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The federal government has finally announced some palliatives measures for the states and the Federal Capital Territory to cushion the effect of the removal of petrol subsidy. Already, there are doubts over the effectiveness of the handling of the palliatives by the state governors and how far the palliatives can go in ameliorating the unintended consequences of the removal of petrol subsidy.
By Tennyson Sampson
THE hike in petrol prices has been blamed for the high food prices being experienced by millions of Nigerians across the country. The high transportation cost, which is also linked to the soaring prices of food and products triggered off by the removal of the subsidy on petrol by the federal government in May this year.
Unfortunately, immediately President Bola Tinubu announced on May 29 2023 that “petrol subsidy is gone”, the price of petrol was reviewed upwards from N191.8 to N526.7 per litre by the Nigerian National Petroleum Company Ltd. Although President Tinubu announced in his inaugural speech that with the removal of subsidy on petrol, the savings made from the new policy would be channeled to improve the lives of Nigerians and invest in infrastructure, but it has been over 80 days since the subsidy removal declaration was made and Nigerians are yet to experience any improvement in their lives. Rather they lament and agonize daily over the hardship which the policies of the federal government have brought to bear on their lives.
For instance, many analysts have described the current food prices as worse than what Nigerians experienced in 2019 when the country shut its borders from neighbouring countries during the era of Covid-19 pandemic. They also added that the current food prices and insecurity in the country have pushed up inflation rate to over 24 per cent in August this year.
The recent survey on the prices of some selected foods and other products in Lagos, showed that 1 kilogram (KG) of Beef was selling for N2, 479 in March 2023, while it was sold for N1, 982.92 in March 2022. And the average price of 1kg of Tomato was N466.60 in March 2023 whereas it was sold for N409.96 in March 2022.
It also showed 1kg of brown Beans sold for N 596.96 in March 2023 as against N594.15 in February this year whereas it was sold for N527.66 in March 2022. And 1kg of a tuber of Yam was sold at about N443.02 in March 2023 whereas it was sold for N378.59 in March 2022. The average price of Vegetable oil (a bottle) stood at N 1,220.62 in March 2023 and N1, 196.68 in February 2023 where as it was sold for N970.29 in March 2022.
Some traders, who spoke to Realnews on high food prices lamented that the prices of foodstuffs like rice, yams, beans, garri, plantain, yam flour, semovita, corn, frozen chicken, turkey and palm oil have become unaffordable and that the prices increase daily due to many faulty policies of the federal government.
In his comments, Christopher Obia, a foodstuffs trader at Mile-12 Market, said that there had been a slight increase in the prices of some food items between March 2023 and August 2023 with current prices likely to go up soon.
“We sell 10kg of semolina between N7, 000 and N8, 000 instead of N6, 000 a few weeks ago. Also, a bag of the short grain of rice goes for N38, 000 and the long grain of rice goes for N41, 000 as against N32, 000 and N37, 000, respectively before now,” he said.
In the Magboro area of Lagos-Ibadan expressway, semolina, which was previously sold for N7,000 a bag has gone up to N7,300, while 1kg of (rose) from N7500 to N800, while a carton containing 20 pieces of spaghetti is sold for N10,500, reflecting an increase of N1,500 from the previous price.
However, the National Bureau of Statistics, NBS, has said that the headline inflation rate rose to 24.08 percent in July 2023 as against 22.79 percent recorded in June 2023.
“Looking at the movement, the July 2023 headline inflation rate showed an increase of 1.29 percent points when compared to June 2023 headline inflation rate.
“On a year-on-year basis, the headline inflation rate was 4.44 percent points higher, compared to the rate recorded in July 2022, which was 19.64 percent.
“This shows that the headline inflation rate (year-on-year basis) increased in July 2023 when compared to the same month in the preceding year (i.e., July 2022),” the NBS said.
It stated that on a month-on-month basis, the headline inflation rate in July 2023 was 2.89 percent — 0.76 percent higher than the rate recorded in June (2.13 percent) and that in July 2023, on average, the general price level was 0.76 percent higher relative to June 2023.
The NBS blamed the rise in the food index on increases in prices of oil and fat, bread and cereals, fish, potatoes, yam and other tubers, fruits, meat, vegetable, milk, cheese, and eggs.
“On a month-on-month basis, the food inflation rate in July 2023 was 3.45 percent, this was 1.06 percent higher compared to the rate recorded in June 2023 (2.40 per cent). The rise in food inflation on a month-on-month basis was caused by increases in prices of bread and cereals, potatoes, yam and other tubers, fish, oil, and fat,” the report said.
Meanwhile, the federal government has announced N5 billion financial support as palliative to each of the 36 states and the Federal Capital Territory to cushion the effect of the removal of petrol subsidy. It also set up an ad hoc committee to engage with the leadership of labour unions on the issues palliatives and interventions.
According to the statement issued by the office of the vice president after the meeting of the National Economic Council, NEC, chaired by Vice President Kashim Shettima at the State House, Abuja on Thursday, August 17, 2023, the members of the committee comprise the Nigerian Governors Forum (NGF) Chairman, Governor AbdulRahman AbdulRazaq of Kwara State; Governor of Anambra State, Chukwuma Soludo; Chairman of Progressives Governors Forum, Hope Uzodinma of Imo State; PDP Governors Forum Chairman, Bala Mohammed of Bauchi State, and Abia State Governor, Alex Otti.
It stated that the Council also received progress reports on the ongoing nationwide distribution of rice, grains, fertiliser, and other items to states and N5 billion financial support, provided by the federal government and commended the Central Bank of Nigeria, CBN, and the National Emergency Management Agency, NEMA, for their interventions.
“The committee will liaise with the leadership of labour unions in the country to find a way forward on the emerging issues in the interest of the nation,” it added.
Since the announcement of the removal of petrol subsidy by President Tinubu, the Organised Labour had disagreed with the government over that decision without consultations with the stakeholders and it has not been able to reach any agreements on resolving the unintended consequences of the petrol subsidy removal. The Organised Labour had recently organized successful protests nationwide and are threatening a national strike soon if their requests for the upward review of the national minimum wage and the rehabilitation of the refineries among others are not resolved.
While the involvement of state governors in handling of the palliatives has been criticised by the Organised Labour and some Nigerians for lack of faith in the ability of these governors to administer the palliatives without resorting to political considerations, some others are proposing other ways to alleviate the suffering of millions of Nigerians.
For instance, they are calling for the establishment of adequate corrective measures to mitigate the effects of fuel subsidy removal, which include increasing agricultural investment and transportation subsidies to minimise the impact on food security, establish safety nets like subsidised education and healthcare services for low-income citizens in order to bridge the widening income inequality in the country.
In addition, they noted that another major effect of the subsidy removal is the increased transportation costs due to the high fuel prices, directly impacting agricultural production and Agricultural inputs and production and called for increase budgetary allocation to the agricultural sector as well as tackle insecurity across the country, which is preventing farmers from going to the farms. They also made an urgent case for the reopening of the nation’s land borders shut many years ago due to the Covid-19 pandemic as well as check trans-border arms smuggling and diversion of petroleum products.
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August 21, 2023 @ 12:54 GMT|
Tags: Alex Otti. Hope Uzodinma President Bola Tinubu Vice president Kashim Shettima
