Fuel Subsidy Removal: Nigeria Approves N5bn Palliative Fund For Each State

Nigeria’s federal government has approved N5 billion for each of the 36 states of the federation for procurement of food items and fertilizers as part of moves to alleviate the sufferings associated with fuel subsidy removal in the country 

This formed the highpoint of the resolutions of the monthly

 National Economic Council (NEC) meeting held on Thursday which was presided over by Vice President Kashim Shettima at the State House, Abuja.

Governors Yahaya Bello of Kogi, Professor Babagana Zulum of Borno, Professor Charles Soludo of Anambra, Seyi Makinde of Oyo and Uba Sani of Kaduna states were on hand to brief newsmen on the outcome of the meeting.

Speaking after the meeting, Borno State governor, Professor Babagana Zulum,  explained that the measure was part of measures to bring temporary solutions to the high cost of living caused by the subsidy removal as government continued to work with more enduring programme.

According to him, the states are to purchase 100,000 bags of rice and 40,000 bags of maize as well as fertilizers, among other items.

He added that considering the urgency in meeting the need to mitigate the skyrocketing food prices across the country, the federal government had last week released five trucks of rice to each state of the federation.

He said: “NEC met today and expressed serious concerns as regards increasing cost of food items, increasing cost of transportation amongst others as a result of subsidy removal. In order to cushion the effect of subsidy removal, the federal government has released five trucks of rice to each state last week.  

“Furthermore, in order to cushion the effect of food shortages across the country, the federal government has approved the sum of N5billion to be given to each state for the procurement of 100,000 bags of rice, 40,000 bags of maize and fertilizers.  

“This funding has to be shared with a formula as follows: 52% of this money is given to states as grants, while 48% of the N5billon is to be paid back on an instalment basis within a period of 20months to the CBN by the states and the local governments areas in Nigeria.

“The Council commended the efforts of the federal government under the leadership of President Tinubu as well as the CBN. We have also commended the efforts of NEMA in cushioning the effects of the subsidy removal.

“Council has taken bold decisions in order to ensure speedy release of grains and other items in order to cushion the effects of subsidy removal on the less privileged in the society”.

The governor, however, pointed out that NEC insisted that the federal government should deploy the $800 million loan from the World Bank the way it was initially planned, which was through conditional cash transfers, using the registers to be provided by the states.

According to him: “Council has also taken note of the $800 million loan and insist that it be strictly used for intended purpose and based on accurate and acceptable register. The $800million announced by the President will go to Nigerians in accordance with an accurate social register”.

He further noted that besides the plan to take care of the immediate effects of subsidy removal, through food reliefs, the Council took notice of federal government’s wider plan to deploy the N500 billion approved by the National Assembly towards strengthening agriculture, transportation and industry.  His words: “Furthermore, Council has also noted the package that was announced by the President in order to cushion the effect of subsidy removal, amounting to about N500billion. This fund has to be distributed to the following sectors MSMEs, industrial sector, about N125billion will go to cash transfers, agricultural sector as well as gas expansion for buses. 

“Because of the increasing cost of fossil fuel, the federal government intends to establish more gas stations in Nigeria, procure more gas powered buses, CNG buses, as well as electric buses in order to cushion the effect of the subsidy removal”.

Zulum also said NEC agreed that the frontier states bordering Niger Republic are to be assisted with more palliative materials than other states, considering the influx of refugees into their domains from the troubled neighbouring country.

“Furthermore, NEMA will also liaise with states in order to distribute foodstuffs to the people immediately, especially those affected in the frontline states that are bordering Niger Republic because of influx of refugees.  

He also disclosed that Council set up a committee, consisting of the Chairman of the Nigerian Governors Forum (NGF) and Governor of Kwara State, Abdulrahaman Abdulrazaq; the governor of Anambra, Professor Soludo, and others, to interface with the organized labour on the current situation.  

His words: “The Council has also tasked the states to dialogue with the Labour unions’ leadership. A committee made up of Anambra State governor, NGF Chairman and others, have been nominated to interface with Labour. The most important thing that the Council has taken note of is that all these palliatives that are being mentioned now are temporary solutions.  “Council has decided to invest in medium and longer term sustainable solutions that will ensure availability of food and non-food solutions in Nigeria, especially investing in commercial agriculture and also investing in irrigated agriculture. NEC is calling on Nigerians and Labour to be calm, law-abiding as the President is determined to address the issues at hand”.

On his part, Governor of Anambra state, Prof. Charles Soludo said the review of social register was in progress.

According to him, Nigeria was already having refugees from Niger Republic which he said is affecting the distribution of palliatives.

