Introduce Credible Palliatives to Cushion Effects of Subsidy Removal, ICAN Tells FG

Wale Igbintade

The Institute of Chartered Accountants of Nigeria (ICAN) has called on the federal government to introduce credible palliatives to cushion the impact of subsidy removal on the most vulnerable population beyond the civil service.

The institute stated this in a statement signed by its Registrar/Chief Executive, Professor Ahmed Kumshe.

It also recommended an 11-point action plan to the federal government following the removal of fuel subsidy.

While commending the bold step taken by the administration of President Bola Ahmed Tinubu following the recent removal of subsidy on petrol and the mixed reactions generated across the different sectors of the country, the Institute also called for effective consultation, and communication with all relevant stakeholders.

It stated that effective consultation and communication with all relevant stakeholders is critical for the introduction and implementation of any major policy, as it will facilitate buy-in broad support and ensure ease of implementation.

The statement noted that while it would have been ideal for this to happen prior to the removal of the fuel subsidy, the federal government should be commended for taking necessary steps to engage and manage various stakeholders.

It added that stakeholders’ engagement would build trust and ensure that the process is inclusive.

“In this regard, the government should design and implement palliatives for low-income earners especially in cities and towns where the cost of living will rise much higher. It should introduce policies that will bring down the cost of transportation and food.

“Palliatives should be implemented at both the national and sub-national levels. Care should be taken to measure the cost of palliatives to be introduced to avoid re-introducing another form of subsidy”, the statement added.

The institute however, frowned at borrowing of $800m for palliatives, adding that savings from the subsidy removal should be used for palliatives and save the country from further debt and rising debt service costs.

The statement read: “We do not support the borrowing of $800 million for palliatives when the savings from the subsidy removal can be used for this purpose, saving the country from further debt and rising debt service costs.

“For SMEs, a palliative may be to put on hold the recently introduced tax increases, while granting tax rebates and investing in infrastructure.

“Notwithstanding the full deregulation, there is still the need for full transparency and accountability of all activities within the oil and gas sector. A situation where the public does not know the exact daily consumption of fuel is inexcusable.

“All individuals and organisations that may have been involved in subsidy corruption should be investigated and punished while established proceeds of such crimes should be recovered. There should also be transparency on how fuel prices are determined in the future.

“The relevant regulators should therefore set in motion a framework to ensure full transparency leveraging on technology. This will also provide useful information for any necessary interventions by the government in the future as envisaged in the Petroleum Industry Act. Chartered accountants are well placed to help the government in all aspects of accountability and transparency in the oil and gas sector.

 “Political office holders should lead by example in making the necessary sacrifice to restore the country back to the path of fiscal buoyancy. This is necessary to show that leaders are making sacrifices too and not just the ordinary citizens being overburdened. Matters such as security votes and general cost of governance should be addressed. Government should demonstrate fiscal prudence and financial discipline rather than extravagance amid widespread poverty.

 “The savings from the subsidy removal and subsequent accretion to the federation account should be applied in a manner that will optimise the benefits to the people in view of their sacrifices. According to the World Bank and IMF, Nigeria spends an average of $23 per annum on every Nigerian on education, compared to S$32 in Mali, $88 in Ghana and $350 in South Africa.”