Nigeria is considering a transport subsidy for its poorest families to cushion the effects of an “eventual” removal of a petrol subsidy, Finance Minister Zainab Ahmed said on Wednesday.
Ahmed said on Tuesday the government planned to remove the petrol subsidy by the middle of next year and replace it with 5,000 naira monthly payments to the poorest families.
“I think the next set of questions are in the 5,000 naira transport subsidy that we are trying to work out to provide succour for the eventual removal of the (petrol) subsidy,” she said.
The transport intervention will be for between 20 to 40 million people, for a period of six to 12 months, she told reporters after a cabinet meeting in Abuja.
The petrol subsidy was meant to end this June as per the country’s 2020 budget. At the last revenue count this month, the subsidy cost the government 243 billion naira per month, which has been increasing consistently, Ahmed said.
Failure to end petrol subsidy will cost Nigeria 3 trillion naira ($7 billion) a year, she said, adding that the country is getting to a point where state-oil company, NNPC will remit virtually nothing to the government after subsidy payments.
“We are still in negotiation because it’s still money that would have to come from the federation account,” Ahmed said.
On Tuesday, the World Bank urged Nigeria to end its costly petrol subsidy within the next three-to-six months, improve exchange-rate management and speed up other reforms to boost growth. read more
Nigeria has fallen behind on implementing reforms started at the height of the COVID-19 pandemic, the bank said, adding that growth rates will lag those of other emerging economies, unless momentum is restored.
It projected Nigeria’s GDP to grow 2.4% this year, after the economy grew just over 4% in the third quarter, its fourth consecutive quarterly rise, following the COVID-19-induced recession in 2020.
The finance minister said the government wanted to expand the economy to a point where growth exceeds population growth. She said annual economic growth this year averaged to 3.3%, slightly higher than population growth of 3.2%.