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Business News of Thursday, 8 June 2023


Tinubu receives support from governors for end of fuel subsidy, pledges savings for federation account

President Bola Tinubu President Bola Tinubu

The Nigerian President, Bola Tinubu disclosed that savings from the end of fuel subsidy would be accrued to the Federation Account after the Nigerian Governors’ Forum (NGF) declared support for the end of the fuel subsidy regime in Nigeria.

This was disclosed on Wednesday during a meeting between President Bola Tinubu and members of the Nigerian Governors’ Forum (NGF), led by its chairman, AbdulRahman AbdulRazaq of Kwara, at the State House in Abuja.

This comes after Labour Groups agreed to suspend a planned nationwide strike over the removal of fuel subsidies in Nigeria which is expected to increase inflation.

How Nigerians will benefit

The President assured that he would maintain an open-door policy and was prepared to share ideas, strengthen institutions and create bottom-up frameworks that would improve the livelihood of Nigerians, adding that there would be a savings account after the full removal of subsidy, he said:

“We need synergy to fight other vices like corruption. We are trying to get smugglers out of the way. How do we work together to galvanise the economy and put resources in place? We must think and perform.

“After removing subsidy, savings must be accruing to the Federation Account.”

NGF’s full support

The NGF in the meeting with the President declared their full support for the end of subsidy as reports say they expressed happiness with the president’s subsidy removal decision, all-inclusive leadership, and statesmanship.

The Governors praised Tinubu for tackling the fuel subsidy debacle, promising to work with him to ameliorate the short-term impact of the decision, as the President advised the political leaders to downplay their differences and jointly focus on alleviating the sufferings and pains of the people.

“We can see the effects of poverty on the faces of our people. Poverty is not hereditary, it is from society.

“Our position is to eliminate poverty, set aside partisan politics; we are here to deliberate about Nigeria and nation-building,’’ he said.

Tinubu’s view

Tinubu emphasizes the unity of Nigeria, urging citizens to see the country as one big family despite cultural and political differences. He believes that with a collective mindset and determination, the nation can overcome poverty and achieve tangible results.

“If we see it that way and push forward, we will get our people out of poverty. A determined mind is a fertile ground for delivering on results,’’ he stressed.

“Present in this room is our diversity in culture and politics, but we are one nation. The unity and stability of the country rest upon us.

“We have managed ourselves very well to have a democracy. We have campaigned and arrived at our present destination. We must work for our people.”

He added the education sector must be improved as part of efforts to reduce poverty and destitution, citing he is prepared to share ideas, strengthen institutions, and create bottom-up frameworks that would improve the livelihood of Nigerians.

AbdulRazaq promised the president that the governors would support the Federal Government in meeting the targets of human development.

What you should know

KPMG Nigeria recently revealed that the removal of fuel subsidies in Nigeria could lead to a significant rise in the country’s inflation rate, potentially reaching 30% in June 2023.

The report by KPMG highlights that the removal, whether implemented entirely or partially, would cause a temporary inflationary surge. Currently, Nigeria’s inflation rate stands at 22.22%, as reported by the National Bureau of Statistics (NBS).

A part of the KPMG report stated: “The World Bank projects that a one-off adjustment will lead to higher inflation in 2023 and 2024 and lower thereafter. Our internal macro model also supports the World Bank’s findings with a forecast of an increase of about 6% over the June 2023 inflation rate bringing it to about 30%.
“In mid-2024, however, all other things remain constant, and as year-on-year base effects kick in, the pace of inflation will drop significantly though overall prices of goods and services will remain elevated. However, as inflation is already high and will increase further, more Nigerians will be pushed into poverty unless compensating measures to cushion them at least partially from the price shock are put in place.”