In a bid to mitigate the economic fallout resulting from the removal of fuel subsidies and surging consumer prices due to high inflation, the Federal Government of Nigeria has embarked on a significant spending spree, which is now projected to reach a staggering N3.27 trillion. This massive allocation for palliatives and loans underscores the government’s efforts to provide relief to Nigerian citizens and businesses grappling with the consequences of this major policy shift.
The range of palliatives includes a diverse array of initiatives, with a substantial allocation of N100 billion earmarked for the acquisition of 3,000 units of 20-seater Compressed Natural Gas (CNG)-fuelled buses. These buses are expected to help alleviate transportation challenges and reduce the cost of commuting for many.
Furthermore, a substantial N200 billion is designated to boost agricultural production, with the goal of shoring up the nation’s food supply and reducing the impact of rising food prices. Additionally, N75 billion has been set aside to support manufacturers, N125 billion for micro, small, and medium-sized enterprises as well as the informal sector, and N185 billion allocated as palliatives for the states.
The government’s comprehensive approach also includes allocating N1 trillion for student loans and various other programs, demonstrating its commitment to supporting education and future opportunities for Nigerian youth.
In response to the removal of fuel subsidies and the consequent increase in petrol prices, the Federal Government announced a N35,000 monthly allowance for federal workers, which is expected to cost N315 billion over six months. This measure aims to ease the financial strain on government employees.
Moreover, a substantial allocation of N1.13 trillion is dedicated to providing financial support to 15 million households, offering them N25,000 per month for three months from October to December 2023. This substantial investment is designed to counterbalance the increased cost of living.
The government has also shown its commitment to supporting vulnerable and low-income households, with plans to transfer N8,000 monthly to the bank accounts of 12 million such households for six months.
Despite these efforts, the World Bank has expressed concern about the potential impact on poverty levels, warning that 7.1 million Nigerians could fall into poverty if the government does not adequately compensate or provide palliatives.
Additionally, there is a controversial allocation of N70 billion aimed at lawmakers to enhance their working conditions, which has attracted criticism from various quarters.
In a bid to further alleviate economic hardships, the government plans to provide a non-interest loan of N50,000 to 1.5 million market women under the Government Enterprise and Empowerment Programme, with the aim of improving their businesses and expanding their capital.
All these measures combine to reach a staggering total of N3.27 trillion in spending by the Federal Government, reflecting its determination to support the Nigerian people and businesses during this challenging period.
Despite initial claims of savings following the subsidy removal, oil marketers suggest that the government may end up spending approximately N1.68 trillion as a subsidy on petrol from September to December due to the lack of price adjustments since August. This expenditure is driven by the depreciation of the Naira against the US Dollar and increased global crude oil prices.
While the government’s efforts are extensive, some voices in the business and economic sectors argue that more measures are needed to effectively counteract the impact of fuel subsidy removal. These debates highlight the complex and multifaceted challenges the government faces as it seeks to balance economic sustainability with the welfare of its citizens.
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