The Organised Private Sector (OPS) and economy experts were unanimous at the weekend that the decision yet again, by the Federal Government to subsidise forex for religious exercises when businesses are suffocating amid scarcity of dollars, smacks of insensitivity and is a needless waste of national resources at a time the economy is slipping into recession.
The Central Bank of Nigeria (CBN) in a circular last week authorising the concessionary exchange rate, said the Federal Government was making concession for 65,167 pilgrims performing the 2016 hajj, at N197 to $1.
But experts say this, coming at a time that the dollar is trading at N310 and N400 at parallel and interbank markets respectively, with businesses finding it difficult to source the dollar, is a misplacement of priorities and cause for concern.
The OPS says that without prejudice to either of the two major religions in Nigeria, it is high time the government completely hands-off, and allows religious issues to be individual affairs.
“Time has come for the government to leave and treat matters of religion as purely private and personal affairs. Nigeria is a secular state. Hence, issues that have to do with pilgrimages should not elicit state’s intervention or support.
“Whoever wants to go on pilgrimage should take full responsibility for his or her spiritual obligation. The state could exercise regulatory responsibilities that will ensure the safety of such pilgrims. Any support outside that would amount to misuse of national resources. The argument is not so much about ensuring fairness and equity between Christian and Moslem pilgrims.
“ The issue we should face with boldness is that the state should take a decision to no longer subsidise individual or corporate’s fulfillment of spiritual obligation, irrespective of the faith involved,” Segun Oshinowo, director-general of the Nigeria Employers’ Consultative Association (NECA) says.
Also, Kyari Bukar, chairman of the Nigeria Economic Summit Group (NESG), says it is wrong for government to make provision for pilgrimages. “We shouldn’t budget a kobo for pilgrimages. Look at Kaduna; the state government has removed it from its budget. It’s insensitive at a time when people are dying of hunger. This money could be channeled to the Internally Displaced Persons (IDPs) for example.”
Bukar’s views tally with those of Simeso Amachree, acting secretary-general of the Trade Union Congress of Nigeria (TUC) who described it as a misplaced priority. “I recall that some state governments have even cancelled the sponsorship of religious pilgrimages because of the economic situation in the country,” says Amachree.
Taiwo Oyedele, partner and head of tax and regulatory services at consulting firm, PriceWaterhouseCoopers (PWC), said “it’s simply wrong and would still make absolutely no economic sense even if the country had surplus FX and a leaner budget deficit gap; both of which it doesn’t.”
The total costs of pilgrimage to Israel (N11.4bn) and Mecca (N57.6bn), which is largely borne by the government at all levels, cost N69 billion in 2015, independent data from the National Hajj Commission of Nigeria and the Nigeria Christian Pilgrim Commission reveal.
“I hear the subsidy, amid intense dollar squeeze, is because same was done for Christians last year. I think government needs to start making decisions based on larger interests and not necessarily to be politically justified,” Oyedele added.
Indeed, the government did approve a subsidised exchange rate of N160 per dollar for 13,800 Christian pilgrims in October 2015, “But the fact is the times have changed and anyone, christian or muslim, who wants dollars for pilgrimage should source independently,” Bukar added.
Nigeria’s economy is in the midst of its biggest crisis in more than a decade. The treasury has tumbled by more than half, on declining oil revenue.
India is probably the only country asides Nigeria that provides subsidies for pilgrimages amid wide spread criticism. However, Indian authorities have moved to end the practice completely by 2020.
Selling hard earned tax payers money to pilgrims at subsidised rates may also open up arbitrage opportunities and would undermine the fight against corruption, analysts say.
The CBN mandated commercial banks to sell dollars to pilgrims going to the Hajj at an exchange rate of N197, in an August 4 circular.
As deduced from the circular, there are a total of 65,197 Pilgrims; hence the CBN will sell as much as $65.197 million assuming every Pilgrim buys $1000 each.
Nigeria’s official exchange rate closed at about N315 Friday, which suggest that this sale could cost Nigerian tax payers about N7.6 billion in exchange rate loss.
Nigeria’s government is offering a concessionary exchange rate to more than 65,000 pilgrims intending to make the pilgrimage to Saudi Arabia this year, even as the country turns to borrowing to plug a budget gap.
A preferred foreign-exchange rate of 197 per dollar will apply for pilgrims’ travel allowances of $750 to $1,000, the CBN said on its website. That compares with an interbank rate of N319.25 per dollar at the close of Friday or the black market rate, which weakened this week to almost 400 per dollar.
Presidential spokesman Femi Adesina declined to confirm the full amount allocated by the government for the subsidy. It was reported in the media at the weekend that the total cost would be as much as N7.9 billion ($25 million), citing its own calculations. This compares with N2.4 billion last year, the newspaper said.
The subsidy was met with criticism on Twitter and online forums by Nigerians who questioned the government’s priorities.
Nigeria presented a N6.1 trillion budget for 2016 and intends to borrow abroad to help plug a N2.2 trillion gap. The economy shrank by 0.4 percent in the first quarter and may contract 1.8 percent this year, according to the International Monetary Fund.
However, the National Hajj Commission of Nigeria (NAHCON) on Sunday said the Federal Government has not given foreign exchange waiver to Nigerian pilgrims performing hajj this year.
The commission’s Head of Media, Uba Mana, said this in a statement in Abuja on Sunday.
“The National Hajj Commission of Nigeria wishes to draw the attention of the public that the Federal Government has not given foreign exchange waiver to Nigerian pilgrims performing this year’s hajj,” Mana said.
“If there is one thing that the Government did for the Nigerian pilgrims, it was to allow the exchange rate prevalent at the time of payment of Hajj fare in February, when the current flexible exchange rate was not in action to subsist.”
JOSHUA BASSEY & LOLADE AKINMURELE