However, Governor of Kaduna State, Senator Uba Sani said only N2 billion has so far been given to states instead of the N5 billion approved.

Also speaking, Governor Yahaya Bello of Kogi State stated that a sub-committee was constituted last year to propose modalities to address imminent food crisis due to the flooding and possible source of funding for palliatives to victims. 

He said, “The Sub-committee was to be Chaired by the Governor of Kebbi State and the following as Members: Ministries of Agriculture, Humanitarian, Finance, NEMA and CBN.

“NEC Secretariat to develop and forward a Template with accompanying letter to all the affected States to collect data on Preliminary Assessment of the impact of the flood in the affected Communities, harmonize the data and produce report of their findings to the Committee.”

On the limitations, he said, ” The exercise would have been more successful and effective if all the affected States had responded as and when due and according to provisions made in the template. Some of the limitations include the following:

Delay or Non-submission of filled template by some States. 

“Only 16 out of the total number of affected States forwarded their submissions to NEC Secretariat to date as expected. About 15 others were yet to do so. The submission from defaulting States are awaited to update the database.

“Some of the States that submitted did not fully complied with requisitions of the template thereby making some of their submissions difficult to process by the automated system. There is the need for compliance with laid down processes to allow for higher degree of uniformity especially considering the huge volume of data involved.

“Only few States reached out to the Council Secretariat’s Technical Team for possible guidance and assistance in the exercise. States are encouraged to take advantage of the Secretariat’s personnel to address important concerns where necessary.

“Only few States indicated financial implication for the damages caused thereby making it difficult to proposed a required amount of intervention.

“Some submissions were not done according to the template which makes difficult to ascertain the financial implications of such states.”

The NEC recommended that the plight of victims of the unfortunate flood disaster across affected States of the federation could be alleviated if the much needed intervention from the Federal Government materialized without further delay. 

“There is therefore the need to expedite release of fund to affected States as recommended by designated Committees constituted by the Federal Government to that effect. This would go a long way in addressing the needs of the victims as well as offset debt incurred by some States to assist their citizens, ” it said. 

NEC in its resolution said the Secretariat and officials of the Office of the Vice President should visit the affected states for on-the-spot assessment of the situation on ground and that the exercise will authenticate the date submitted by state to determine needed intervention.

“That Federal Government’s immediate intervention to be expeditiously carried out by NEMA, Ecological Fund Office and other relevant agencies. States to assure maximum cooperation.

NEC also resolved that all hands should be on deck to assure appropriate submission and data presentation. The quality of data collected should be enhanced to meet international standard. That the challenges of flooding deserves concerted and collective effort.

“There is need to strengthen NEMA as a structure and sustainable adaptation measures for the citizens. In mobilizing resources to tem the tide of flooding, there is need to look beyond NEMA.

“NEC Secretariat to come up with recommedations on the roadmap towards addressing the flood situtation.” 

Bello said Excess Crude Account from 19th July to 14th August, 2023, is $473,754.507, Stabilisation Account from 18th July to 14th August, N30,346,557,405.12, while Natural Resources Account from 18th July to 14th August 2023, is N115,175,616,159.65.

In his presentation, Governor Makinde of Oyo State said the Nigeria Economic Summit Group (NESG) made a presentation on how to explore a NEC Agenda for macroeconomics stability and shared prosperity. 

He said the Presentation was to inform the council on achieving low Inflation and stimulation Growth and Macroeconomic Objectives.

He explained that the objectives of the macroeconomic stability are high and stable economy, low Inflation Growth Price level, unemployment Account, favourable current low balance and stable exchange rate account balance.

According to him, the current macroeconomics landscape showed that investment inflows have dwindled since 2019, likewise the country’s investment/GDP ratio; Crude Oil exports and refined petroleum products imports dominate Nigeria’s trade structure.

He further said Nigeria’s Naira position against major trading currencies deteriorated, while weak forex supply and heightened demand for imports remains core drivers of exchange rate instability.

Besides, he said market volatility has persisted despite recent forex alignment, driven by pressure on forex demand that widens the gap between official and parallel market rates due to inadequate supply and speculative tendencies and that external reserves have remained under pressure as it fell by 8.3 percent from 37.1 billion in January 2023 to 33.9 billion in July 2023. 

The recommendations are that “the NEC must insist on pushing a national legislative reform agenda for national competitiveness. It is essential that nigeria resolves the legislative binding constraints to our national competitiveness, the NESG through nassber, our partnership with national assembly and nigerian bar association has identified over 115 legislations that hinder growth, in the last few years, 10 legislations have been passed (including the cama 2020 and the pia 2021”.)

Deji Elumoye in Abuja

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