Business

‘More expensive than subsidy?’ — Is FG’s N5,000 transport grant dead on arrival?

Published

3 years ago

November 27, 2021

Zainab Ahmed, minister of finance, budget, and national planning, said on Tuesday that the federal government would remove fuel subsidy by 2022 and replace it with a N5,000 grant for the poorest Nigerians. According to her, about tens of millions Nigerians would benefit from the transport grant.

Following the revelation, Nigerians online and offline have weighed in on the policy, raising quite a number of reservations about the policy, which is billed to take off sometime between February to June 2022.

While some say the policy is inevitable, following the fiscal condition of the Nigerian states, others differ, emphasising that Nigeria is an oil-producing country and should not have to pay so much for petrol.

TheCable on Wednesday reported that Nigeria had the third-lowest petrol pump price in Africa, after Angola and Algeria. This position strengthens the argument for keeping oil subsidies — if other oil-producing states are doing it, Nigeria can keep subsidies too.

On the flip side, some Nigerians believe the removal of subsidies is long overdue. This school of thought claims that Nigeria is at least 10 years late to the party. They see subsidies as unsustainable, inefficient, and responsible for the lack of competition in the oil sector.

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However, a large chunk of both schools of thought does not entirely believe in the idea of giving N5,000 transport grants to the poorest Nigerians. Some say the grant will be more expensive than the existing fuel subsidy and would have an even worse impact on state finances.

Zainab Ahmed taking questions at NDU launch event

TheCable has reviewed all we know about this policy to draw informed conclusions on the subsidy removal and replacement plan.

You may have seen claims online suggesting that N5,000 for 40 million Nigerians monthly, would amount to N2.4 trillion, which is more than the existing subsidy payments of about N1.8 trillion per year. Mathematically, this is correct. But according to what we know about the policy, this is not exactly the case.

Speaking at the launch of the Nigeria Development Update (NDU) hosted by the World Bank, the minister of finance, said the number of beneficiaries would vary between 20 million and 40 million.

During her opening speech, she said: “Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, we are working with our partners on measures to cushion potential negative impact of the removal of the subsidies on the most vulnerable at the bottom 40% of the population.

“One of such measures would be to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million deserving Nigerians.”

For 30 million Nigerians, the cost of maintaining this grant per year will be N1.8 trillion, which is also as bad as the subsidy payment itself. Going by what the minister initially said, the cost of the grants is worse. This drives the argument for keeping subsidies.

However, the minister also said during the panel discussion that the grant may not get to all 40 million Nigerians, suggesting that the final numbers will be dependent on available resources. This means a lot less than N1 trillion may eventually be spent on delivering the policy.

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TIME: FEBRUARY OR JUNE 2022?

Another challenge with the project is the timeline; questions abound on when exactly this project would kick-off. According to the Petroleum Industry Act, subsidies should be removed by February 2022. But according to the 2022 budget, subsidies will be paid till June, 2022.

Two contradicting pieces of legislation? Not exactly. When the PIB was signed by President Muhammadu Buhari, the president set up an implementation committee to execute PIA within the space of one year.

The committee, in line with the ministry of finance, budget and national planning, made room for subsidies till June 2022, but the removal could be as early as February to save the government some subsidy funds.

Will December, January, February be enough time to convince Nigerians on subsidy removal? Time will tell.

The beneficiaries would be identified as they were with other SIPs under the Buhari government, but payments will not be made physically like this

HOW WOULD THE 40M NIGERIANS BE SELECTED?

Yes, this is a recurrent question. But according to the minister, the selection process will build on the existing conditional cash transfer register used by the office of the vice-president in administering payments to poor and vulnerable Nigerians in the past.

The minister said the government will be working with state governments and non-governmental organisation (NGO) to ensure that the people who get the grant are the ones who actually get the funds.

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DEAD ON ARRIVAL?

The World Bank recommended that Nigeria “implement a large-scale (covering 25% to 50% of the population) and time-bound targeted cash-transfer program to mitigate impacts of high inflation and the PMS subsidy removal.”

It also asked the government to “redirect savings from PMS subsidy to finance primary health, basic education, and rural connectivity projects” with the country.

The bank estimates that subsidy savings could be as high as N3 trillion per year. If that is the reality, then Nigeria can go ahead with the cash transfers, and still have some money to finance primary health, basic education, and rural connectivity projects.

However, going by 2019 figures, subsidy savings will be less than N2 trillion, while N5,000 to 40 million Nigerians will amount to N2.4 trillion. At that rate, there will be no savings for other projects recommended by the bank.

Dead on arrival? A lot will depend on the final implementation plans.

TheCable

Related Topics:Arrival dead expensive FG grant subsidy transport Zainab Ahmed

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Aviation

Aviation workers threaten nationwide airports shutdown over Customs officer assault

Published

2 hours ago

March 25, 2025

Trends Admin

Aviation workers threaten nationwide airports shutdown over Customs officer assault

Aviation unions have announced plans to shut down airports across Nigeria starting March 31 in protest against the failure to remove a customs officer who allegedly assaulted the Director of Aviation Security at the Federal Airports Authority of Nigeria (FAAN).

In a joint statement signed by Ocheme Aba (NUATE), Frances Akinjole (ATSSSAN), and Abdul Rasaq Saidu (ANAP), the unions condemned the repeated physical assaults on FAAN staff, vowing not to tolerate such incidents any longer.

