Following the request by President Muhammadu Buhari to the House of Representatives for revision of the 2021 fiscal framework, especially the approval of N4 trillion petrol subsidy fund, the Manufacturers Association of Nigeria (MAN) and others have said the effects will on Nigeria’s critical sectors will be dire. TAIWO HASSAN reports
Despite public outcry, especially amongst members of the organised private sector (OPS), foreign and local investors, manufacturers and the business community, warning the administration of President Muhammadu Buhari to stop funding subsidy payment for premium motor spirit, otherwise known as petrol, the president has gone ahead to approach the House of Representatives to approve the release of N4 trillion petrol subsidy fund for importation of fuel for the rest of 2022. Government, after admitting that it will hands off subsidy in June this year, made a dramatic turn, according to the country’s private sector operators, who believe the administration is planning to use the funds for political campaigns to woo Nigerians in the forthcoming 2023 elections. Already, Nigeria’s economy has no buffers to maintain and sustain fuel subsidy any longer amidst continuous borrowings from international organisations such as the World Bank, International Monetary Fund (IMF), AfDB, which is already dragging the country’s debts towards N50 trillion.
For a key member of the country’s private sector body, the Manufacturers Association of Nigeria, the N4 trillion request is a misplaced priority that shouldn’t have even come up in the first place. MAN pointed out that the fund that will be sourced via fresh borrowing would further burden the country’s economic development in short, middle and long terms. Unexpectedly, President Buhari had requested for a revision of the 2021 fiscal framework, and then the lawmakers approved the petrol subsidy fund despite public outcry. Arguing that placing much importance on petrol over issues of health and infrastructure was misdirected, MAN President, Mansur Ahmed, maintained that subsidy was a yoke on the economy. His words: “We believe that subsidy is a yoke on our economy.
First of all, the social sector is critical. Maybe people feel that fuel is so important, but if you compare it with health, education and security, you will notice it is nowhere near them. “There are inefficiencies and leakages, but that is because of subsidy. Government should invest that money in infrastructure, health, and education. The money will make a bigger impact on the economy when invested in those critical areas, but what impact will subsidy make on the economy and what impact has it made so far? “There are inefficiencies and leakages, but that is because of subsidy. Government should invest that money in infrastructure, health, and education. The money will make a bigger impact on the economy when invested in those critical areas, but what impact will subsidy make on the economy and what impact has it made so far?”
Other stakeholders’ views
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Corroborating Ahmed’s claim, an economist and Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, expressed the conviction that the petrol subsidy approval would lead to higher debt service, an increase in fiscal deficit, increasing inflationary pressure and even naira depreciation. “With this development, our macroeconomic outlook in the near term should be a cause for worry. The outcomes of these approvals include increased borrowing, higher debt service, surge in fiscal deficit, heightening inflationary pressure, and a risk of further depreciation in the naira exchange rate,” Yusuf added.
For a former Deputy National Publicity Secretary of the All Progressives Congress (APC), Comrade Timi Frank, President Muhammadu Buhari’s plan to borrow another fresh N6 trillion, out of which N4 trillion is meant for subsidy payment for PMS, is shocking and ill-advised. According to him, “it is better for Buhari to sell Nigeria as an entity than to continue to take loans, thereby perpetually enslaving Nigerians.” Frank stated that Nigerians were already burdened by debts, which have taken a huge toll on their purchasing power. “The total budget deficit is projected to increase from N965.42 billion to N7.35 trillion, representing 3.99 per cent of the GDP.
“The increment of the deficit will be financed by new borrowings from the domestic market,” he said. Frank, who is the United Liberation Movement for West Papua (ULMWP) Ambassador to East Africa and the Middle East, in a statement in Abuja, described the move to further amass debt by Buhari as unconscionable, immoral, antipeople and anti-God. He insisted that it was better for Buhari to sell Nigeria and share the money among APC loyalists since his appetite for both domestic and foreign borrowings appears insatiable. He urged Buhari to know that poverty in Nigeria had grown in equal proportion with loans already taken as the true intention for the debt has not been developed, but to be shared through corrupt deals. He lamented that despite the huge amount of loans already amassed by the Buhari regime, the country was still ranked the poverty capital of the world, a clear evidence that the loans never benefited the poor masses or the completely knocked down economy.
For MAN and OPS, it is a pity that the N4 trillion PMS subsidy payment won’t in anyway add value to production and other critical sectors of the economy.