FG considers N3.27tn expenditure on palliatives and loans

FG considers N3.27tn expenditure on palliatives and loans
FG considers N3.27tn expenditure on palliatives and loans

The Federal Government’s total spending on palliatives and loans to mitigate the effects of fuel subsidy removal is projected to reach a substantial N3.27 trillion.

These measures were implemented to alleviate economic challenges faced by Nigerians and businesses following the removal of fuel subsidies and the subsequent surge in consumer prices due to high inflation.

These palliatives encompass a range of initiatives, including the acquisition of 3,000 units of 20-seater CNG-fueled buses at a cost of N100 billion, N200 billion allocated for agriculture production support, N75 billion for manufacturers, N125 billion for micro, small, and medium-sized enterprises, and the informal sector.

FG introduces palliatives

N185 billion was earmarked as relief for states, and a significant N1 trillion was dedicated to student loans and other programs.

Additional programs include N315 billion to cover federal workers’ N35,000 allowance for six months, N1.13 trillion to support 15 million households at N25,000 per month from October to December 2023, N70 billion designated as palliative measures for lawmakers, and a N75 billion loan facility extended to 1.5 million market women.

President Bola Tinubu’s announcement on May 29, 2023, declaring the removal of fuel subsidies led to significant economic disruption, with fuel prices more than doubling since then, resulting in a corresponding escalation in commodity prices and inflation.

Following this removal, the World Bank raised concerns that 7.1 million Nigerians might fall into poverty if the Federal Government didn’t provide adequate compensation or palliatives, potentially increasing the number of impoverished citizens to 100.9 million.

The World Bank report cited the sharp increase in petrol prices as a major factor.

In response, the Federal Government initiated a series of loans and palliatives for Nigerians, with President Tinubu announcing the first set of relief measures on July 31.

A N500 billion palliative plan was unveiled to address the consequences of fuel subsidy removal.

The agricultural sector would receive N200 billion to cultivate 500,000 hectares of farmland and promote year-round farming, while N315 billion would go toward paying federal workers’ N35,000 allowance.

In addition, a significant N1 trillion was allocated to student loans and various programs.

To cushion the effects on states, N5 billion in relief measures was announced for each state, in addition to the distribution of 180 trucks of rice.

This financial support would assist state governments in acquiring essential food supplies, such as bags of rice and maize, as well as fertilizers.

Regarding the loan facility for market women, the Federal Government would extend a non-interest loan of N50,000 to 1.5 million market women under the Government Enterprise and Empowerment Programme, aimed at enhancing their capital and expanding their businesses.

This initiative, known as the Iyaloja Fund, is scheduled to launch by October 17.

This comprehensive set of palliatives and loans offered by the Federal Government represents a total commitment of N3.27 trillion.

While the removal of fuel subsidies has saved considerable funds, the Federal Government faces the possibility of spending around N1.68 trillion on petrol subsidies from September to December due to the unadjusted petrol prices since August.

The continued depreciation of the naira against the US dollar and rising crude oil prices have raised concerns.

Organizations like the Manufacturers Association of Nigeria and the Lagos Chamber of Commerce and Industry have emphasized the need for additional measures to counteract the fuel subsidy removal’s impact.

While commending the government’s interventions, the Manufacturers Association of Nigeria has called for an end to challenges like calculating import duties for production inputs at the floated exchange rate and denominating gas prices in dollars, which contribute to rising production costs and hinder the manufacturing sector’s performance.