Desperate times call for austerity measures, by Ibrahim T. Tumsah
Radical Thought
Nigeria’s current predicament is not going to forever remain our destiny. The removal of petrol subsidy and the unification of the Naira foreign exchange policy are necessary steps that needed to be taken for Nigeria to realize its full potential. The World Bank says that these reforms could save Nigeria up to $5.10 billion this year alone. This indicates that these are positive steps towards curbing the nations spending problem.
There was a time Nigeria was amongst the richest nations in the world, (in terms of revenue) because of what we were earning from our oil exports to the rest of the world. Unfortunately those times are in the past and we have squandered and misused our wealth through corruption and a lack of vision. These days, with the new government administration the nation is gripped in a make or break vice. For too long we have been living way beyond our means. Projecting to the world that we are rich, while under the surface of that facade, many are destitute. For a long time the fuel subsidy maintained the veneer of that facade. An air of arrogance that we could not get rid of because of our inability to accept reality. Thankfully, ripping the band aid off has made us realize our predicament.
Some say Nigeria doesn’t have a revenue problem, but a spending problem. With President Bola Ahmed Tinubu at the helm we can be hopeful that we will be able to reign in the wasteful expenditure for wiser and more efficient investment plans. The thing is, for this administration to work it needs to adopt austerity measures. The Federal Government can’t demand or ask the general public to make sacrifices, while they continue to live in extravagance. The FG need to lead by example by not only cutting their spending but by also providing the regular citizens with social safety nets that will cushion their fall on the hard times ahead.
In times of economic and fiscal austerity, the government faces the challenge of implementing these social safety nets to minimize the effects of the economic hardships on its citizens. It can start with a public transportation support scheme, as is already evident, transportation costs have increased; which has affected the mobility of citizens. The government can implement this scheme by investing in a network of public transportation infrastructure. It can do so by providing buses that will shuttle workers from one stop to another, using cut price fares. Historically, Nigeria has been set up in a way that is most favourable to car users. With the petrol subsidy removal, it is no longer feasible for many Nigerians to afford using their cars for their day to day activities. Our whole transport system needs to be rethought. Public buses now need to be introduced to the equation. An individual needs to be able to walk to a bus stop and alight the vehicle, whilst knowing that he/she will be able to drop off at the nearest designated stop to where they need to go. This measure can curb the phenomena of households having more cars than they need.
Another measure that could be taken is converting cars that run on fuel to also run on gas. It is not commonly known that Nigeria is actually more of a Liquified Natural Gas (LNG) producing nation than a Crude Oil producing one. Nigeria currently has the 9th largest gas reserves in the world, sitting on approximately 210 trillion cubit feet (tcf) of the proven gas reserves. The government could encourage people to shift their fuel consumption to gas. It is possible to convert a car that runs on petroleum to one that runs on liquid petroleum gas (LPG). It is a relatively simple process that can cut fuel costs by 50% according to experts. The straightforward process involves installing a secondary fuel system in the vehicle with a separate tank and gauge for Autogas. There is no requirement for a new or replacement engine. The car maintains the primary fuel system and will now then be a dual-fuel vehicle, allowing the owner to switch between the two systems fairly quickly and easily. The initial outlay for the conversion can be paid back in a short time, with the massive savings in fuel prices. The car when converted, runs much the same as with conventional fuel, but becomes a dual fuel vehicle. The upside of this is that you can easily switch to using petrol if the need arises. There are over 100 filling stations around the country – most of which are regular LPG plants stations with Autogas dispensers.
The removal of petrol subsidy and currency fluctuations may lead to increased food prices, impacting the affordability and availability of food for vulnerable populations. The government can implement or strengthen food security initiatives, such as targeted food subsidies, agricultural support programs, or community-based food production projects. The government can support farmers by providing tools, crops and other agricultural inputs to weaken the effects of food inflation when fresh produce hits the market. Many of the most vulnerable in Nigeria will be hard hit by a sudden food price increase, so the government has to target the problem at the source; especially in the long run where persistent food price increases might run the risk of people going hungry.
Many Nigerians are willing to cut the President Tinubu administration some slack. Many are willing to be optimistic about the new government and the future of Nigeria. It is important to note that the implementation of social safety net policies during times of economic and fiscal austerity can be challenging due to budget constraints. The Federal Government needs to carefully balance the provision of support with fiscal sustainability, considering long-term implications and potential trade-offs.
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