Very encouraging: The Nigerian government has ordered an immediate review of the plan to share N500 billion by N8,000 each to 12 million Nigerian households, as a palliative, to cushion the impact of subsidy removal. This is coming after the voices of the citizens were heard by the government.

I commend the government for this, and hope during the review they will pinpoint the root cause why many farmers need to be given food. Yes, our farmers generate famine and poverty, requiring the government to support them with handouts; a huge irony that in the land of farmers, farmers are hungry.

Why? It comes down to infrastructure and support systems. Let me take the case study of  my village, Ovim, and Isuikwuato local government area of Abia state, in general. Before our son, then-navy commander Ndubuisi Kanu, became a governor, the road connecting Ovim to the cities like Okigwe was not there. As a result of that, many local markets did not have access to larger markets. 

But when he built the road linking Ovim to Okigwe, he unlocked abundance in the village and environs. Magically, Oriendu Market became the most important market in the area, serving many communities because it has a decent road network. That road is like an economic liberation and till today, Admiral Kanu (RIP), remains an icon.

Then imagine if someone goes to Ovim and builds cold rooms which villagers could rent. So, when you come to the market to sell your farm produce, and you are unable to finish all the sales, that cold room can keep the produce fresh for the next market day, in four days. If that happens, the farmers will even become better because waste will drop.

To make that cold room work at scale, you need electricity. You get where I am going: can Nigeria use this N500 billion to provide coldroom-as-a-service in rural markets, supported by renewable energy startups? If that happens, the rural farmers will improve their incomes, and this N500 billion will become a pillar for the ascension of rural Nigeria. Of course, you can do a similar thing in many markets across our major cities.

Nigeria, do not share it; use it to build something productive!

Comment on Feed

Comment 1: Anytime I see people criticise the 8k cash transfer scheme, what comes to mind is “keynesian expenditure multiplier” but wetin I know.

My Response: I am not sure the  “keynesian expenditure multiplier”  works here. That works if you give that money so that local companies can produce to ensure people can keep their jobs, etc. It is likely this N8k will buy only imported products which means when you stop giving the handouts, everyone returns to ground zero.

Keynesian is designed to be a stimulant to be effective, and Nigeria has nothing to stimulant since we have no electricity, etc. If you give everyone in a village N8k, they may be fine for 4 days. But once that stops, you have not stimulated production in that village since the farmers have no electricity to build coldrooms, storage systems, etc.

Comment 1:Ndubuisi Ekekwe I taught keynesian expenditure multiplier was based on the marginal propensity to consume

My Response: You consume to help the production side. If not, when the funds end, you have not achieved anything. Under Buhari, we shared tons of money, scaling that consumerism, but with no connection to production. In the US, for example, they do it when companies are about to fold due to many factors (covid, recession, etc). By giving people money to spend, they save those companies since people buy their products. But it is not done in perpetuity. We have been sharing money for ages and that has not helped anything because it was never designed to drive and stimulate local production.

President Bola Tinubu has ordered the review of his plan to disburse N500 billion by N8,000 each to 12 million Nigerian households as palliative to mitigate the impact of subsidy removal, following backlash from Nigerians.

Tinubu on Tuesday, ordered that the N8,000 conditional cash transfer
programme be reviewed immediately, according to a statement issued by Dele Alake Special Adviser to the President on Special Duties, Communications and Strategy.

The statement said the president directed immediate release of fertilizers and grains to approximately 50 million farmers and households respectively in all the 36 states and the FCT.

The earlier plan to disburse N8,000 to 12 million households, covering 60 million Nigerians was heavily criticized. Nigerians said, given the increasing prices of petrol – which has shot up the cost of living, that money is a mockery of their plights.

According to the statement, the move is said to be part of “the whole gamut of relief package”, which is designed by the federal government to ameliorate the effects of the subsidy removal.

The statement reads:
You will agree with me that it has become part of the culture of President Bola Ahmed Tinubu’s administration to constantly dialogue with Nigerians who voted him into office. The President covenanted with Nigerians that their welfare and security will be topmost in the Renewed Hope Agenda of his government.

In the last few days, the conventional and new media platforms have become awash with stories of the government intending to embark on conditional cash transfers to vulnerable households mostly affected by the painful but necessary decision to remove subsidy from petrol.

The story has been widely reported that the Federal Government is proposing to give 12 million households from the poorest of the poor N8,000 monthly for a period of six months as a government palliative to reduce the discomfort being experienced by Nigerians consequent upon subsidy removal.

A lot of ill-informed imputations have been read into the programme by not a few naysayers. The administration believes in the maxim that when there is prohibition, there must be provision. Since subsidy, the hydra-headed monster threatening to kill the economy has been stopped, the government has emplaced a broad spectrum of reliefs to bring help to Nigerians.

While it should be noted that the cash programme is not the only item in the whole gamut of relief package of President Bola Ahmed Tinubu, as a listening leader who has vowed to always put Nigerians at the heart of his policy and programme, the President has directed as follows:-

1. That the N8,000 conditional cash transfer programme envisaged to bring succor to most vulnerable households be reviewed immediately. This is in deference to the views expressed by Nigerians against it.

