Prominent Nigerians and experts in public policy, economy and governance on Tuesday urged the government to take tough decisions in order to ensure fiscal sustainability and economic development in Nigeria.
The experts spoke in Abuja at a policy conversation and book launch organised by the Carnegie Endowment for International Peace and Agora Policy, an Abuja-based think tank.
The event, themed “How Nigeria can build a post-oil economic future”, held against the backdrop of the global conversation about climate change and the transition from fossil fuel, Nigeria’s historic economic underperformance and current economic challenges, and the transition to a new administration.
The event also featured a presentation and exposition on the policy implications of a book titled “Economic diversification in Nigeria: The politics of building a post-oil economy”, written by Zainab Usman, the Director of the Carnegie Africa Programme.
Interventions
Speaking at the event, Kaduna State governor, Nasir El-Rufai, called on the next administration in Nigeria to take hard, difficult decisions in the face of economic challenges and uncertainty.
Mr El-rufai also urged the Nigerian government to end the petroleum subsidy regime in the country to ensure fiscal sustainability.
He recalled that in 2021, the National Economic Council (NEC) gave a committee he chaired an assignment to work out a framework on what to do with the resources if the subsidy was removed.
He listed the components of committee’s recommendation to include a framework on investments in security, social protection, infrastructure on health and education among others.
“We worked with experts and the World Bank and came out with a report on what to do with the resources which would be transparently explained to Nigerians,” he said.
“In 2021 the federal government’s budget for roads was N200 billion and in 2021 we were projecting to spend N1.2 trillion on subsidies. We saw the danger and I called for its removal.
“We have a framework and the economic council agreed for it to be withdrawn because we had a clear plan on where the money should go which included the federal, state and local government for interventions.
“It is still on and currently we are looking at N6 trillion on subsidy but go and check the national budget on infrastructure, health and education, it is not up to that and that does not make any sense. So, we need to end the subsidy.”
Subsidy
The Nigerian government has for decades subsidised fuel and fixed retail prices of petroleum products.
In November 2021, the government announced its plan to remove the fuel subsidy and replace it with a monthly N5,000 transport grant for poor Nigerians.
But later in the month, the government suspended its planned removal of the subsidy after the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) threatened to embark on mass protests.
The government said it will retain fuel subsidy indefinitely and will work on amending the 2022 budget to provide funds for that purpose.
Later in the first quarter of 2023, Nigeria’s Minister of Finance, Zainab Ahmed, said that it will be more appropriate for the government to begin the implementation of its fuel subsidy removal in the second quarter of the year.
As concerns were raised over the sustainability of the subsidy regime, the Nigerian National Petroleum Company Limited (NNPCL) also announced that the country was spending over N400 billion monthly on petroleum subsidy. https://www.premiumtimesng.com/news/top-news/582724-fuel-subsidy-now-above-n400bn-monthly-nnpcl.html
The government subsequently said that it will phase out the subsidy regime by the end of the the first half of the year.
But last month, the National Economic Council (NEC) suspended the planned removal of subsidy on petroleum products by the end of President Muhammadu Buhari’s administration. https://www.premiumtimesng.com/business/business-news/595422-federal-govt-suspends-subsidy-removal.html
Mrs Ahmed, said that the council deliberated on the matter and resolved that the fuel subsidy cannot be removed for now.
Meanwhile, international organizations and and public policy experts have called on the government to scrap the subsidy arrangement amid mounting debts.
Debt
In January, the National Bureau of Statistics said that Nigeria’s public debt stock stood at N44.06 trillion ($101.91 billion) in the third quarter of 2022.
The bureau, in its Nigerian domestic and foreign debt Q3 2022 report, said that Nigeria’s public debt stock which includes external and domestic debt rose from N42.84 trillion or $103.31 billion in the second quarter of 2022 to N44.06 trillion or $101.91 billion in the third quarter of the same year.
The NBS said the figure shows that the public debt in national currency grew by 2.84 per cent within the period.
Last week, the Nigerian Senate approved the request of President Muhammadu Buhari to restructure the N22.7 trillion loans that the Central Bank of Nigeria (CBN) advanced to the federal government under its Ways and Means facility.
Similarly, the Debt Management Office (DMO) recently estimated that public debt stock could rise to N77 trillion by the end of May.
The estimated figure comprises N44.06 trillion total debt figure as of third quarter 2022, N22.7 trillion Ways and Means financing advanced to the Federal Government by the Central Bank of Nigeria (CBN); new borrowings in 2023 budget and the Promissory Note.
Other Interventions
On his part, the former Emir of Kano, Muhammadu Sanusi, who was a special guest at the event, underscored the need to prepare the minds of Nigerians on bad decisions that bankrupted the country and the challenges ahead.
Mr Sanusi, an economist and former Governor of the Central Bank of Nigeria, noted that to get it right, the incoming government should place competent officials in suitable positions.
“We are going to have a government sworn on 29 May and I think we have to start stating what is expected of that government.
“What do we, as Nigerians, classify as a milestone that shows we are heading in the right direction? We also need a government that understands the depth of the crisis that we are in,” Mr Sanusi said.
“We all have a responsibility to convey the implications of the policies that we recommend.
“We need to go back to that situation where politicians respect the independence, integrity and autonomy of these institutions and where these institutions are held accountable by the law setting them up to perform duties,” he added.
In her intervention, the author of the book, Mrs Usman, expressed concerns about the absence of political leadership that strengthens public policy in Nigeria.
She identified the need for public policy makers to identify the problems bedeviling, analyse it adequately, and profer the right solutions.
Also speaking, Anambra State Governor, Chukwuma Soludo, called for transformational leadership and agenda, noting that the incoming administration has a chance for a fresh start.
“It has to start by getting the team assembled and getting to work immediately with institutional reforms and a competitive system,” Mr Soludo said.
Mr Soludo also advised the government to study case studies of successful subsidy removal and replicate them in the country.
“It will be necessary if we begin to mainstream case studies and utilise lessons from those case studies that worked before by replicating them,” he said.
He recalled that during the administration of former president Olusegun Obasanjo, the country went through impressive and sustainable economic growth for many years, due to the transformation policies and political will of the administration.
“We cannot have a competitive economy without a competitive system. We need a productive rather than a consumption leadership,” he added.
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