Nigeria Economic Sustainability Plan

How We Are Putting Money In The Hands of Nigerians — Presidency

– Grants to MSMEs and artisans under the survival fund scheme
– Nigerians will have alternatives to fuel use
– Most Nigerians will not pay more for electricity

The Federal Government is committed to ameliorating the pains and the negative impact of the COVID-19 pandemic on Nigerians through the active implementation of the Economic Sustainability Plan.

Economic Sustainability Plan

Nigeria’s Economic Sustainability Plan (ESP) designed under the Economic Sustainability Committee chaired by Vice-President Yemi Osinbajo and approved by President Muhammadu Buhari will reduce the adverse economic effects of the COVID-19 pandemic within the country in 12 months and will lift more Nigerians out of poverty.

The plan sets out to spend 2.3 trillion naira to manage the economic fallouts of COVID-19 and prevent a deep recession in the country. These initiatives and measures are designed to help the common man namely MSMEs supportive initiatives. On the 21st of September, 2020, we are starting the survival fund, which is a part of this plan.

Survival Fund (www.survivalfund.ng)

– Payroll Support
– Artisan Grant
– MSME Support
– -CAC Discounted/Free Registration of Businesses

(watch video for details)

From week commencing 21st September, 2020, the website https://www.survivalfund.ng will go live for Nigerian MSMEs across the entire nation and artisans, plumbers, electricians, transport workers, private school teachers, or who belong to different categories under the survival fund to register and apply for various grants.

The Buhari administration remains capable of achieving so much with very little as has been made evident in its efforts towards infrastructural development and the social investment programs despite earning less than its predecessors.

There are two broad sources of funding for the ESP. We have 500 billion naira from the budget, and we will be using the Central Bank’s lending structures and facilities to raise the lending aspects of the program and also some international concessionary loans.

Inflation

These are challenging times for Nigeria, Africa, and globally and this has made it more imperative for the administration to channel funds into the system to support Nigerians, hence the 2.3 trillion Naira stimulus ESP. With the administration’s support through the Central Bank’s lending packages, interest rates will be minimal to enable Nigerians to get back on their feet. The important thing at this point is to put money in people’s hands and we are doing it urgently.

Fuel Hike

The deregulation of PMS prices was announced on 18 March 2020. The price modulation activity that took place announcing a new PMS pump price at the beginning of September 2020 was just part of the on-going monthly adjustments to global crude oil prices.

The long-drawn fuel subsidy regime that was being run by Nigeria in the past ended in March 2020, when the Petroleum Products Pricing Regulatory Agency (PPPRA) announced that it had begun fuel price modulation, in accordance with prevailing market dynamics and would respond appropriately to any further oil market development. This meant that the price of fuel would be determined mainly by the international price of crude oil.

Sequel to this announcement, the price of fuel then dropped from 145 to 125 Naira per litre, and then to between 121.50 and 123.50 Naira per litre in May. With the low price of crude oil then, the cost of petrol, which is a derivative of crude oil, fell, and the lower pump price was passed on to the consumers to enjoy. With the price of crude inching up, the price of petrol locally is also bound to increase, hence the latest price of 162 Naira per litre.

Case For Removal of Fuel Subsidy

The cost of fuel subsidy is too high and unsustainable. From 2006 to 2019, fuel subsidy gulped 10.413 Trillion Naira which is an average of 743.8 billion Naira per annum.

Subsidizing fuel is no longer feasible, especially under the prevailing economic conditions in the country. The government can no longer afford fuel subsidy, as revenues and foreign exchange earnings have fallen by almost 60%, due to the downturn in the fortunes of the oil sector.

The effect of deregulation is that PMS prices will change as changes in global oil prices occur. Government can no longer afford to subsidize petrol prices, because of its many negative consequences. These include a return to the costly subsidy regime. With 60% less revenues today, we cannot afford the cost. The second danger is the potential return of fuel queues, which has, thankfully, become a thing of the past under this Administration. The days in which Nigerians queue for hours and days just to buy petrol, often at very high prices, are gone for good.

Despite the recent review of the price of fuel to 162 Naira per litre, petrol prices in Nigeria remain the lowest in the West/Central African sub-regions.

Below is a comparative analysis of petrol prices in the sub-regions (Naira equivalent per litre):

– Nigeria – 162 Naira per litre
– Ghana – 332 Naira per litre
– Benin – 359 Naira per litre
– Togo – 300 Naira per litre
– Niger – 346 Naira per litre
– Chad – 366 Naira per litre
– Cameroon – 449 Naira per litre
– Burkina Faso – 433 Naira per Litre
– Mali – 476 Naira per litre
– Liberia – 257 Naira per litre
– Sierra Leone – 281 Naira per litre
– Guinea – 363 Naira per litre

Benefits of Deregulation

If, per chance, the price of crude drops again, the price of petrol will also drop, and the benefits will also be passed on to the consumers. The current price is not a foreclosure and it could be reviewed downwards once there is a drop as established.

One of the difficult decisions, which we took at the beginning of the Covid-19 pandemic in March 2020 when oil prices collapsed at the height of the global lockdown was the deregulation of the prices of PMS. Thus the benefit of lower prices at that time was passed to consumers with PMS selling at 125 Naira per litre.

The Federal Government is not unmindful of the pains associated with higher fuel prices at this time which is the primary reason for the survival fund, we will continue to seek ways to cushion the pains, especially for the most vulnerable Nigerians. The government is providing cheaper and more efficient fuel in form of auto gas.

