June 25, 2024

Nigerian leader defends end to fuel subsidy as hardship bites harder


Nigerian President Bola Tinubu has defended the West African nation’s decision to stop subsidizing fuel, a move that already is adding to economic hardships by pushing up prices for transportation and commodities.

During a meeting with governors in the capital city of Abuja, Tinubu informed them that ending the long-standing subsidy last week would contribute to the government’s poverty alleviation efforts and initiatives. He acknowledged the hardships faced by millions of citizens and urged patience in light of the current challenges.

Tinubu emphasized that poverty is not an inherited trait but a product of societal factors, expressing the government’s commitment to eradicating poverty. The Nigerian presidency quoted Tinubu’s statement, highlighting his dedication to this cause. The governors expressed their support for the removal of the subsidy and pledged to collaborate in its implementation, as stated by the presidency.

Nigeria, despite being an oil-producing nation, relies on imported refined petroleum products and has been subsidizing their cost for many years. However, with declining oil revenues due to rampant theft and reduced foreign investment, the government deemed the fuel subsidies economically unsustainable. In 2022, the government allocated a budget of 4.4 trillion naira ($9.5 billion) for subsidies, surpassing the combined allocations for education, healthcare, and infrastructure.

Critics argue that the government’s decision to withdraw the subsidy without implementing alternative incentives, particularly during a period of high unemployment and poverty rates, is problematic. Inflation has reached an 18-year high, and unions have threatened strikes in protest against the subsidy removal. In response, Nigerian states have started implementing various measures to assist citizens, such as reducing the workweek or considering increasing the minimum wage.

The Associated Press discovered that businesses in Abuja and other parts of Nigeria are grappling with the subsidy’s end, as they now face increased fuel costs for generators. Approximately 46% of Nigeria’s population lacks access to electricity, according to the World Bank. In Kano state, a major economic center in northern Nigeria, taxi driver Mahmud Mudi had to suspend his operations due to financial losses caused by higher gasoline expenses.

Mudi expressed the unbearable nature of the situation and the worsening impact of the subsidy removal on an already challenging economy. Another resident, Rafi’atu Audi, a government employee, described the difficulty of commuting to work daily due to the sharp increase in transportation costs. With transport fares rising while salaries remain stagnant, Audi expressed her inability to bear the financial burden any longer.

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