By Lawan Bukar Maigana
Nigerians are justifiably heaving a sigh of relief after days and months of tension and anxiety over how their economic fortune would look like in the new year. With two recessions in few years, low purchasing power, food inflation, worsening rate of unemployment and poverty, coupled with increase in VAT, electricity tariff etc, the last killer blow the federal government planned to deliver in the new year was the removal of fuel subsidy which would have jerked up the pump price of PMS to over 300 naira per litre.
Reason however prevailed and the government announced that it was suspending the policy until that time they are sure Nigerians can cope with the shock of a fuel price increase.
The new no-subsidy regime was supposed to take effect from July this year but it is now clear that subsidy would continue throughout the year. Whoever advised the government to suspend the subsidy removal plan must be a responsive person who is sensitive to the plight of long-suffering Nigerians.
Even though virtually every country in the world today battles one economic challenge or the other, it is still unjustifiable for the government to remove subsidy on fuel at this critical point when the country is battling all manner socio-economic disruptions.
Had the plan been implemented, I am not sure the government would have been able to deal with the consequences that would have followed in terms of youth youth restiveness and mass actions. Based on the impact of the destructive 2020 EndSARS rallies which was even limited to some parts of the country, the government has already developed phobia for any form of protests, hence the decision to stop the implementation of the anti people subsidy removal.
Nigerians would have had an unprecedentedly historic hike in the prices of foodstuff, transportation fare, building materials, medication among others. And there would have been a collapse of a lot of companies in the country because they too cannot bear it and the cost of living would be unbelievably high. We all know the consequences of companies folding up: job losses and more widespread poverty.
The rate of inflation has never been so alarming as it is today in the history of the country and it keeps rising every day. Yet, the FG wanted to turn a blind eye to it and remove fuel subsidy from July this year until a group of genuine patriots reviewed the plan and finally rejected it.
Kudos to the considerate men and women for being truthful to themselves. Every reasonable person knows that doing anything that will result in a hike in prices of commodities and services in Nigeria is terrible because of the direct and indirect consequences.
In 2021, the National Bureau of Statistics extrapolated that “ Nigeria’s annual inflation rate rose to 15.63% in December of 2021, after eight straight months of decline, amid a slight acceleration in prices of major component food (17.4% vs 17.2% in November), linked to the increase in demand during the festive season.
Upward pressure also came from non-food products, including transport (15%, the same as in November); clothing & footwear (15.1% vs 14.8%); miscellaneous goods & services (14.1% vs 14%); housing & utilities (11.1% vs 10.6%), among others.
The annual core inflation rate, which excludes the prices of agricultural produce, rose further to 13.87% in December, the highest since April of 2017, from 13.85% in the prior month. Monthly, consumer prices inched up by 1.82%, the most since May of 2017, after a 1.08% increase in the prior month.
The Consumer Price Index (CPI) measures the change over time in the prices of 740 goods and services consumed by people for day-to-day living. The index weights are based on expenditures of both urban and rural households in the 36 states. The most important categories in the CPI are Food and Non Alcoholic Beverages (51.8 percent of total weight); Housing, Water, Electricity, Gas and Other Fuel (16.7 percent) and Clothing and Footwear (7.7 percent).
Transports account for 6.5 percent of the total index and Furnishings and Household Equipment Maintenance for 5 percent. Education represents 3.9 percent of total weight, Health 3 percent, Miscellaneous Goods and Services 1.7 percent, and Restaurants and Hotels 1.2 percent. Alcoholic Beverages, Tobacco and Kola account for 1.1 percent of the total index, Communications for 0.7 percent and Recreation and Culture for the remaining 0.7 percent.”
Even though there are strong indications that the decision to stay action on subsidy removal is political in nature as it is widely linked to the 2023 survival tactics of the ruling party, the change of policy or postponement of the evil day gives long-suffering Nigerians a breathing space for at least another one year.