SUBSIDY REMOVAL BEST DECISION TO TACKLE RISING DEBT – LCCI CHIEF OLAWALE-COLE
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The Lagos Chamber of Commerce and Industry says the Federal Government’s planned petrol subsidy removal will reduce Nigeria’s debts and tackle widespread corruption in the oil sector.
The proposed elimination will be one of Nigeria’s best economic moves, according to LCCl President Dr. Michael Olawale-Cole, who spoke on Tuesday in Lagos at the chamber’s second quarter state of the economy conference.
Nigeria secured an $800 million relief package from the World Bank to minimise the effect of subsidy removal on the most vulnerable in the society.
Recent data by the Debt Management Office puts Nigeria’s public debt at N46.25 trillion ($103.11 billion) as at end-December 2022, compared to N39.56 trillion ($95.77 billion) in 2021.
Olawale-Cole, however, urged the government to start putting several cushioning measures in place ahead of the subsidy removal in the second half of the year to mitigate any likely disruptions to the economy.
“Removal of fuel subsidies is, amongst others, expected to spur investments in domestic refining and petrochemicals and create a significant value chain for the various stakeholders.
“Though the planned removal of fuel subsidies may cause further northward movement of inflation in the short term, it is arguably one of the best economic decisions to reduce our unsustainable debts and widespread corruption in that sector.
“The government must however, take cognisance of its socio-economic implications, especially with unemployment at the unwholesome rate of about 40 per cent,” he said.
The LCCI’s President frowned at borrowing to fund subsidies or support uneconomic ventures, saying that the government’s fixation on debt accumulation was unhealthy.
According to Olawale-Cole, the government must prioritise exploring other avenues, including opening equity opportunities, offloading/selling of its real estate holdings and tackling oil theft to create room for fiscal manipulation.
He stressed the need to importantly follow the recently launched and restructured Ministry of Finance Incorporated (MOFI) by President Muhammadu Buhari on Feb. 1, to optimise national assets.
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