The unions also called on the government to urgently reduce the number of customs officers operating within the aviation sector, aligning with global best practices. They warned that if their demands are not met, they will proceed with the nationwide shutdown, potentially disrupting air travel and operations.

The statement reads: “Considering the enormity and frequency of physical and psychological assault on the staff and management personnel of FAAN, of which there is no end in sight, we are compelled to inform the management of the unwavering determination of our unions to cause the establishment of a clear framework of mutual respect among FAAN staff and the security agencies operating at the airports.

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“Consequential sanctions are in place which guarantee the safety and human rights of FAAN staff. We shall direct all the workers to withdraw from the airports with effect from March 31, 2025, pending when such protocols are established.

“The recent assault on no less a personality than the Director of Aviation Security of FAAN is one too many, which leaves a taste too bitter to swallow. It is our sincere hope that our demand in the above respect is well met to avoid the industrial conflagration that will ensue in the absence of acceptable remedial actions.”

In response, Abdullahi Maiwada, the spokesperson for Customs, stated in a recent release that the disagreement between FAAN officials and officers of the Nigeria Customs Service (NCS) stemmed from a miscommunication over equipment movement and seating arrangements.

Aviation workers threaten nationwide airports shutdown over Customs officer assault

Business

SEC announces stricter measures to protect investors

Published

24 hours ago

March 24, 2025

Trends Admin

Director-General of SEC, Dr. Emomotimi Agama

SEC announces stricter measures to protect investors

The Securities and Exchange Commission (SEC) has reaffirmed its commitment to protecting investors in Nigeria’s capital market by cracking down on fraudulent activities.

According to the Director-General of SEC, Dr. Emomotimi Agama, operators engaging in unscrupulous practices will face strict penalties as the Commission prioritizes safeguarding investor interests.

“So, clearly for us, it is getting people to understand that there is no hiding place anymore for anybody that has the intention to defraud Nigerians and to defraud anybody that is investing in this market,” Dr. Agama stated, emphasizing the Commission’s zero-tolerance policy.

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Dr. Agama highlighted that the Investments and Securities Act (ISA) 2007 serves as the framework for securities regulation in Nigeria, ensuring that market operators adhere to high ethical standards.

He emphasized the importance of the “fit and proper person’s test,” which requires operators to meet specific regulatory criteria to maintain their licenses.

“This is because the very ethics of regulating or registering a securities market operator is in the principle of the fit and proper person’s test,” he explained.

“What you have been seeing most recently by the revocation of licenses, the suspension of operators and our follow-up to operators that are not registered with the SEC is only a tip of the iceberg as to what we intend to do this year.”

Dr. Agama assured stakeholders that the SEC will leverage its regulatory powers under Nigerian law to deter fraudulent activities, noting, “We believe strongly that a protected investor is a powerful investor.”

SEC announces stricter measures to protect investors

Business

Bitcoin rises above $86,000 as crypto market gains momentum

Published

24 hours ago

March 24, 2025

Trends Admin

Bitcoin rises above $86,000 as crypto market gains momentum

Bitcoin and other leading cryptocurrencies extended their gains on Monday, buoyed by positive investor sentiment despite concerns over upcoming U.S. tariffs and key economic data releases later this week.

As of 7am WAT, Bitcoin rose 3.2% to $86,590, while Ethereum gained 2.3%, trading at $2,047.

The global cryptocurrency market capitalization increased by 2.94% in the past 24 hours, reaching $2.84 trillion.

Other notable performers included XRP, Cardano, and Dogecoin, which posted gains of 3%, 2%, and 3.8%, respectively. Chainlink, Avalanche, Hedera, and Stellar recorded growth ranging from 3% to 10%.

“Bitcoin is holding above $86,000, registering a 3% gain today. The key resistance level to watch is $86,700; a breakout could pave the way for $90,000,” said Vikram Subburaj, CEO of Giottus.

Bitcoin’s market capitalization surged to $1.727 trillion, with dominance rising to 60.73%. Its 24-hour trading volume soared by 93% to $18.2 billion, while stablecoin transactions accounted for 94.74% of total crypto trading, reaching $57.58 billion, according to CoinMarketCap.

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Solana Outperforms Peers Amid Positive Market Sentiment

Solana (SOL) emerged as a standout performer, surging over 7% in the past 24 hours to trade above $139.

The rally was fueled by reports suggesting that President Trump’s April 2 tariffs may be more targeted than initially feared, easing market concerns.

Weekend rumors indicated that the tariffs might include country exemptions and non-cumulative charges on metals, contributing to improved sentiment across global markets.

The Federal Reserve’s projections for two rate cuts this year further supported risk assets, with the central bank describing potential tariff-induced inflation as “transitory.”

BitMEX co-founder Arthur Hayes expressed optimism about Bitcoin’s trajectory, stating, “The Fed’s policy orientation could help Bitcoin achieve $110k before it retests $76.5k.”

Solana’s momentum aligns with unprecedented acceptance rates. DeFiLlama reported that Solana’s total value locked (TVL) reached 54.87 million SOL, its highest level since June 2022. Ali Charts revealed that a record 11.09 million addresses now hold SOL, underscoring growing adoption.