As reactions continue to trail the Federal Government’s $800 million World Bank grant to be used as subsidy palliatives ahead of the proposed fuel removal in June, Nigerians have described the loan as unnecessary, stressing the need to shelve the plan.
They also faulted the government for always failing to display transparency whenever it obtains loans, a development that runs foul of the Fiscal Responsibility Act (FRC).
Minister of Finance, Budget and National Planning, Zainab Ahmed had, during the weekly Federal Executive Council meeting, announced that the first tranche of funding from the Washington-based lender will enable the FG give cash transfers to the most vulnerable in the society through a national social register.
According to the minister, the palliatives would be targeting 50 million vulnerable Nigerians or 10 million households, adding that engagements are ongoing with the newly established Presidential Transition Council (PTC) and the incoming administration to drive the palliative programme.
Reports have it that the Finance Ministry is expected to spend about $53 million of the $800 grant on hiring staffers, office administration, committee overheads and other logistics such as training and workshop.
This is besides indications that the World Bank facility would raise Nigeria’s projected debt stock of $171 billion by a further 0.47 per cent. This, according to analysts, will further raise the sinking fund for refinancing and servicing of the debt stock from 29 per cent scheduled in 2023 Appropriation Act to 43.8 per cent for the 2024 financial year.
The repayment plan for the $800 loan, according to the agreement between the FG and the International Development Association (IDA), the concessional lending arm of the World Bank Group, is to spread till 2051 – a period of 28 years.
But the said grant has continued to elicit sharp reactions from concerned Nigerians who feel that it is needless and ill-timed. A human rights activist, Emmanuel Onwubiko described the decision as an unprecedented crime against the economy, noting that it is wrong for an outgoing government to collect credit, start disbursement, and then shift implementation to the next administration.
For Professor of Economics at the Olabisi Onabanjo University, Ago-Iwoye, Sheriffdeen Tella, the Nigerian economy does not need to carry a burden of $800 million for subsidy removal and palliatives that are wrapped in fraudulent garments.
According to him, the nation’s economic managers are siphoning funds, and this needs to be probed.
He queried how palliatives were managed in the past, how figures being bandied were arrived at and why the nation should borrow in dollars for consumption?
Tella declared that with the nation already in debt traps, needless loans would only further aggravate underdevelopment and poverty.
Lead Director, Centre For Social Justice (CSJ), Eze Onyekpere also expressed the belief that there is no need for the federal government to
borrow the money in question.
Onyekpere said: “Besides, FG did not make it known to Nigerians before going ahead to borrow the money in the first instance, all what we heard was that an $800 million bank loan has been secured by government.
This shows lack of transparency and accountability in the borrowing process, which negates the Fiscal Responsibility Act. Under the Act,
the borrowing process should have been made open to public input and participation.
“To me and most Nigerians, the whole exercise shows absolute lack of capacity on the part of government. It would have been better if
government uses the subsidy money to settle provisions of infrastructure that would have galvanized the economy instead of borrowing.”
He bemoaned the fact that those at the helms of affairs in the country run public office as their private business.
On his part, Prof. Omo-Ogun Ajayi of the University of Calabar, Cross River State also faulted the government as being notorious for taking loans without applying them judiciously, adding that it is too late for a government that has just few days to go to be talking about loans.
He charged the incoming administration to think of a more sustainable palliative before removing the ‘so called’ subsidy. “If the
refineries are working, if we have security, if we have sustained energy, excellent road network, and public water supply, among others,
Nigeria will do with or without subsidy palliatives. This government has trust deficit and ought not be allowed to take another loan for whatever reason.”
Industry analysts have noted that since assuming office on May 29, 2015, President Buhari has spent more than N2 trillion on Social Investment Programmes (SIP). Yet, an estimated 133 million Nigerians, according to statistics, have sunk into multidimensional poverty, just as another 24.2 million people face acute food insecurity.
Also, in dissent, Oil workers, under the aegis of Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), have issued a strong warning to the Federal Government not to contemplate the removal of the subsidy without putting in place adequate local refining capacity.
The Union, in a communiqué at the end of its National Executive Council (NEC), meeting in Lagos, expressed disappointment in the failure of government to deliver on its promises of putting the three national refineries to optimal production before contemplating the removal.
NUPENG, however, insisted that the FG must ensure that the local refineries are put into full operation before such a major policy decision is taken in the interest of Nigerians.
The communiqué stated that: “NEC-in-Council also examined the recurrent discussions for the removal of subsidy from the Petroleum Motor Spirit (PMS), and expresses deep concerns over the failure of the Federal Government to do the needful as advised by organised labour that deregulation of the PMS should not be predicated on importation of the product because of all the obvious negative impacts on the socio-economic life of the people and nation in general.
“The Council-in-session expressed disappointment in the failure of the government to deliver on its promises of making the three national refineries work before contemplating the removal of the subsidy on this very important economic item in view of the enormous implication and the impact on the economic activities and considering the socio-economic importance of PMS to ordinary Nigerians.
“The NEC-in-session reaffirms that in as much as our Union is not averse to the removal of PMS subsidy, the Federal Government must ensure that our local refineries are put into full operation before such a major policy decision is taken in the interest of the generality of Nigerians,” it stated.
In his reaction, the Founder/CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf said the outgoing administration has no business disbursing any fund as palliatives for the removal of fuel subsidy.
According to him, “The whole idea of palliatives should be left for the new administration to handle. If we say it is the new administration that will remove the subsidy, let them come on board with their own framework for removing the subsidy.” He said this is because there is no way the new administration will come on May 29 and announce subsidy removal. “It is not possible. They have to sit down, look at the numbers for the palliatives and all of that, and also engage as a new administration. This is not something you do in a week or two, you need some time to be able to do them and lay down how you want to transit from the current policy regime that you met.”
Dr. Yusuf said the new administration couldn’t use the current social investment framework because there have been a lot of credibility problems around the social investment programme. “Even the register they are talking about, there is a whole lot of question marks around the register, how transparent is the register, what is the spread, is it equitable, how did they come about the so-called households? These are issues to be sorted out.
“They should just allow the new administration to handle the matter. I hear they have already got the money, I don’t think it is proper for them to disburse it. How many more weeks do they have, why the rush?”
