'N8K is significant' - World Bank says FG’s palliative will increase household earnings by 10 percent

The Federal Government's intention to give out N8,000 as temporary relief after eliminating the fuel subsidy has drawn a reaction from the World Bank.

It claimed that the action will result in a 10% increase in the income and accessible earnings for nearly 50% of Nigerians.

Recall that Legit.ng reported that the National Executive Council (NEC) under President Tinubu finally agreed on palliative measures for Nigerians.

According to Alex Sienaert, the World Bank's Lead Economist for Nigeria, the money from the government will prevent many Nigerians from skipping meals, keeping children out of school, or visiting the hospital.

Palliative will help Nigerians

Sienaert praised the administration for recent economic changes, particularly the one on subsidy elimination and the proposed palliative, during an economic assessment session at the Lagos Business School, according to a story in Punch.

He said: The other thing we often hear is that N5,000 or N8,000 is a trivial amount of money. I think people will be shocked to know that for a huge number of Nigerian households, it is a very significant amount of money.

Inferring from statistical reports, he said 50% of Nigerian households make less than N60,000 each month. On this note, he added: So, if you are giving them N5,000 or N8,000 extra for six months to help tie them over, you are increasing their earnings and available incomes on the order of 10 per cent.

For many households, it would be meaningful. According to Sienaert, the cash transfer would not cost the government a large sum of money in comparison to the benefits that subsidy elimination will provide.

He added that the palliative could help poor and vulnerable households get through hard times without having to do things that harm their prospects, like pull out of school, not go to the hospital, skip a meal, or whatever the case may be.

He argued that the amount is a significant amount of resources compared to what is being released.

He noted: I know what has been in the news is the idea of a N5,000 or an N8,000 cash transfer to needy households for about six months. If you look at that the cost of that, it would be equivalent to just about one month worth of spending on the subsidy that was happening before it was cancelled under the old exchange rates and still less than two months’ worth under the new one.

Stimulate economy rather than give N8,000 palliatives

Deji West, a financial and business consultant however, disagrees with Sienaert, referring to the scheme as ”rubbish” adding that it is not the way to go.

West told Legit.ng: It is better to create employment or venture into things that enables the creation of up to 5 million jobs in 3 industries. It is better to use the money to stimulate economy or give employers incentives to employee.