2. That the whole gamut of a palliative package of government be unveiled to Nigerians.

3. Immediate release of fertilizers and grains to approximately 50 million farmers and households respectively in all the 36 states and the FCT.

The President further assures Nigerians that the N500 billion approved by parliament to cushion the pain occasioned by the end of subsidy regime will be judiciously utilized. The beneficiaries of the reliefs shall be Nigerians, irrespective of their ethnic, religious or political affiliation.

President Bola Tinubu has promised to always prioritize the well-being of Nigerians, and he is irrevocably committed to the vow. A number of decisions taken so far by this Administration have buttressed this stance.

You will recall that the president took a similar decision after listening to complaints from the business community/stakeholders about burdensome taxes, particularly multiplicity of taxes they are made to experience. This warranted the signing of four (4) Executive Orders cancelling some classes of taxes while suspending the implementation dates of others.

In addition, the president has also set up a Tax Reform/Fiscal Policy Committee to bring up recommendations that will engender a wholesome fiscal environment for the country and remove anti-business barriers.

I wish to assure Nigerians that President Tinubu will continue to be a listening leader whose ears will not be dull to the views expressed by the citizenry. The President believes government exists to cater for the interest of the people, and he has demonstrated this so clearly.

Thank you all.

Dele Alake
Special Adviser to the President
(Special Duties, Communications and Strategy)
July 18, 2023

The cost of Premium Motor Spirit (PMS) has risen as much as N650 in some parts of Nigeria, following a jump in the price of crude oil in the international market and the poor performance of the naira in the forex market.

This is coming weeks after President Bola Tinubu announced the removal of fuel subsidy, and the central bank’s decision to float the FX market.

Petrol stations have begun to adjust their pump prices to reflect the changes in the markets. In June, the National Controller Operations, Independent Petroleum Marketers Association of Nigeria, Mike Osatuyi, warned that PMS prices will likely rise in July, as market fundamentals become the major determinant of the prices.

“What I am seeing is around N600 and above, depending on the exchange rate, the current crude price at the international market, and the landing cost. Those in Lagos will pay around N600, those outside Lagos around N600 plus, while those in the north would be paying anything from N700 and above,” he said.

Though the Independent Petroleum Marketers Association of Nigeria (IPMAN) debunked the report, saying the association has no plans to increase pump prices for now, the jump in fuel costs has proved Osatuyi right.

In Lagos and the Federal Capital Territory (FCT) Abuja, the price rose to N617 and N640, while in Ondo and Kano states; it sells for N650 and N620 per liter.

The prices are expected to go up in northern states like Sokoto and Maiduguri because of higher transportation costs emanating from moving the products from Lagos to the far north.

Mele Kyari, the group chief executive officer of the Nigerian National Petroleum Company Limited (NNPCL), said on Tuesday that the increase was determined by market forces.

Besides Brent crude price rising to $78.86 per barrel, naira’s performance in the forex market contributed immensely to the current price of fuel. The naira has slumped below N800/$1 in the Investor and Exporter, forcing an increase in the price of goods and services. This also means that the price of petroleum products will rise accordingly.

Marketers had in June explained that Nigerians were able to buy fuel below N600 per liter because they were still loading petroleum products at a government price of N496.50 per liter. But with the old stock out and new products arriving at higher landing costs based on current forex realities; it’s realistic to expect an increase in pump prices.

While Dangote Refinery is yet to begin operation as expected this month, consumers are counting on competition to drive the price down.

Ahmed Farouk, Chief Executive Officer of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), said the agency plans to issue more licenses to petrol importers. According to Farouk, more than 56 companies applied for import licenses to bring in petrol, but only 10 of them showed a commitment to import. Among these, Emadeb Energy, A.Y Shafa, and Prudent Energy successfully imported petrol into the country.

However, the increase in fuel prices means that Nigeria’s inflation is going to see a further spike as the cost of living soars. The Nigerian Bureau of Statistics announced on Monday that inflation rose to 22.79% in June, driven by the rise in the cost of goods and services that includes fuel.

The impact of this on businesses, which rely largely on generators for electricity supply, is expected to be severe. Many businesses are expected to shut down if the government does not act fast to mitigate the impact of fuel subsidy removal.

Meanwhile, the total fuel consumed in Nigeria has since dropped, post the removal of fuel subsidy.

He added that this represents a 35% reduction when compared with the 65 million litres per day, prior to subsidy removal, citing that, the daily average truck out after the announcement of the subsidy removal on May 29, dropped to 46.38 million litres per day.  The fuel regulator chief, said this is a significant reduction when compared to previous months saying: 

“The current daily consumption has drastically reduced as against 65 million litres which had been the daily consumption before subsidy removal. 

“In January, it was 62 million litres per day; February, 62 million litres per day; March, 71.4 million litres per day; April, 67.7 million litres per day; May 66.6 million litres per day; June, 49. 5 million litres per day and July, 46.3 million litres per day,”.