Tinubu channels subsidy savings to production incentives, social facilities

• N800 bn for SME, agric, CNG transport schemes
• Student loans, minimum wage, infrastructure funds in package

Sopuruchi Onwuka

President Bola Tinubu has declared that the present administration of the federal government would deploy funds hitherto used in subsidizing domestic price of the premium motor spirit in funding multiple fiscal incentives for small enterprises in critical production and services sectors of the economy.

President Tinubu who has been under fire for initiating economic reforms that hurt poor people in the country stated that his administration regrets the pains of the reforms and promised to work assiduously to deliver quick wins that would erase the initial suffering on the masses.

In a national broadcast on the prevailing economic crisis trailing his reforms, President Tinubu maintained his position that the once beneficial fuel subsidy had to go in order to save money for more palpable social services including public transportation, healthcare, schools, housing and national security.

He said petrol subsidy empowered a group of privileged people with so much wealth and power “that they became a serious threat to the fairness of our economy and the integrity of our democratic governance.”

To be blunt, Nigeria could never become the society it was intended to be as long as such small, powerful yet unelected groups hold enormous influence over our political economy and the institutions that govern it.

He also criticized the dismantled multiple exchange rate system as a highway of diverting “money that should have been used to create jobs, build factories and businesses for millions of people.

“Our national wealth was doled on favourable terms to a handful of people who have been made filthy rich simply by moving money from one hand to another. This too was extremely unfair. It also compounded the threat that the illicit and mass accumulation of money posed to the future of our democratic system and its economy.

He reiterated his commitment to reform the economy for the long-term good by fighting the major imbalances that had plagued the economy; adding that “ending the subsidy and the preferential exchange rate system were key to this fight. This fight is to define the fate and future of our nation. Much is in the balance.”

He acknowledged the painful fallouts of the reforms, accepting that households and businesses now struggle under high inflation. He said there was no better ways to address imbalances in the economy except going through a tough hurtful patch.

In hinting at early gains of the reforms, the president declared that “a little over two months, we have saved over a trillion Naira that would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters. That money will now be used more directly and more beneficially for you and your families.

“What I can offer in the immediate is to reduce the burden our current economic situation has imposed on all of us, most especially on businesses, the working class and the most vulnerable among us,” he promised.

 He stated that his administration was working with states and local governments to implement interventions that will cushion the pains of the people across socio-economic brackets; including removal of unfriendly fiscal policies and multiple taxes that are stifling the business environment.

He said he has already issued Executive Orders on suspension and deferred commencement of some taxes to provide the necessary buffers and headroom to businesses in the manufacturing sector to continue to thrive and expand.

He said the government would spend significant N75 billion between July 2023 and March 2024 to enable the manufacturing sector increase its capacity to expand and create good paying jobs.

“Our objective is to fund 75 enterprises with great potential to kick-start a sustainable economic growth, accelerate structural transformation and improve productivity. Each of the 75 manufacturing enterprises will be able to access N1 Billion credit at 9% per annum with maximum of 60 months repayment for long term loans and 12 months for working capital,” he explained.

Micro, small and medium-sized enterprises and the informal sector, the president said, will receive N125 billion credit facilities at single digit rates to drive growth.

“Out of the sum, we will spend N50 billion on Conditional Grant to 1 million nano businesses between now and March 2024. Our target is to give N50,000 each to 1,300 nano business owners in each of the 774 local governments across the country.

“Ultimately, this programme will further drive financial inclusion by onboarding beneficiaries into the formal banking system. In like manner, we will fund 100,000 MSMEs and start-ups with N75 billion. Under this scheme, each enterprise promoter will be able to get between N500,000 to N1million at 9% interest per annum and a repayment period of 36 months.”

To arrest the jumps in the prices of food items and also address rising hunger in the country, President Tinubu stated that his government was engaging broadly with various farmers’ associations and operators within the agricultural value chain to provide grains for immediate consumption and farm inputs sustainable food production.

“I have ordered the release of 200,000 Metric Tonnes of grains from strategic reserves to households across the 36 states and FCT to moderate prices. We are also providing 225,000 metric tonnes of fertilizer, seedlings and other inputs to farmers who are committed to our food security agenda.

“Our plan to support cultivation of 500,000 hectares of farmland and all-year-round farming practice remains on course. To be specific, N200 billion out of the N500 billion approved by the National Assembly will be disbursed” to invest N50 billion each to cultivate 150,000 hectares of rice and maize.

He added that another N50 billion each would also be earmarked to cultivate 100,000 hectares of wheat and cassava.

“This expansive agricultural programme will be implemented targeting small-holder farmers and leveraging large-scale private sector players in the agric business with strong performance record.”

The president explained that custody of the funds and credit access would be managed by Development Finance Institutions, commercial banks and microfinance banks.

To improve infrastructure across the country, President Tinubu stated that he approved the Infrastructure Support Fund to enable States intervene and revamp decaying healthcare and educational Infrastructure.

“The fund will also bring improvements to rural access roads to ease evacuation of farm produce to markets. With the fund, our states will become more competitive and on a stronger financial footing to deliver economic prosperity to Nigerians,” he declared.

On transportation, the president stated that government would invest N100 billion in 3000 units of 20-seater CNG-fuelled buses by March next year, adding that part of the programme is to roll out buses across the states and local governments for mass transit at a much more affordable rate.

However, the buses will be shared to major transportation companies in the states, using the intensity of travel per capital; and participating transport companies will be able to access credit facility at 9% per annum with 60 months repayment period.

To address the demand of workers who are currently mobilizing for a nationwide strike, President Tinubu stated that his government was already in liaison with the Labour unions to introduce a new national minimum wage for workers. He explained that budget for implementation of the new minimum wage would be made when it has been determined.

To ease education financing for students, the president stated that government would make education more affordable and provide loans to higher education students who may need them.

Also in addressing the inflation triggers in the economy, President Tinubu stated that government was monitoring developments in the foreign exchange market with a view of introducing fresh interventions when necessary.

“We are also monitoring the effects of the exchange rate and inflation on gasoline prices. If and when necessary, we will intervene,” he pledged.

In restating the vow of his administration not to falter on the principle of greatest good for the greatest number of our people, the president stated that government was closing the time gap “between subsidy removal and these plans coming fully online.”

“We will get out of this turbulence. And, due to the measures we have taken, Nigeria will be better equipped and able to take advantage of the future that awaits her,” President Tinubu promised.

Earlier before President Tinubu’s national address, his spokesman Dele Alake had announced that government has approved provision of buses to the students’ bodies of all universities, polytechnics and colleges of education across the country.

He said measure was in furtherance of the president’s desire to ease the burden of the fuel subsidy removal on students of higher institutions of learning.

He added that President Tinubu also approved the removal of all restrictions on the students’ loan to make it available to any student or household that may desire it to ensure no Nigerian student abandons his or her educational pursuits as a result of lack of money and economic circumstances of their parents.

“Similarly, President Tinubu has directed the authorities in all Federal Institutions of higher learning to avoid arbitrary increase in sundry fees payable and where possible defer further increase so that parents and students don’t face too many difficulties.

“While it is important to reiterate that President Tinubu has directed release of over 200,000 Metric Tonnes of grains to families in 36 states and Federal Capital Territory, Abuja, the government is working to ensure that vulnerable students can also benefit from conditional cash transfers and food distribution.”

Dele Alake stated that “President Tinubu will continue to prioritize education and the needs of the students, improve welfare of teaching and non-academic staff and invest in infrastructure to make our institutions of higher learning become more globally competitive.”