Nigerian economist, Paul Alaje engaged in a discuss addressing the recent conundrum around the Buhari administration’s bid to remove subsidy from fuel prices and questions concerning it’s effect on the national economy and public welfare.
In an interview with ARISE NEWS on Wednesday, the Senior Economist with SPM Professionals stated concerns that the government has not put in place proper provisions and take required steps to assure the removal of subsidies would not have grave effects on the nation. He fears its impact on the people as the nation’s economy is ravaged by debt from various sectors.
Alaje pointed out that the establishment of subsidies in the first place is the main issue of the nation saying that the nation has no business with it, as it will only widen the pool of debts the economy already swims in.
“I will liken this to a young lad who has decided to sleep in an area full of mosquitoes. And he decides to take bitter drugs so he won’t get malaria. The problem we have in Nigeria is the decision and policies we have taken. As a matter of fact, in economic terms, Nigeria shouldn’t be paying for subsidy.
“Various economists will make their own predictions but be assured that subsidies will cost us over 3 trill for 6 months.”
It was stated that the nation consumes up to 66million liters per barrel a day with the government subsidizing about 202 naira liters per day. This will cost the government 400 billion liters per barrel in subsidies.
In 2019, the yearly debt servicing charges paid to the CBN was approximated to be N339 billion. Then N912 billion, N1.22 trillion and 1.64 trillion in 2020, 2021 and 2022 respectively. As stated by Alaje, the nation currently owes up to N70 million in debts with over 20 trillion in ways and means, and over 40 million in debt stock.
Paul Alaje further suggested means by which the incoming administration could practicalise to ease the nation’s economy when servicing annual debt stock. This includes ensuring functionality of local refineries side by side with private sector refineries, extension of narrow gauge lines for aggregators to ensure stable food prices for the betterment of communities that depend on transportation to disperse crop resources and finally, provision of palliatives to ease impact of subsidies removal in poor communities.
The economist advised incoming government that though it may be impossible for the incoming administration to “run without borrowing”, placing focus on increasing national revenue should be the goal.
“Truth is if we want to generate revenue, which is what this admin needs, the next admin also need. We need to know where the monies are. Unfortunately, the equipment to discover what revenue people are generating, especially, those that are in the tech. industry and when I say tech, I’m not talking about start up, I’m talking organizations that have gone beyond our county. Ones that have gone beyond Nigeria.
“Where is this money? Quite a number of them in our country, hat are returning trillions and trillions of Naira but if you consider the environment where they work, of course that have concerns of how truthful government. Will be and trust they have in Nigerian gov to provide necessary amenities.
“I’m not against the removal of subsidy but in removing subsidy, don’t cause bigger challenge.”