Subsidy is Gone! Welcome To Hunger and Poverty

The process of ending government financial assistance for fuel means subsidy removal. For the past 15 years, successive administration's in Nigeria had spent trillions of naira to pay independent marketers who import refined fuel into the country. The subsidy regime was made attractive because no serious effort was made to revamp the refineries in Nigeria. The thinking has been that a cabal is profiting from the subsidy regime and this is a reason why our refineries are been sabotaged. Before the 2023 Presidential election, all candidates campaigned on the basis of removing subsidy on petroleum products but with for efferent implementation strategies.

In his inaugural speech, President Bola Ahmed Tinubu said this much on subsidy:

"We commend the decision of the outgoing administration in phasing out the petrol subsidy regime which has increasingly favoured the rich more than the poor. Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall instead re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions"

This is the statement that heralded the hardship and suffering of Nigerians.

Three components of this statement require some analysis. First is the removal of subsidy from petroleum products. Second is government's intention to re-channel the excess funds accruing to government to provide better infrastructure. Third is the job creation component which is a core campaign issue in the 2023 Presidential election.

One of the positive implications and ramifications of subsidy removal is that it would free up financial resources for other sectors of the economy, incentivize domestic refineries to produce more petroleum products and reduce Nigeria's dependence on imported fuel. This will also, increase employment, channel funds for the development of critical public sectors with their attendant multiplier.

Within a short time, the subsidy story has increased transportation. Initially, the Federal Government rolled out palliative measures without creating an SPV to drive it. Soon, the palliative regime collapsed. The increase in transportation cost has also triggered serious economic backlash such as inflation which has impacted negatively on the standard of living of ordinary Nigerians. With the prevailing hunger and hardship, the subsidy removal policy has been described as a deliberate attempt to inflict pain on Nigerians.

The negative implications are that fuel subsidy removal may decrease economic growth in the short term, increase inflation, increase poverty, increase fuel smuggling, increase crime, increase the prices of petroleum products and loss of jobs in the informal sector

Presently, there is nothing to show that the trillions of naira accruing from subsidy removal can be ploughed back to rejuvenate the economy. Before the Buhari administration handed over, there was a deadline for the commencement of production of the Port Harcourt refineries. Three months after the deadline, nothing has happened. The general thinking was that the Dangote refinery would sell refined petroleum products in Nigeria. This also has not happened. Premium Motor Spirit which used to sell for N200/1litre now sells for N800/1litre. The result is that the increase in the price of essential commodities has led to high cost of living. The devaluation of the domestic currency has decreased the purchasing power of the naira. For an import dependent country like Nigeria, it's like hell.

Meanwhile, promises of increase in the minimum wage of workers has not been implementation. The Tinubu administration has inaugurated an era of foreign exchange failure, spiralling inflation, cost of living crisis, poverty hunger and frustration in the land. The situation is so horrible that ever s waring nation like Ukraine sends grains to Nigeria to mitigate the pervasive hunger in a country that is best endowed with agricultural potentials.

This has a negative impact as the poor are net-consumers and not net-producers of the petroleum products. Households are affected by the effects on their income and consumption. The purchasing power of the naira has diminished, Businesses are affected negatively and more and more jobs are lost, giving rise to increasing unemployment.

The Federal Government should declare a state of emergency and take interim measures to tackle the cost of living crisis. Opening the borders for the free flow of goods and services is another quick impact measure that will reduce hunger. It is not enough for government to distribute grains, which will not get to the end users -the ordinary Nigerians who are now victims of acute hunger and poverty. Ten percent of FAAC allocations to State governments should be set aside for agriculture. Each State should be made to specialize in the cultivation of one food crop.

The day President Tinubu declared that subsidy was gone was the same day he declared war on the common man. With the prevailing hunger, most Nigerian youths are being pushed into unedifying endeavours. The Ministers and aides surrounding Aso Rock should inform Mr President that serving the interest of the people and maximizing the happiness of the greatest number of Nigerians does not include frequent travels. It requires settling down to find answers to the cost of living crisis initiated by the removal of subsidy and the implementation of IMF prescriptions.

Indeed subsidy is gone. Nigerians are now in a regime of hunger, poverty and economic disaster. Nigerians deserve to live.

John Idumange writes from Port Harcourt