Subsidising fuel amidst crushing poverty

by Editorial

November 2, 2018 | 12:10 am
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This year, the federal government has bandied several figures as expenditure on fuel subsidy or under recovery as it prefers to call it, since it officially denies that it still pays subsidy on petrol. The current figure we have is from Ibe Kachikwu, the hapless minister of state for petroleum, who, in April avers that Nigeria’s annual expenditure on fuel subsidy has risen to over N1.4 trillion ($3.9 billion). Going by the figures, it means about N3.76 billion is spent daily on subsidising petrol. This was a staggering 386 per cent higher than the earlier figure of N774 million daily given on March 5, 2018 by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Maikanti Baru, for the importation and distribution of petroleum products in the country.

As the price of petrol has continued to rise in response to the price of oil in the international market, that figure is now outdated and may soon reach or has even reached $5 billion a year. If Nigeria were a developed economy like the United States with massive and adequate investments in education, healthcare, and infrastructure and the economy is booming, that would be understandable.

But no; this is a country adjudged to be the poverty capital of the world, with the highest number of people – over 87 million people – living in extreme poverty in the country. Worse is that the situation is getting worse with approximately six Nigerians sliding into the extreme poverty gap every minute and about 8,000 daily.

This is a country where the health, education and social infrastructure are almost broken and with little or no investments in these sectors. This is a country with record high unemployment rate, high dependency rate, security challenges and the absence of right economic policies and programmes that will be a catalyst to lifting people out of poverty.

Yet instead of concentrating on these concerns, the government is more interested in subsidising elite and middle class consumption of petrol.

Pray, what rational and sensible government could afford to leave millions of its citizens in poor health, ravaged by avoidable diseases such as malaria, yellow and Lassa fever, cholera, typhoid etc while it continues to spend billions of dollars and trillions of naira yearly to subsidise consumption of petrol by the rich and the middle class? Despite Nigeria being a signatory to the World Health Organisation recommendation for every government to spend at least 13 percent its annual budget to health, Nigeria has not allocated more than 6.57 percent of its budget to the health sector. A good example is the 2018 budget where only N340.45 billion, representing 3.9 percent of the N8.8 trillion expenditure plan, was allocated to the health sector.

It took a Bill Gates recently to remind the Nigerian government of global statistics we are all aware of – that “Nigeria is one of the most dangerous places in the world to give birth, with the fourth worst maternal mortality rate in the world, ahead of Sierra Leone, Central African Republic, and Chad,” and that “one in three Nigerian children is chronically malnourished.”

Pray, what rational government with a modicum of conscience could spend such humungous amount yearly on frivolous consumption of petrol that adds very little to the economy while allocating only a meagre N605.8 billion to education in a country of nearly 200 million people with a clear majority young population desperately in need of education? What country with a sensible government will be happy allocating far more to its consumption of fuel than educating and developing its future workforce and human capital?

We believe there can no longer be any rational or sensible explanation for the humongous amount of money spent daily on subsidising the consumption of petrol to the detriment of other critical sectors and needs in society. Petrol is a commodity like any other that is best left to market forces of demand and supply. The little political capital derived from maintaining the huge and extremely corrupt fuel subsidy regime is not commensurate with the long-term damage that is being done to the economy, growth and development of the country by that wasteful expenditure. Nigeria cannot afford to be travelling down an escalator that is clearly going up.


by Editorial

November 2, 2018 | 12:10 am
  |     |     |   Start Conversation

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