FG’s lack of tangible plans  to cushion effects of subsidy removal disturbing -NACCIMA

…Says to increase VAT from 7.5% to 10% add more financial burdens on the OPSN

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), has raised concern on  the inability of  the Federal Government not having any tangible plans to cushion the impacts of the subsidy removal

The Nigeria’s umbrella chamber of commerce  said the evidence of this lack of plan is in additional borrowing of $800 million (statistically translating to N8000 per ordinary Nigerian) which, according to the Federal government  is meant to cushion the impact of the fuel subsidy removal. Currently, Nigeria’s debt today stands at a whopping N77 trillion.

 Recall that while analysing the 2023 Budget, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, indicated the government’s decision to remove subsidy on petrol (PMS), arguing that government was borrowing money to fund petrol subsidy.

But while   NACCIMA and indeed the Organised Private Sector of Nigeria (OPSN) are not against subsidy removal from fuel, they are concerned about the impacts of the subsidy removal on businesses which are already burdened with so much economic pressures and difficulties, leading to the shutdown of many Small and Medium Enterprises (SMEs) and more unemployment in the country.

The National President of the Association Ide John C. Udeagbala who raised  this concern  on the Second Quarter Press Briefing of 2023 on the State of the Economy on Thursday in Lagos , said the measures taken so far by the Federal Government to address this issue of subsidy removal is rather tepid and does not bring immediate  solution to the problem.

Said Udeagbala: “while analysing the 2023 Budget, the minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, indicated of government’s decision to remove subsidy on petrol (PMS), arguing that government was borrowing money to fund petrol subsidy.

“NACCIMA and indeed the OPSN are not against subsidy removal from fuel; however, we are concerned about the impacts of the subsidy removal on our businesses which are already burdened with so much economic pressures and difficulties, leading to the shutdown of many SMEs and more unemployment in the country.

“The greater challenge is that government has not shown any tangible productive plan to cushion the impacts of the subsidy removal other than to borrow additional $800 million Dollars (statistically translating to N8000 per ordinary Nigerian) which, according to them is meant to cushion the impact of the fuel subsidy removal. Nigeria’s debt today stands at a whopping N77 trillion.”

As part of the solution, NACCIMA calls on the Federal Government to urgently fix nation’s four refineries which remains comatose for the past 16 years to end to petroleum products importation into the country.

 It noted that aside from production of basic fuel products (PMS, Diesel, etc), there are other heavier distillates and by-products of these refineries which are also critical inputs for industries such as LPFO, SRG, Carbon Black, among others

“This, we believe, will help to generate further employment opportunities for our citizens particularly the teeming youths. It will also address the impact of fuel subsidy removal without adding additional debt burden on the nation. Besides, our ability to provide some basic raw materials internally will help our industries to compete better to benefit from the African Continental Free Trade Agreement (AfCFTA),”  Udeagbala said.

On power generation, NACCIMA commended the recent constitutional amendment on power generation which allows state governments to create laws for the generation, transmission and distribution of electricity to areas not covered by the national grid system in the states has paved way for the transformation of the power sector in Nigeria.

“This is the right step in the right direction and NACCIMA commends the Federal Government for the laudable policy,” noting that “the various challenges faced by the sector has resulted in the frequent and long power cuts that has hampered economic growth and development.

About 85 million people in Nigeria representing about 43% of the population has no access to national grid, making Nigeria the largest energy access deficit in the world.

NACCIMA calls on the various state governments to take advantage of this new policy to collaborate with the OPSN to use the available energy sources, such as gas and renewable energy to provide power for the informal sector to thrive and build production economy as well as create employment for the masses.

 NACCIMA applauded the planned 2023 census, noting that it is an opportunity for government to widen the tax base of the population in the country instead of increasing tax rates and multiplying taxes on the already over-taxed few individuals and OPSN companies.

On election NACCIMA suggests that all elective positions for both the national and states positions should be conducted the same day and it would only take just an additional one or two minutes to the time being spent on the presidential and national assembly elections.

 This, it said, will sum up the time for each voter to less than five minutes. The time of ending the election can also be extended by one or two hours to accommodate all voters. This will save time and money and most likely add credibility to the elections processes in addition to eliminating the possibility of a bandwagon effect.

Udeagbala said that NACCIMA is worried by the recent proposal of the Minister of Finance advising the incoming government to increase VAT charges from 7.5% to 10%, noting that   attempts to add more financial burdens on the OPSN.

“We expressed our fears that any further tax increase on businesses may lead to the shutdown of many SMEs and worsen the unemployment crisis in the country.