Nigeria’s Great Reset
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Outgoing Buhari administration saddles incoming government with fuel subsidy removal which will see a litre of fuel selling for N750 resulting in unprecedented inflation and protests
Nigeria will face its own great reset in June after a new administration is sworn in on May 29 as fuel subsidy is scheduled to be cancelled from June 1. Stakeholders in the oil sector warned that a litre could sell for as much as N750 a litre.
With fuel subsidy removal there will be an unprecedented inflation which will be worse than the Weimar Republic inflation that brought Adolf Hitler to power in the 1930s with the danger that the protests could spiral out of control.
Outgoing minister of labour and productivity Chris Ngige on Tuesday in Abuja said workers salaries will be raised to cushion the effects of the subsidy removal by the incoming administration.
President Muhammadu Buhari, who steps down in May, had planned to remove the popular but costly subsidy in 2022 as part of fiscal and petroleum sector reforms, but abandoned the plan because of fears of protests in the run-up to last month’s election.
“We have already concluded on the issue of pay rise … we recommended 5% and 10% pay rise for workers in different categories,” Ngige said.
Previous Nigerian governments have promised to remove the fuel subsidy, which most economists say is an unsustainable drag on public finances, but have failed to do so because of fierce opposition from citizens.
Many Nigerians regard cheap subsidised fuel as at least one benefit they receive from the state, which fails to deliver other basic services such as electricity and security despite receiving billions of dollars every year from oil exports.
While the new government is not obliged to act on the recommendation, the call does put pressure on the new government to remove the subsidy – even though the outgoing administration itself failed to do so.
Bola Tinubu, who is from the same party as Buhari, also promised during his presidential election campaign to ramp up oil production and deregulate midstream gas prices within six months.
Tinubu said in his manifesto that he would channel the money saved on the subsidy into agriculture, social welfare, road construction, public transport subsidies, education and healthcare.
Nigeria set aside 3.36 trillion naira ($7.3 billion) to spend on the subsidy until mid-2023, according to its finance minister Zainab Ahmed
($1 = 459.85 naira)
Akowe with materials from Reuters
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