Fuel subsidy has always been a major bone of contention within the socio-economic context
of Nigeria. Previous attempts to remove fuel subsidy by former administrations have been
met with stiff resistance. Why has this been the case and what does it mean for Nigerians at
large?
In 2022, Nigeria spent N3.35tn on the fuel subsidy. The federal government claims that this
budget can be maximised in other areas of national and economic development in the
country.
The federal government has hence declared that it can no longer afford to accommodate
the fuel subsidy in the national budget.
It plans to exit the fuel subsidy by June, 2023.
Removal of the fuel subsidy means that the cost of production of premium motor spirit will
tremendously increase. This increase will have an adverse effect on cost of transportation
and consequently, prices of goods and services.
The impact this will have on small and medium enterprises and the unemployment rate in
the country cannot be overstated.
The National Economic Council has urged the federal government to place a hold on this exit
strategy due to the fact that Nigerians are not prepared for it. Minister of Finance, Zainab
Ahmed, has stated that she agrees that the fuel subsidy needs to happen sooner than later
but she insists that a sustainable and overreaching palliative solution must be in place to
cushion the effect of fuel subsidy removal on Nigerians. The world bank has committed
$800M to this effect and Zainab Ahmed said that these funds will be disbursed to 10 million
households, with the most vulnerable being given priority.
The effects of the mismanagement of the fuel subsidy removal can have dire effects on the
current condition of socio-economic state of the nation.
Why has this been the case and what does it mean for Nigerians at large ?
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