government to ensure that the electronic call-up system at ports aimed at redressing the congestion works without fail.

“Revisit the Finance Bill 2022 to ensure it includes the critical inputs of the organised private sector.”

A special policy to enhance patronage of Made-in-Nigeria products

The leadership of MAN has tasked the Nigerian President to announce a special policy initiative to address the revival of closed and distressed industries, particularly in the North-Eastern region of the country, where Ajayi-Kadir disclosed “60 per cent of our member companies have closed.

“Craft and announce a special policy initiative to leverage diaspora expertise and investment to address evident gaps and help to boost the performance of the economy.”

He further told Tinubu: “Direct all Ministries, Departments, and Agencies (MDAs) of government to unfailingly comply with Executive Order 003 on the patronage of made-in-Nigeria products.

“In this regard, there should be strict application of the margin of preference, effective monitoring, and periodic evaluation of compliance, and appropriate sanctions meted out to MDAs acting in breach of the executive order.”

He added by asking the President “to announce a special policy initiative to derisk manufacturing and release adequate funding for the sector through effective funding of special lending windows.”

Tinubu’s plan for public sector reform and finances commendable -KPMG

Meanwhile, Dr. Yemi Kale, a Partner and Chief Economist at KPMG Nigeria, who is also a player in the Organised Private Sector said he was excited by President Tinubu’s gestures to address perennial challenges dogging the development of the Nigerian economy over time.

Kale reportedly stated: “I think he (Tinubu) got it right in terms of things that are most urgent, especially things that can be completed in the first four years.

“To me, I am more excited about public sector reform and public finances.”

According to him, the public sector reforms would be deep and go beyond rationalisation of public sector, as contained in the Oronsaye Report.

The reform must touch the capacity of the public servants themselves, said he.

Kale was also captivated by the desire of the President to address the challenges of multiple taxation on the manufacturing and productive sectors of the economy.

He said: “I am one of the few people that does not believe in increasing taxes.

“I am not one of those who are fans of pushing up taxes particularly in a recession or when the economy is actually struggling with fragile growth, particularly in Nigeria’s economic model where household expenditure and private investment are two largest contributor to our GDP.”

The expert added: “When you increase taxes you are squeezing household consumption expenditure and you are also squeezing the earnings of businesses thereby squeezing business expansion and so on.

“So I am not a fan of increasing taxes. I prefer harmonising the multiple taxes that is out there. I am a bigger fan of more efficient public sector expenditure that get rid of wasteful expenditure like the fuel subsidies.

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