The Public Affairs Service of CMC Connect LLP, a leading communications consultancy, has counselled the Bola Tinubu administration to channel fuel subsidy funds into investment in public infrastructure, education, health care, agriculture, and jobs creation, among other critical areas.
In its advisory on the fuel subsidy tango between the government, labour and the citizens, the firm, which however disagreed with the timing since subsidy withdrawal was meant to commence on 1st July, said that the Tinubu administration must “show capacity to get Nigeria working again”.
It said that Nigerian state and its officials have work to do to, particularly in winning the people over given the trust deficit of governments in Nigeria. “Their trust deficit burden is such that even when they come up with good policies, the citizens hardly believe or take them seriously. They need to measure their trust barometer, and work on closing the gap”, CMC Connect said.
As part of its recommendations, the advisory contained a list incentives and quick wins to reflate the economy and ensure business sustainability.
The consultancy also said that labour should be constructively engaged to avoid friction. “NLC must be ready to shift ground in the interest of what the government is set to achieve”, it advised, adding: “The new government must live up to citizens’ expectations by investing proceeds of the present pains for future gains”.
The full statement, titled: “Fuel subsidy removal: Gains and pains for Corporate Nigeria”, read:
THE GAINS
I. Subsidy removal will save Nigeria N400 billion monthly as Nigeria consumes 66.5 million litres of PMS daily.
II. It will free up resources for other sectors of the economy.
III. It will ensure more private sector participation in the production and importation of petroleum products which will open up the market and allow government to focus on other key sectors of the economy.
IV. It will lead to massive jobs creation
V. The market will be saturated, no more shortage, no more cartel, pricing will become competitive. Market forces will drive down the prices of petroleum products in the long run as witnessed in the telecom sector.
VI. There will be price stability, which will reduce inflation.
VII. The capacity of Dangote Refinery to produce for local market from August 2023 will lead to availability of forex for private sector importation of raw materials.
VIII. The workforce will be free from the long queues often experienced in getting PMS
THE PAINS
I. Subsidy removal is expected to take full effect on 1st July 2023 but it is being wrongly executed from 31st May 2023. Nigerians and government are being cheated.
II. New fuel price regime has thrown the nation into hyperinflation.
III. It reduces values of Naira and purchasing power of Nigerians, making cost of living unbearable.
- It further pushes Nigeria downward on the global scale of Ease of Doing Business.
- It hampers economic growth, reduces household income, and income to business.
- The pronouncement has resulted in further depreciation of the Naira at forex market.
VII. It further immiserates the citizenry and erase any glimmer of hope they have in the Tinubu administration.
VIII. The spiral effect of the subsidy removal may end up contradicting what the President is trying to achieve with his promise of peace and economic renaissance.
IX. Trade unions, students’ union and human rights groups are already on collision course with the new government, which may erode people’s confidence and trust in the new government.
OUR RESOLUTIONS
1. We believe in the removal of subsidy; it is long overdue
2. The subsidy funds should be re-channelled into better investment in public infrastructure, education, health care, agriculture, jobs creation etc.
3. In the immediate, government must show capacity to get Nigeria working again.
4. Government should come up with incentives and quick wins to reflate the economy in order to ensure business sustainability.
5. The Nigeria Labour Congress should be constructively engaged to avoid friction.
6. NLC must be ready to shift ground in the interest of what the government is set to achieve.
7. The new government must live up to citizens’ expectations by investing proceeds of the present pains for future gains.
8. Government and its officials have work to do here, especially on its perceived trust deficit. Their trust deficit burden is such that even when they come up with good policies, the citizens hardly believe or take them seriously. They need to measure their trust barometer, and work on closing the gap.
9. The private sector should be more encouraged to tap into the investment opportunities within the value chains of subsidy removal.
10. Businesses must come up with strategic plans to weather the storm.
a. They must device more creative and cost-efficient ways of working.
b. Working remotely for businesses that doesn’t require physical presence is no longer a choice.
c. Businesses and individuals must embrace electronic powered cars for their operations.
d. Adopt cost efficient alternative sources of energy to power homes and business operations. Renewable energy sources such as: solar panels, wind or gas powered energy generation system are better options to diesel or PMS powered energy sources.
