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Business News of Monday, 5 September 2022

Source: www.punchng.com

FG urged to prepare Nigerians for subsidy removal

Minister of Finance, Budget and National Planning, Zainab Ahmed Minister of Finance, Budget and National Planning, Zainab Ahmed

The Federal Government has been urged to prepare Nigerians for higher fuel prices that will follow the removal of the petrol subsidy in 2023.

This is the outcome of two online polls carried out by Arise TV recently.

Respondents were asked on Twitter and YouTube whether it was the responsibility of the government, economic think-tanks, the media and the labour unions to prepare Nigerians for post-subsidy fuel prices.

Forty-four per cent fingered the government, while 43 per cent said it was the responsibility of all of them.

Responding to the poll, Partner and Chief Economist at PwC Nigeria, Dr Andrew Nevin, said, “There needs to be some communication to Nigerians on planning for what is going to be a major change.”

Chief Economist at Coronation Merchant Bank, Chinwe Egwim, also responded to the poll, saying that a collective effort was required from the perspective of government in terms of a policy reform “and the media as one of the most powerful tools that can communicate change and articulate the right message to support necessary adjustments to a post-fuel subsidy Nigeria.”

Chief Economist at the Development Bank of Nigeria, Professor Joseph Nnanna, said, “Economic Think-Tanks have a role in explaining the economic implications for Nigerians especially for those at the bottom of the pyramid.”

Chief Executive Officer of the CFG Advisory, Tilewa Adebajo, said it was basically the job of the government.

“If government is not taking the lead in this, then it is not going to work. We do not have enough revenues to service our debts. Our revenues are down because we are paying subsidies and NNPC has remitted little to nothing to the Federation Account.

“The government is violating the Fiscal Responsibility Act. If there is no political will from the government, then we will still be talking about fuel subsidies next year.”

Dwindling national fortunes have taken a huge toll on the economy with the government suggesting harsher fiscal times are to come in 2023 if fuel subsidies are retained.

The Minister of Finance and National Planning, Zainab Ahmed, said the government’s budget deficit was expected to exceed N12.42 trillion if petroleum subsidies were maintained for the entire 2023 fiscal cycle.

Mrs Ahmed disclosed this while appearing before the House of Representatives Committee on Finance to defend the 2023-2025 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP).

She said the Federal Government planned to borrow over N11 trillion and sell national assets to finance the budget deficit in 2023.

Nigeria’s revenue to GDP is nine per cent, while Ghana’s is 13 per cent. Nigeria is seven times Ghana’s population of 31 million.

According to the Debt Management Office, Kenya and Angola have revenue-to-GDP ratios of 16.6 per cent and 20.9 per cent respectively.

Nigeria does not also collect enough taxes as its tax to GDP is nine per cent, with the least recorded in 2016 (5.3 per cent).

But the average of the 30 African countries in Revenue Statistics in Africa 2021 was 16.6 per cent.

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