Subsidy Removal, Painful Surgery to Save Economy, Says Olawepo-Hashim

*CPPE urges FG to roll out palliatives

Dike Onwuamaeze

A former presidential candidate and business man, Mr. Gbenga Olawepo-Hashim, has appealed to the labour Movement and other social groups to accept the removal of the subsidy on petroleum product as a painful surgical procedure instituted to excruciate a dangerous cancerous cell in the life of a patient in order to save the critically ill.

However, barely two weeks after President Bola Tinubu removed the contentious fuel subsidy, the Centre for the Promotion of Private Enterprise (CPPE), has urged the federal government to reciprocate the thoughtful stance of the organised labour unions by speedily rolling out measures that would mitigate the pains of the removal of fuel subsidy on the Nigerian masses.

In a statement from his media office in Abuja, yesterday, Olawepo-Hashim explained that since the subsidy was removed already in the 2023 budget by the previous administration, it was now obvious because the market price was reflected and the entire market had absorbed the increase with prices going up for different items.

According to him, “even if the subsidy is reversed, prices of goods and services will not be reviewed to their previous levels and it would be a loss to the economy.”
He added that, “there cannot be any sensible talk about undoing what has been done but managing the pains of the adjustment on vulnerable groups such as Labour, who do not have the price mechanism for their services to absorb the pain.”

He noted that “as an entrepreneur, what I have done in my business is to pay immediately, a transport subsidy across board; same amount to all my workers without prejudice to their salary scale. I believe the Government and all employers of labour will do the same.”
He maintained that, “there are far more benefits of removal of the subsidy to the economy, chief among which include massive investment in the mid and downstream sectors of the economy that hitherto have been locked out due to the subsidy regime.”

These sectors, he argued, typically create millions of jobs and remain a critical section that add value to the economy.
“In the past I have been a strident campaigner against removal of petrol subsidies because I had no trust in the ability of most of the previous governments to manage the gains of the exercise for the benefit of all Nigerians.
“The times are different now. Nigeria has a new political-economic manager in President Bola Ahmed Tinubu, we can trust his ability to manage the exercise in the interest of all.

“Comrades, we have marched together in the past three and a half decades saying no to subsidy removal, but it is time to shift grounds; let us only insist on welfare and protection for the working class in the midst of this adjustment,” he said.
Olawepo-Hashim maintained that Tinubu remains an ally of the working class, adding that, “it is time to move forward together in a direction that is well articulated in the Renewed Hope which Nigerian electorates democratically endorsed.”

But the Chief Executive Officer of CPPE, Dr. Muda Yusuf, yesterday in a press statement titled “Fuel Subsidy Removal: Ensuring Inclusive, Impactful and Sustainable Palliative Measures,” noted that the sufferings faced by Nigerians were real and affecting the citizens across all segments of our society, including those in the public service, private sector, informal sector, artisans, students, Small and Medium Enterprises (SMEs), the unemployed, the aged, pensioners etc.
Yusuf, therefore, emphasised that the mitigating measures should be holistic and inclusive and should be driven by a combination of direct interventions, fiscal policy measures and monetary policy actions.

He said: “The citizens have demonstrated an incredible understanding, tolerance, patience and resilience. The government cannot afford to overstretch this gesture and cannot afford to be perceived as taking them for granted. Reciprocity by the political leadership at all levels is urgent, exigent and crucial.
“The hardship mitigating measures could be classified into immediate, short term, medium and long term.  Such responses would send the right signals to citizens and demonstrate government’s sensitivity to the devastating impact of the subsidy removal on the poor.”

Yusuf added that in many instances, transportation costs have gone up by between 20 per cent and 50 per cent.
“For most citizens, transportation is critical to their survival.  The hike in transport fares and the corresponding inflationary effect is already posing a threat to the livelihood of many, both within and outside the public sector. Wage earners, small business owners, informal sector operatives, artisans and the unemployed are all very vulnerable in the current circumstances.
“This is the context in which the government needs to urgently respond to the current crisis, focusing on the scope of impact, effective targeting, inclusion and the right messaging.

“Immediate panaceas need to be activated, not just with respect to transportation costs, but the surging cost of living generally. The agreement signed with labour did not reflect the desired urgency of the mitigation measures. It is also scanty on immediate actions and quick wins, which are needed to immediately assuage the feelings of the ordinary citizens and stabilise the social environment.”  

The CPPE also recommended to the federal government the following interventions in the interest of social justice and social stability.

Some of these measures are the acceleration of the Presidential Power Initiative to upscale power supply in the country to reduce the demand for petroleum products for purposes of electricity generation by households and businesses and ending the pricing of gas in Dollars for domestic use, especially for manufacturers.

It said: “Necessary urgent steps must be taken by government to put an end to this ‘dollarisation’ framework to ensure a moderation in energy cost for the manufacturing sector.

“Government should take urgent steps to reduce the cost of LPG to households. Recent reduction in the LPG price is laudable, but the price reduction trajectory should be sustained to ease pressure on households and prevent deforestation.”

The CPPE also advocated that import duty, VAT and other port charges on Semi Knocked Down parts for the assembly of mass transit buses should be waived.

It also called for “drastic reduction in import duty on intermediate products for food processing industry in the country.  The government should engage major food processing companies to determine specific policy options for the realization of this objective. This would moderate food inflation.”

The CPPE further called for the, “abolition of all forms of taxes and import duty on renewable energy equipment to boost the adoption of renewable energy by households and SMEs.  Such waivers would make renewable energy adoption affordable.  This reduction should cover relevant equipment like solar panels, inverters, batteries etc.  This would make citizens less reliant on the electricity grid.”