The Federal Government of Nigeria is running against time to avert a nationwide strike, due to commence on Wednesday by organized labor unions.
The recent strike threat was issued last week by the Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) as a way of getting the government to act fast to ameliorate the economic impact of its recent policies – the removal of fuel subsidy and the floating of the FX market.
The President Bola Tinubu-led administration, in the wake of these policies, promised to roll out a range of palliative measures to mitigate their effect. The measures include the World Bank-backed cash transfer to poor Nigerian households and releasing of grains to boost food security.
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But the palliative measures have been deemed significantly insufficient, bolstering the belief that the government is insensitive to the plights of Nigerians – instigating the current faceoff between the government and labor unions.
The removal of fuel subsidy and the deregulation of the forex market saw the price of fuel shoot up to N617 from N195 per liter and the naira exchange at around N800/$1 from N464/$1 at Investor & Export window. This means an unprecedented increase in the cost of goods and services – overwhelming the meager spending power of Nigerians.
Following the threat of a nationwide strike, and the backlash that followed an earlier announcement by the government to disburse N8,000 to 12 million Nigerian households, the federal government appears to have amended the palliative measures.
In his national address on July 31, Tinubu outlined 8 key palliative measures his administration is rolling out to cushion the adverse effects of the FX and subsidy reforms. They are the following:
Reducing the high cost of food: Tinubu said that to ensure food remains affordable, the government will release 2000 metric tons of grains from strategic reserves to households across all 36 states and the Federal Capital Territory. Furthermore, 225,000 metric tons of fertilizer, seedlings, and other inputs will be provided to farmers committed to the nation’s food security agenda.
Boosting agriculture with N200 billion: The president said agricultural development will be supported with the disbursement of N200 billion to cultivate 500,000 hectares of farmland. This program will focus on cultivating rice, maize, wheat, and cassava, benefiting small farmers as well as large-scale private sector players in the agricultural industry.
Minimum wage: He added that by collaborating with labor unions, the government is working to introduce a new national minimum wage for workers. The salary review will be implemented once agreed upon and budget provisions are made.
N125 billion for MSMEs: President Tinubu said the federal government will commit N125 billion in funding to support Micro, Small, and Medium-Sized Enterprises (MSMEs). From this fund, N50 billion will be dedicated to providing grants to 1 million nano businesses by March 2024. Each of the 774 local governments in Nigeria will receive a minimum grant of N50,000, benefiting a total of 1,300 nano business owners in each area.
N100 billion for mass transit: Additionally, the government will invest N100 billion to purchase 3000 units of 20-seater Compressed Natural Gas (CNG) fuel buses. These buses will be distributed to major transportation companies in states based on travel intensity. Participating transport companies can access credit with a maximum interest rate of 9% and a repayment period of 60 months.
9 percent interest loan for SMEs and Startups: Tinubu said 100,000 SMEs and startups will receive support through a scheme with a budget of N75 billion. Entrepreneurs can access loans ranging from N500,000 to N1 million at a maximum interest rate of 9% per annum, with a repayment period of 36 months.
Student loans: According to the president, the federal government plans to push over N1 trillion saved from fuel subsidy payments into providing student loans for higher education, ensuring that no Nigerian student has to abandon their studies due to financial constraints.
Infrastructure fund for states: To improve living conditions and address critical areas, a new infrastructure fund will be available to states. The fund will be utilized for healthcare and educational infrastructure upgrades, as well as to improve transportation routes for the transportation of farm produce to markets.
Which do Nigerians need more?
Among the many demands made by labor unions, wage increase has stood out, drawing overwhelming support from Nigerians who believe it will go a long way to boost their spending power, and in turn, help the informal sector to stay afloat. In addition, it is believed that other palliative measures like grain distribution and the CNG-powered mass transit initiative can only reach a limited number of people and the agriculture scheme will not yield immediate result.
Compared to other countries where petrol sells above N500 per liter, Nigeria has one of the poorest minimum wages.
The TUC had demanded N200,000 monthly minimum wage, but many doubt if it would be possible considering how broke Nigeria currently is. Some analysts believe that a significant increase from the current N30,000 monthly salary is achievable based on revenue boost from the removal of fuel subsidy. FAAC (federation account allocation committee) allocations to the federal, state, and local governments are expected to jump following the removal of fuel subsidy.