In a bid to ensure inclusive, impactful and sustainable palliative measures on fuel subsidy removal, there are a few things the Nigerian government must do.
The Director and CEO of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has put forward about 15 things that must done in the immediate, short and medium term.
Dr Yusuf said the pains of fuel subsidy removal on citizens, especially the vulnerable segments of the society, were very severe.
Below are some things that he suggests that the Federal Government should do to lower the effect on Nigerians.
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Interventions In Fiscal Policy Measures
- Import duty, VAT and other port charges on Semi Knocked Down parts for the assembly of mass transit buses should be waived. This would not only make mass transit buses cheaper; it would enhance industrial capacity utilisation of the vehicle assembly plants in Nigeria.
- Import duty on passenger buses of 15 passenger capacity and above should be reduced by 50% for the next one year.
- Import duty on fairly used cars of engine capacity of 2000cc and below should be reduced by 30%. This would enhance access of the middle class to vehicle ownership in the light of the high deficit in the provision of public transportation.
- Drastic reduction in import duty on intermediate products for food processing industry in Nigeria.
The government should engage major food processing companies to determine specific policy options for the realisation of this objective. This would moderate food inflation.
Taxes And Import Duty
- Introduce incentives to stimulate private investment in pipelines. This would sufficiently reduce distribution costs of petroleum products.
- Abolition of all forms of taxes and import duty on renewable energy equipment to boost the adoption of renewable energy by households and SMEs. Such waivers would make renewable energy adoption affordable. This reduction should cover relevant equipment like solar panels, inverters, batteries etc. This would make citizens less reliant on the electricity grid.
- All agricultural inputs – machineries, agrochemicals and fertiliser among others should attract zero import duty and zero VAT.
This would boost investment in agriculture, especially commercial agriculture. Higher agricultural output would boost food production and ultimately moderate food inflation. - Generous tax and other fiscal incentives should be provided for private investors in healthcare. This would help to conserve foreign exchange through a reversal of the growing medical tourism in Nigeria.
- Private investors in education should get generous tax and other fiscal incentives. This would enable the private sector complement the efforts of government in providing quality education, especially at the primary and secondary levels.
Private Sector Interventions
- Employers, especially thriving medium and large enterprises, should be persuaded by government to provide buses for their employees, if they are not already doing so. This would complement the intervention of government in this respect. Where possible, employers should provide lunch vouchers for their staff.
- Reduction of the number of days workers would be required to be physically present at work. We need to entrench remote working culture in the public and private sectors, where practicable. Employers should leverage technology in their operations, as the nature of work is changing globally.
- The private sector has a responsibility to provide palliatives for their employees. Government should prevail on private sector employers, especially the medium to large enterprises, to complement the efforts of government in the introduction of measures to cushion the negative social effects of the subsidy removal outcomes. It should be a call to give capitalism a human face.
Read Also: Best Thing FG Should Do To Cushion Effect Of Subsidy Removal
Foreign Exchange Policy Reform
- Acceleration of reforms in the foreign exchange market, especially the unification of the exchange rate in line with the President’s pronouncement and the ruling party manifesto.
This is crucial to create a level playing field in the forex market and pave way for equal access to by all players in the petroleum downstream sector to either import or refine petroleum products.
This is essential to drive competition in the industry and protect citizens from exploitation.
Monetary Policy Measures
- Soft loans for small businesses are an important component of the palliatives. Also, the microfinance banks should be part of such a scheme in order to deepen inclusion.
- This would facilitate output growth and job creation in this very important segment of the economy.
Cutting Cost of Governance
- The sacrifices of the moment should not only be the concern of the working class and ordinary citizens.
The political leadership at all levels must commit to reduction in the cost of governance.
