According to Finance Minister Zainab Ahmed, Nigeria is exploring a transportation subsidy for the country’s poorest households in order to mitigate the impact of the “eventual” elimination of a petrol subsidy.
By the middle of next year, the government intends to abolish the petrol subsidy and replace it with 5,000 naira monthly handouts to the poorest households, Ahmed said on Tuesday, according the AFP.
“I suppose the next set of questions are in the 5,000 naira transport subsidy that we are attempting to figure out to offer succour for the ultimate elimination of the (petrol) subsidy,” she added.
After a cabinet meeting in Abuja, she informed reporters that the transportation intervention will be for between 20 and 40 million people over a period of six to 12 months.
According to the country’s 2020 budget, the subsidy on gasoline was supposed to stop this June. Ahmed added that the subsidies cost the government 243 billion naira every month at the end of this month, which has been rising steadily.
NNPC, Nigeria’s state-owned oil corporation, will send essentially nothing to the government after subsidy payments if the government does not discontinue the subsidy programme, she added.
For now, Ahmed explained that the federation account’s funds must be used because of this.
As of Tuesday, the World Bank encouraged Nigeria to stop its expensive petrol subsidy, strengthen exchange-rate management and accelerate other changes in order to increase GDP.
An international banking institution has warned that Nigeria’s economic development will be lower than that of other emerging economies until it catches up with the pace set by other countries during the COVID-19 epidemic.
Following the COVID-19-induced recession in 2020, it predicted that Nigeria’s GDP would expand by 2.4% this year, following a third-quarter increase of slightly over 4%, Nigeria’s fourth straight quarterly growth.
The government’s goal, according to the finance minister, is to raise economic growth to a level that outpaces that of the population. She said that this year’s average yearly economic growth was 3.3%, which was slightly higher than the country’s population increase of 3.2%.