April 17, (THEWILL) – The Minister of Finance, Budget, and National Planning, Zainab Ahmed, on Sunday, said the Federal Government will pay N5,000 to 10 million households for six months, as palliatives for removing petrol subsidy after June.
Ahmed, who spoke on the sideline of the World Bank/ International Monetary Fund spring meetings in Washington DC, said the amount is N50 billion per month and reaches N300bn, with $800m (N371.6bn at CBN N464/$1 rate) World Bank loan to fund the project.
Zainab also said the $800m has been negotiated and approved by the Federal Executive Council and is now before the parliament for approval.
“The $800m has been negotiated and approved by the Federal Executive Council and we now have a request before the parliament for approval.
“And once the parliament approves it, we roll. We’ve also been doing preparatory work side by side along the approval process. And that includes the building of the social register, which will be used for the electronic transfers of the funds.
“We needed to have this ready because when the government eventually removes the fuel subsidy, there will be an immediate transport palliative that will be provided to the most vulnerable members of our society, who have been identified, registered, and now contained in our national social register.
“This effort is led by the Ministry of Humanitarian Affairs, Disaster Management, and Social Development.
“They developed that register with the support of the World Bank. The register has about 10 million households and that’s an equivalent of 50 million Nigerians,” she noted.
Zainab explained that the initial design is to disburse cash transfers of N5,000 per month per household for a period of six months.
“So, whether this is enough is an assessment that we are undertaking with the transition team. If it’s not enough, the country has to raise additional resources to be able to cover more people, extend the period or increase the amount; whichever is finally negotiated upon.
“When the subsidy is removed, there would be additional revenue that would now accrue to the Federation account.
“One of the things we are working on is how this incremental revenue would be used. The money belongs to the federal, state, and local governments. So, we need to discuss how to use this.
“We hope that we’ll be able to still fence this incremental revenue and apply it to measures that will help to ensure that the fuel subsidy removal is actually sustained so that it won’t be another start-and-stop program. But this has to be a collective decision. The current administration and the incoming administration are working on a plan to make sure that we have a consensus on how to use that incremental revenue,” she said.
Speaking on how the palliative will impact the transport sector, the Minister said there will be a consideration of whether some of the support will go to the transport sector directly but it’s not a decision that has been taken yet.
Zainab also said the subsidy removal could spike inflation but would moderate.
“Anywhere in the world where you remove any kind of subsidy, it has that effect. That is why that initial fund is necessary so that you are deploying it quickly and reducing the impact on the lives of the most vulnerable people in our society,” she added.
