TOWARDS SUSTAINABLE PALLIATIVES  

The palliatives must be well thought-out and comprehensive

The removal of subsidy in the downstream sector of the petroleum industry is easily the most potent economic policy measure that will define the reputation of President Bola Ahmed Tinubu and his administration. With pump prices jumping from N195 to a whopping N550-N600 depending on where you are in the country, land transportation costs have automatically jumped in accord. Food inflation and inflation on other living cost items are bound to follow. The inflationary spiral could be much worse. All this in an economy that the last administration left in tatters. While palliative measures are being discussed with representatives of organised labour, we do not yet have in place the leadership of the government agencies that would implement them.  

All arguments around the fuel subsidy issue have come down to their hardship effect and how to ameliorate them. The matter of appropriate palliatives has come to occupy centre stage in public discourse on the matter. Labour is pushing for a substantial increase in the minimum wage now at a miserable N30,000 for those who have jobs. Additional palliatives in the form of subsidized transportation are being advocated. Some state governments have gone ahead to drastically reduce the number of working and schooling days per week.

Regrettably, most of the measures now being canvassed are either familiar, short term or lazy. Reduction of workdays per week will erode the abysmal productivity level of the work forces in the states concerned. Reducing the number of schooling days per week will worsen our already sad educational standards while freeing more youngsters to a bulging army of mischief and criminality. Similarly, the token addition of a few more buses to existing stocks in some urban areas will not substantially ameliorate what is obviously a looming national mobility crisis. An economy with constrained mobility is a looming disaster. Nor does a reduction in bus fares in a few cities address the broad transportation price hike for the broad majority of Nigerians.

Most of our people in rural and semi urban areas move around on tricycles, rickshaws and motor bikes which are all powered by petrol now selling at astronomical prices. Food items and agricultural produce are moved to markets on these devices. Therefore, the contemplated palliatives in order to be sensible and meaningful must be well thought-out, comprehensive and sustainable. The discussion must see the economy as an integrated complex with urban and rural networks. More importantly, a palliative regime, to be meaningful on a long-term sustainable basis, must take into consideration all the inflationary factors that are likely to become active in the economy soon. It is therefore important that concrete measures be put in place before so that the pains of today can ultimately engender shared prosperity.

At the risk of repetition, we reaffirm THISDAY endorsement of the action taken by President Tinubu on fuel subsidy removal. From inception 28 years ago, we have been consistent in highlighting the fact that fuel subsidy is a by-word for waste and corruption. But as we stated recently, a major economic decision with implications for the social wellbeing of most Nigerians should also not be handled with levity. The inflationary impact and the multiplier effects that place a disproportionate burden on the poor are legitimate concerns, especially in an economy with high incidence of poverty, erratic power supply and inadequate public transport system.  

We support ongoing negotiations and engagements between labour, government, and employers. Realistic anticipatory minimum wage adjustments are in order and overdue. There ought to be a formula with a self-adjusting sliding scale for the future so that increases take place automatically as inflation and exchange rates move up or down. In addition, subsidized transportation vouchers need to be introduced for workers in the busiest urban areas.  

While it is anticipated that savings from the subsidy removal will be ploughed back into improved social services like education and healthcare, there need to be concrete steps to ensure that this increased investment takes place. Savings from the subsidy removal should not just free up more funds for corruption and waste as we have seen in the past.