The Federal Government recently announced its plan to give poor and vulnerable Nigerians, N5000 monthly stipend upon the removal of the subsidy on petroleum products. While speaking at the World Bank Development Update, the penultimate week, the Minister of Finance, Budget and National Planning, Zainab Ahmed specifically mentioned that the stipend would be given to about 30 to 40 million poor Nigerians.
In January 2021, Sadiya Farouq, the Minister of Humanitarian Affairs, Disaster Management and Social Development also said about 24.3 million poor Nigerians will be given same amount of money for six months. That the finance minister re-echoed the same message should not be taken as a mere coincidence. These pronouncements have confirmed the next line of action of the federal government on how to come to terms with the bogey of oil subsidy. However, there are many unanswered questions.
Subsidy, a hotly debated topic in Nigeria today between government and the masses, is said to be denying the three arms of government the needed resources to execute their basic functions of governance. In fact, it was reported that if subsidy is not removed as quickly as possible, about two-thirds of the state and local governments might become insolvent.
This is where the problem lies. If the federal and state governments are constrained by inadequate resources, which caused the contemplation of subsidy removal, where will the government get the resources to fund the monthly stipend that will run into trillions of naira? Nigeria currently expends about N1.8 trillion on subsidy annually. Meanwhile, the monthly stipend will cost the nation about N2.4 trillion or more. What therefore is the logic behind this decision?
If the federal and state governments are constrained by inadequate resources, which caused the contemplation of subsidy removal, where will the government get the resources to fund the monthly stipend?
In the previous trade disputes which the federal government had with the Nigeria Labour Congress (NLC), one of the key takeaways was that the refineries would be made functional before subsidy removal. Petroleum products refined at home will not be subjected to the volatility in exchange rates and OPEC driven prices. At present, none of the refineries is working, Which in itself is a shame.
Therefore, is this not a case of putting the cart before the horse if government removes the subsidy without the promised functional refineries?
Another important area is the determination of poor Nigerians. According to the estimates provided by the two-aforementioned ministers, the number of Nigerians who will be the beneficiaries of the monthly N5000 stipend range from 24.3 million to 40 million.
The National Bureau of Statistics (NBS) in 2019 estimated that 83 million Nigerians lived below the poverty line. That was before the global pandemic of 2020 which forced more people into poverty. In other words, the number of Nigerians who live below the poverty line would have increased. We do not doubt the figures emanating from the NBS. What we doubt however is the availability of household to household, street by street details of poor Nigerians which could engender smooth distribution of such stipend.
Without a database showing individuals’ comprehensive socio-economic characteristics, it will amount to an exercise in futility as most of the beneficiaries will turn out to be those who do not deserve it in the first place.
Again, how did the FG arrive at the N5000 monthly stipend? Put in another way, what does a poor Nigerian need on a monthly basis that N5000 can provide? In the last one and half years, inflation has gone through the roof with the prices of staples unaffordable to the poor. At N420/$, this amounts to $12 per month. Again, when we consider that on the average, the national family size is about five individuals, the proposed N5000 monthly stipend amounts to nothing but mockery.
Read also: FG to give ‘poor Nigerians’ N5000 in exchange for subsidy removal
According to the NBS, year on year in October 2021, the price of brown beans rose by 46 percent, while white beans increased by 55 percent; 500g unsliced bread rose by 20 percent; garri, both yellow and white rose by an average of 18 percent; maize, either yellow or white increased by 31 percent, while the price of unripe plantains rose by 16 percent as of October 2021. The trend is the same for yam tubers, rice, palm and vegetable oils. Food items even cost more in the southern parts of the country than in the northern parts.
Further, transport cost, whether interstate, within the city, on motorcycle or through the water has risen by an average of 26 percent nationally during the period. Inflationary pressures have equally affected the prices of cooking gas and kerosene. All these clearly demonstrate that the 5000 naira cannot address any problem which will emanate from subsidy removal.
By and large therefore, the federal government needs to seriously address the deteriorating socio-economic problems in Nigeria. And this cannot be done by pursuing the shadows as exhibited in the plan to give N5000 monthly to the poor poor. First, the refineries must be working. Second, there is no assessment report on ground on past monetary payments to the poor. This is necessary to know the likely results the proposed monthly stipend will achieve. Third, there are no data on poor Nigerians in place. We fear that this decision was politically motivated and only those connected to the corridors of power will benefit, and not the really poor Nigerians. Therefore, the Federal Government should do some novel thinking on the issue. If the refineries are made to work, the issue of subsidy will not even arise at all. It is time to link oil and social justice in this country. And one sure way is to ensure that an oil producing country weans itself away from the shame of reliance on imported refined oil.