Also, Government, through the PPPRA, will ensure that marketers do not exploit citizens through arbitrarily hike in pump prices.

Electricity Tariff

On the issue of recent service-based electricity tariff adjustment by the Distribution Companies, or DISCOS, this review was scheduled to start at the beginning of July 2020 but was put on hold so that further studies and proper arrangements can be made. This government is not insensitive to the current economic difficulties our people are going through and the very tough economic situation we face as a nation.

Case For The Service-Based Tariff

The problems with the largely privatized electricity industry have required that government support the industry. To keep the industry going, the government has so far spent almost 1.7 trillion Naira, especially by way of supplementing tariffs shortfalls.

The government does not have the resources to continue along this path. To borrow just to subsidize generation and distribution, which are both privatized, would not be in the nation’s interest.

However it is instructive to note that despite the recent service-based tariff review, the cost of electricity in Nigeria is still cheaper or compares favourably with that of many countries in Africa.

Cost In Naira Per kwh in Some African Countries.

– Nigeria – 49.75
– Liberia – 206.01
– Senegal – 71.17
– Niger – 59.28
– Guinea – 41.36
– Mali – 88.23
– Sierra Leone – 106.02
– Burkina Faso – 85.09
– Togo – 79.80

Benefits of the Service Based Tariff

In order to protect the large majority of Nigerians who cannot afford to pay cost-reflective tariffs from increases, the industry regulator, NERC, has approved that tariff adjustments had to be made but only on the basis of guaranteed improvement in service.

Under this new arrangement, only customers with guaranteed minimum of 12 hours of electricity can have their tariffs adjusted. Those who get less than 12 hours supply will experience no increase. This is the largest group of customers.

The Federal Government has also noted the complaints about arbitrary estimated billing. Accordingly, a mass metering programme is being undertaken to provide meters for over 5 million Nigerians, largely driven by preferred procurement from local manufacturers, and creating thousands of jobs in the process.

NERC will also strictly enforce the capping regulation to ensure that unmetered customers are not charged beyond the metered customers in their neighbourhood. In other words, there will be no more estimated billings.

The Federal Government is also taking steps to connect those Nigerians who are not even connected to electricity at all. Under its Economic Sustainability Plan, the government is providing solar power to 5 million Nigerian households in the next 12 months. This alone will produce 250,000 jobs and impact up to 25 million beneficiaries through the installation, thus ensuring that more Nigerians will have access to electricity via a reliable and sustainable solar system.

COVID-19 Response

Figure 6: PTF COVID

“In Nigeria, we are taking a two-step approach. First, to protect the lives of our fellow Nigerians and residents living here and second, to preserve the livelihoods of workers and business owners to ensure their families get through this very difficult time in dignity and with hope and peace of mind.” – President Buhari

  • The Federal Government of Nigeria is rolling out several measures and directives on healthcare, border security, and fiscal and monetary policies in response to the pandemic. More measures are coming.
  • The President has set up an Economic Sustainability Committee chaired by Vice President Osinbajo, to develop a comprehensive economic plan to respond to the disruptions and dislocations caused by the COVID-19 pandemic.
  • The President has also set up a Presidential Task Force on #COVID-19, chaired by the Secretary to the Government of the Federation, Boss Mustapha, with Dr. Sani Aliyu as the National Coordinator. The PTF is coordinating Nigeria’s multi-sectoral inter-governmental approach to COVID-19.
  • The President also set up a Committee made up of the Minister and Minister of State of Finance, Budget and National Planning, Minister of State Petroleum Resources, Governor of the Central Bank of Nigeria and Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), to assess the impact of COVID-19 on the 2020 Budget and to recommend appropriate and immediate response strategies.

President Buhari has also approved the following:

  • Establishment of a 500 billion Naira COVID-19 Crisis Intervention Fund, for the upgrading of health facilities nationwide, finance a national Special Public Works Programme, as well as any other interventions that may be approved in the future.
  • Release of special intervention grants of 10 billion Naira and 5 billion Naira to the Lagos State Government and the Nigeria Center for Disease Control (NCDC) respectively, to facilitate the Covid-19 Response.
  • Immediate Release of 70,000 Metric Tonnes of Grain for distribution to poor and vulnerable households across the country.
  • Establishment of a Joint Technical Task Team to facilitate the movement of food and agricultural inputs across Nigeria, during the Coronavirus lockdown.
  • Commencement of a three-month repayment moratorium for all TraderMoni, MarketMoni and FarmerMoni loans, with immediate effect.
  • Commencement of a three-month moratorium for all Federal Government funded loans issued by the Bank of Industry, Bank of Agriculture and the Nigeria Export Import Bank.
  • Presidential directive for immediate Expansion of National Social Register (official database for implementation of the Conditional Cash Transfer programme) by 1 million additional households.
  • Implementation of Modified version of National Home Grown School Feeding Programme, to deliver dry food rations to households of pupils already benefiting from the NHGSFP.
  • Design and production, under the auspices of the Federal Ministry of Science and Technology, of various equipment for the fight against COVID-19, including:
    • “O” shaped and “N” Inverted-shaped 2-metre high public walkway Disinfectant Tunnels
    • Electromechanical and Mobile Pneumatic-based Ventilator
    • Environmental Foam Spray formula
    • High efficacy broad spectrum disinfectants that are neem based.
    • Rapid Diagnostic Kits for testing of COVID-19