President Bola Tinubu has called on Nigerians to accept short-term sacrifices in exchange for future investments after his government put an end to the long-standing fuel subsidy. This move has caused a surge in petrol, transportation, and food prices.
Tinubu, who was elected in February, announced the end of the fuel subsidy on his first day in office.
The subsidy had been costing the government billions of dollars, artificially keeping petrol prices low for consumers.
Nigeria, despite being a major oil producer in Africa, has limited refining capacity. As a result, it has been exchanging crude oil for gasoline, which it then subsidizes, causing a significant drain on revenue, and foreign exchange, and contributing to mounting debt.
The decision to remove the subsidy has caused petrol prices to triple, leading to increased transportation costs and a ripple effect on food prices and electricity. Many Nigerians rely on petrol-powered generators for electricity. In a national broadcast on Nigeria’s Democracy Day, Tinubu acknowledged the pain caused by ending the subsidies but stressed that it was necessary for the country’s economic well-being.
He promised to repay the citizens’ sacrifice through substantial investments in transportation infrastructure, education, regular power supply, healthcare, and other public utilities.
Although Nigeria has the largest economy in Africa, its citizens already face high inflation, intermittent fuel shortages, and an unreliable power supply. The removal of subsidies was deemed necessary by experts, but critics argue that the government has not done enough to counter the inflationary impact.
After the subsidy removal, petrol prices surged from 190 naira per litre to about 540 naira ($1.20) per litre.
In addition to ending the fuel subsidy, Tinubu’s government recently dismissed the central bank chief, Godwin Emefiele, who was subsequently arrested by the DSS domestic security and intelligence service as part of an investigation into his role. Emefiele had faced criticism for implementing former President Muhammadu Buhari’s cash swap policy, which led to a severe shortage of physical currency earlier this year. Critics also blamed him for Buhari’s unconventional multiple currency exchange system, strict controls on accessing foreign currency, and the government’s debt program.
Tinubu, a former governor of Lagos and a businessman expressed dissatisfaction with the central bank in his inaugural address, calling for a thorough overhaul of monetary policy and a unified exchange rate to stimulate investment.
ASBNews/AFP
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