Published 25 November 2021
On Tuesday, the Minister of Finance, Budget and National Planning, Zainab Ahmed, announced the Federal Government’s plans to remove fuel subsidies by mid-2022. To justify the fuel subsidy removal, Ahmed echoed the same old criticism of the subsidies being unsustainable. To couch the effect of the hardship sure to follow, she added that they would be giving a N5,000 monthly grant to 30 to 40 million poor and deserving Nigerians. We need not waste time debating which class of Nigerians should qualify as “deserving,” given how much their shabby economic policies have depreciated the quality of life. Things have been so bad that almost 90 percent of the entire country would deserve any relief program.
Unfortunately, their proposed N5000 monthly allowance is merely another talakawa policy. It will cost the government a lot of money but will ultimately achieve nothing. In the past six years, this regime has introduced several talakawa policies such as the Conditional Cash Transfer that led Vice President Yemi Osinbajo to distribute N10,000 in the market; the N-Power scheme that pays N30,000 stipend to youths to enhance their skills; the school feeding project, and the Special Public Works programme touted to potentially employ 774, 000 youths throughout the country. None of these talakawa programs have alleviated poverty; they have merely deepened it. The N5,000 transport grant will not be different.
On the surface, the talakawa policies of the present administration seem like welfarist programmes for the economically disenfranchised, but what they do is legally transfer money from the public purse to the corrupt class. What eventually trickles down to the poor are the crumbs that fall off their table. That is why the country slid from endemic poverty to multidimensional poverty. Let us face it, the hardship that confronts Nigerians is not the kind that is resolved by flinging a few thousands of naira in the direction of the most insolvent. Nigerians were systematically impoverished as a consequence of the hare-brained ideas of a leadership whose ideas of economic reform barely transcended shutting down the borders and banning everything in sight. To dig us out of the hellhole they pushed us requires more than adding another N5,000 cash transfer to a growing list of inchoate and incoherent economic policies. What we need are policies that will build a conducive environment for entrepreneurial initiatives to thrive and ultimately regenerate the economy.
You only need to look at the rising figures of unemployment and inflation in Nigeria to see that these welfarist ideas are not only costing Nigerians heavily, but they are also achieving poorly. The unemployment last released by the National Bureau of Statistics shows that much. Bear in mind that the official figures such as what the NBS publishes only tell a part of the whole story of the diminishing quality of life. The fact behind the figures is that Nigeria is successively breeding generations of almajiris, people who have never known a life without poverty. All they have ever experienced is failing social infrastructure, dysfunctional governance, and social disenfranchisement. These are not problems that a N5,000 handout can solve.
First, what is the logic behind removing a supposedly unsustainable fuel subsidy only to introduce a transport grant that is just as unaffordable? At a public forum in July, the same finance minister stated that fuel subsidies gulp as much as N150bn monthly. According to her, much of the benefit of the subsidies does not even go to the average Nigerian. The prime beneficiaries are the fuel marketers who buy the subsidised fuel only to retail it higher in neighbouring countries. She proposed that Nigeria could spend the funds on infrastructures like education and health rather than keep losing it to marketers’ schemes. Merely months later, she proposes a cash giveaway that will cost the government between N150 and N200 billion!
If the argument is that Nigeria can no longer afford fuel subsidies because the heavy cost deprives us of necessary funds for necessary social infrastructure, then where is the N150-200bn that will fund the transport scheme going to come from? Yes, she can very well argue that unlike the fuel subsidy, the N5,000 grant will go straight to the poor who need them. However, none of the similar schemes of cash handouts they have instituted has worked so far. Besides, the disbursement of those N5,000 grants will face the same problem of a lack of viable administrative mechanisms that tilted the fuel subsidy to favor rich marketers. Just like much of the so-called cash transfers that the APC embarked on at the beginning of its regime, much of the transport grant will end up in the pockets of the same corruption-ridden political class. What is the point of stopping the fuel subsidies only to retain it through transport grants?
Second, how did the finance minister and her strategists who brainstormed to arrive at the meagre sum of N5,000 transport grant account for the multiplier effect of higher fuel prices? Once the fuel subsidies are removed and fuel prices go up, the cost of goods and services will concomitantly rise. What will the N5,000 do to alleviate the hardship that people will inevitably face? By now, the government should be tired of these silly tricks of handing out lame sums of money.
While each Nigerian administration that has tried to stop the fuel subsidies planked their reason on its unsustainability, they have also failed to carry through on the policy because they themselves are the prime beneficiaries. They—not the impoverished class nor the trade unions who make the same tired argument anytime the fuel subsidy matter comes up—are the ones for whom the subsidies have been preserved. We will recall that when the current president, Major General Muhammadu Buhari (retd.), was contesting for the position, he said was that fuel subsidy math does not add up and is, therefore, a scam. Since Buhari got into power in 2015, he has not only kept up the fuel subsidy payments but they have also ballooned under his watch. Just last year, they announced that their government had finally removed the fuel subsidies. Media aide Garba Shehu even published a self-congratulatory piece where he said history would be kinder to Buhari than to his critics because he finally grew the balls to do what every government could not do for decades. Barely 12 months after that celebration of Buhari’s fortitude, we are back to square one where we are still setting a future date for ending fuel subsidies. The policy somersault is an obtuse demonstration of their disingenuousness and dubiousness.
Finally, this might sound cynical, but those fuel subsidies are going nowhere for now. The reason I can adduce for the Buhari regime bringing up the issue of ending fuel subsidies at all is because of the World Bank. They approached the World Bank for a $30m loan to build a vaccine plant in Nigeria and those ones recommended that Nigeria remove the subsidies on fuel and electricity. Talking about removing fuel subsidies is mere posturing for the World Bank. The present regime wants the World Bank to think we are considering putting our house in order, whereas we are not that serious. As soon as they get the loan, the regime will fall back to their default position of maintaining the fuel subsidies. At best, they will remove it and surreptitiously un-remove it all over again.
I cannot but doubt that this government will end fuel subsidies just months before a high-stakes general election. When the 2023 electioneering fully launches next year, all those fuel marketers who currently benefit from those subsidies will be a part of the clique of their sponsors. That is why they cannot afford to turn off the faucet. What I do not doubt, though, is that they will go through with the proposed N5,000 transport grant scheme. Given how much the 2023 elections will cost, they will see the need to institute another talakawa policy to funnel cash from the public coffers and into the pockets of their corrupt acolytes in high places.
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