Election Questions — Fuel Subsidy
It’s unfortunate that economic issues are relegated during the political season. With the 2023 elections approaching and the candidates emerge from the political parties, it is time to ask the tough questions and make our decisions based on where they stand on these sensitive issues. I will be calling attention to these important questions in my #ElectionQuestions series. This is the first in the series.
As it stands, it would not come as a surprise to me if President Muhammadu Buhari called those around him after the APC presidential primaries and said,
“Well done and take care.”
And then called it a day over the affairs of the country. His body language shows that he could not be bothered.
With the fuel subsidy albatross, it’s incredulous to believe the leader of the country would take that approach but it is what it is.
Everyone knows it’s dragging the country back but few want to touch the subject.
It’s an emotional topic.
Not a few people have told me that fuel subsidy is the only dividend of democracy they enjoy. Despite Nigerians enjoying cheaper prices than many oil countries in the world, they consider it a birth right.
For some, the question is, what is the point of removing fuel subsidy when the savings would be looted? For others, there is no way to remove subsidy without inviting inflation (as if what we have been having since 2016 isn’t inflation).
However, reality does not care about emotions. Fuel subsidy would have to go.
Nigeria spends an unbelievable amount of money on fuel subsidy. The amount spent on fuel subsidy monthly has risen from N60.39bn in March 2021 to N245.77bn in March 2022. That’s an increase of 307%. At this rate, it is estimated that it could balloon to N360 billion soon. By the end of this year, Nigeria is projected to spend N6 trillion on fuel subsidy alone. For context, Nigeria plans to spend N1. 29 trillion on education. Judging by past budget performance, we are likely to spend only about 60% of that.
So we’d spending more than 7 times on subsidy what is spent on education.
In what world does this make sense?
If you consider that the economy is so much in comatose that IMF has said we’d be spending 100% of our revenue on debt servicing alone by 2026 (we currently spend 86%, South Africa does 20%), then you know that fuel subsidy would not continue.
Now that you know what is at stake, you should be interested in knowing what your anointed presidential candidate thinks about fuel subsidy.
What is his understanding of fuel subsidy?
Will he stop fuel subsidy?
How will he stop fuel subsidy?
What will he do with the savings from fuel subsidy?
How will he avoid Goodluck Jonathan-like nationwide protests over fuel subsidy removal?
These are the questions.