BREAKING :Economists to FG: How to use palliatives to mitigate effects of subsidy removal

 

As the nationwide strike action by the Organised Labour in protest against the Federal Government’s subsidy removal looms, economists and public analysts have listed different approaches to prevent a shutdown of the economy.

Firing the first salvo, Prof Ayo Teriba, CEO, Economic Associates said “The palliatives being contemplated should be given in cash to cushion the adverse impacts of subsidy removal to mitigate the impact of petroleum subsidy removal. It reduces the income of the generality of the people. However, whether it should give everybody the same sum is debatable because you are dealing with workers and people, who are on different salary scales and incomes. But I am in support of the principle that it should be limited to cash and that it should not be more than 6 months.

The conversation about many of the other items that Labour was clamouring for is something that the government would still get to like the minimum wage, which is a periodic issue and the transportation, energy costs and others would be tackled at another or different levels. 

“However, I do not subscribe to giving these 12 million vulnerable people equal sum of N8, 000 makes sense. Some may be of low income, others middle income, so, it would not be right and fair to give them equal sum.

That detail, government has to negotiate for the beneficiaries, because you are talking about the real value of income of the vulnerable people to the extent that they are not all on the same income level. They have to be relative to their loss to the incidence of the impact of subsidy removal. Government has to go into the details of the modality for giving the beneficiaries: how do you separate the middle income from the low income, because there’s no suggestion or data that all the 12 million people are low income.”

For, Alhaji Yushau Shuaibu, Publisher, PRNigeria; “I don’t really think this is any different from what obtained under the immediate past administration. May be the present Federal Government needs to explain the palliatives policy further, stating whether the target beneficiaries would be different. 

“Until it gives further information on the targeted beneficiaries and it is clear to the public, then one can assess.

“My worries are: these vulnerable people, many of them may not have bank accounts, how do we know they would be real people, how do we identify them, do they have National Identification Number, NIN, many don’t have bank accounts, not to talk about what about BVN. Is government strategy going to be different from the past one which attracted some criticisms? Is government going to use local councils or agencies to make sure it actually trickle down to the real vulnerable people?

“For me at this time, there are more questions than answers for now, the modalities for implementing or disbursing the funds are not yet clear.”

According to Prof. Uche Uwaleke, a Professor of Finance and Capital market at the Nasarawa State University, Keffi, government should consider non-cash palliatives instead of cash to ameliorate the effects of subsidy removal faced by Nigerians.

Uwaleke said, “This is rather a sub-optimal option. The government should look in the direction of non-cash palliatives.

“The President is equally seeking approval of $800 million soft loan from the World Bank as part of funds to cushion the impact of the subsidy removal.

“If we add this N500 billion to the N600 billion (assuming I & E average rate of N750 applied to the World Bank’s facility), that should give N1.1 trillion.

“Consistent with the principle of maximum social benefit in public expenditure, one way, in my view, to ensure this money reaches the grass roots is to divide it by 774 Local Government Areas (LGAs) which translates to about N1.4 billion and transfer this sum to each local government.”

“An optimal way to ameliorate suffering is via sustainable jobs. So, this money can be utilised as initial capital to establish massive skill acquisition centres in every LGA.

“The construction of these centres will generate huge job opportunities in the LGAs and help to reverse rural-urban migration.

“The management of the funds will be done by the communities themselves using traditional and religious institutions.”

Uwaleke urged the government to partner the private sector to address the challenge.

He said, “with the current galloping inflation rate (official figures are understated), what can N8, 000 do to a family of four in a month?

And this is meant for only 12 million families (about 48 million persons that is assuming they are adequately targeted and the National Social Register is clean and updated) in a country of over 200 million people

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CREDIT. Vanguard News .