• Saturday, July 13, 2024
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The removal of fuel and electricity subsidies will worsen the impacts of the COVID-19 pandemic in Nigeria

Fuel crisis: Business owners seek FG’s intervention

The majority of Nigerians are still suffering the impacts of the COVID-19 pandemic which ravaged the world economy in 2020. The economic and social disruptions caused by the pandemic are devastating.

Many Nigerians lost their lives and livelihoods to the pandemic. The economic impacts of the pandemic have aggravated the plight of families living below the poverty line in Nigeria. The Federal Government’s plans to remove fuel and electricity subsidies will only worsen the economic conditions of Nigerians.

The pandemic caused unprecedented challenges to the food system in Nigeria as many farmers were unable to carry out farming activities effectively. The majority of Nigeria’s farmers could not supply their produce to the market and buy farming input due to government confinement measures. As a result of the constraints experienced during the pandemic, many farmers are striving to return normalcy to their farming businesses. The supply of farm produce is still below the potential level and that has led to increase in prices of food items. The increase in prices of food items has subjected many Nigerians to extreme poverty while others are malnourished.

The shock impact of the COVID-19 pandemic hit the manufacturing industry so hard leading to high costs of production and storage. High costs of production in the industries caused high prices of the manufactured, significant reduction in demand for products, as well as dropping income. Many workers lost their paid jobs due to the inability of their employers to pay salaries and wages. Many manufacturers are yet to recover from the social-economic impact of the pandemic due to the high costs of production. Also, many Nigerians who lost their jobs are yet to have other jobs to earn income. They depend on families and friends for food and other basic needs. This vulnerable group of Nigerians stands to feel severely any fiscal pressure in the form of fuel and electricity removal because every increment in fuel is passed on to the final consumers.

The economic disruption caused by COVID-19 has led to a high rate of youth unemployment in Nigeria. The National Bureau of Statistics published that the youth unemployment rate has risen to 42.5 percent while the national unemployment rate stands at 33.3 percent. The high rate of unemployment in Nigeria presents a big threat to lives and property as the unemployed persons stand to cause all forms of insecurity. The high number of unemployed persons in Nigeria has strong potentials for reducing economic growth and development.

The federal governnent’s projected growth of 2.6 for 2021 is a result of the accumulative effects of the pandemic which severely hit the Nigerian economy. The 2.6 percent growth forecast shows that the Nigerian economy is far below the world growth projection of 5.9 percent and it depicts stagnation in per capita income and a high dependency ratio. The Vice President, Prof. Yemi Osibanjo, recently stated that Nigeria’s population is growing more than the GDP growth rate. He stated further that Nigeria may not be able to create enough jobs for its citizens due to the high population growth rate. The statement of the Vice President shows that per capita income in Nigeria is low and it represents poverty.

Read also:  With efficient transport system, fuel subsidy becomes irrelevant- Onoheharho

Nigeria’s retail and wholesale markets are currently feeling the hard impact of the pandemic as sales and income have sharply dropped. The number of customers that patronize the market daily has gone down due to high commodity prices and unemployment. Many shops have closed down while others are struggling to survive by employing only a smaller number of workers.

The health conditions of many Nigerians have deteriorated following their inability to have good food daily and medications. The troubling reality of the Covid-19 crisis for many families in Nigeria has been hunger and deprivation as many people are still battling every day for survival. The World Bank (WB) in January 2021 predicted that the Covid-19 crisis in Nigeria will result in an additional 10.9 million Nigerians entering poverty by 2022. The impact of the pandemic necessitates the establishment of a functioning social security system that will allow all Nigerians to achieve an adequate standard of living; not subsidies removal by this time.

The impacts of the COVID-19 pandemic which disrupted the world economy in 2020 still ravage the Nigerian economy. Many Nigerians are living below the poverty line due to the severity of the economic impacts of the pandemic. The majority who lost their livelihoods are yet to be re-established. The FG’s plans to remove fuel and electricity subsidies will only worsen the economic situations of the vulnerable in Nigeria as the proposed #5000 grant will not get to the poor based on what happened to the distribution of COVID-19 palliatives in 2020.

Felix Ashakah is Economic Lecturer at Western Delta University, Oghara