The Federal government has designed measures to cushion the negative impact of the removal of the subsidies on the most vulnerable 40% of the population.
The plan came ahead of the target date of mid-2022 for the complete elimination of fuel subsidies.
One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 to 40 million deserving Nigerians.
Minister of Finance Budget and National Planning Mrs Zainab Ahmed made this disclosure in Abuja on Tuesday at the launch of the Nigeria Development Update.
According to the Finance Ministry, “with the expansion of social protection policies during the pandemic, the government has an opportunity to phase out subsidies such as the PMS subsidy while utilizing cash transfers to safeguard the welfare of poor and middle-class households.”
To this end, she said government “intends to accelerate our structural reforms, particularly in the power sector, in governance, in business environment to unlock the huge potentials of the economy, scale up social safety net and deepen financial inclusion to reduce poverty and inequality gaps.
“We will carefully calibrate the sequencing of these reforms to manage their attendant political fallouts.”
Zainab Ahmed noted that government is optimistic that “the recent developments in the oil sector, such as the Petroleum Industry Act (PIA) 2021, the full reactivation of the four public refineries in the country, and the completion and coming on stream of the three private refineries under construction in 2022, would significantly boost contribution from the sector to our economic growth efforts”.
The Minister stated that “the subsidies regime in the sector remains unsustainable and economically disingenuous.”
Zainab Ahmed also said that “digital revolution is looming in Nigeria and waiting to happen spontaneously.”
She agreed that Nigeria’s digital economy “can transform economic activities by unleashing new productivity gains, offering new services, and improving the government’s efficiency.”
Government she said sees “enormous opportunity for our teeming youth population in this sector which has largely remained unharnessed with isolated progress and possibilities.
“We need greater investments in newer and competitive technologies to be made for the provision of critical infrastructure in the telecoms sector to unleash potentials.”
To protect such investments, government has been mobilising national security outfits, and even local ‘vigilantes’ to provide added layers of security for the infrastructure, while at the same time engaging local communities towards addressing the likely root causes of cases of infrastructure vandalization.
The World Bank in the development update had said the poorest 40 per cent in Nigeria consume less than 3 per cent of the total PMS in the country, stressing that the rich were benefiting more from the subsidies.