The Nigeria Employers’ Consultative Association (NECA) has expressed concern over the unsustainable fuel subsidy regime and the burden the country’s rising debt profile places on the economy.
Its Director-General, Mr. Timothy Olawale, told The Nation that the fuel subsidy regime has proved to be unsustainable and a major leakage in national revenue treasury.
He said a former governor of the Central Bank of Nigeria (CBN) stated that in 2011, the country made $16 billion from petroleum sales and spent $8.2 billion to subsidise imported petroleum products.
He said despite wise counsel, the Federal Government refused to demonstrate the political will to deregulate the downstream oil sector.
According to him, the non-deregulation of the sector has fuelled the continued dependence on offshore sources for petroleum products. This, he said, has bred perennial shortage of petroleum products and unimaginable corruption in the management of the subsidy regime.
These, he stated, remain a major concern for businesses.
Olawale said: “Over the last decade, the country has spent over N9 trillion on fuel subsidy, about N15.5 trillion on capital expenditure, N2.1 trillion on health, and about N3.9 trillion on education.
“This is a misplacement of priority and shows that critical developmental items, such as education, health and infrastructure, have suffered due to the expenditure on fuel subsidy. The fuel subsidy regime has succeeded in creating phony and emergency billionaire at the expense of millions of pauperised Nigerians.”
Olawale expressed concern at the rising debt profile of the nation with huge percentage of the budget going into debt servicing.
Read also: IGR: Expand tax net, not VAT, NECA urges govts
“Borrowing could have been permissive, given the state of the economy in 2015, but not to the clearly humongous level it has turned out to be.
“Incurring debt for developmental purposes is not in question, but the over N24.39 trillion debt stock, taking over 20 per cent of annual national budget to service should be enough source of worry. Though the argument of debt to GDP (Gross Domestic Product) ratio is tenable, the IMF (International Monetary Fund) warned that Nigeria’s Debt-to-GDP Ratio, though good, is risky and cannot be guaranteed going forward.
“Government should do well to manage the rising debt profile, both at the states and federal level, as this trend portends a gloomy future for the nation.”
He said the government should take steps to end the subsidy regime as the billions spent on subsidy could be used to support the real sector, subsidise critical and productive economic sector and also help government to lift the proposed 100 million poor Nigerians out of poverty.
“The increasing debt profile and the corruption-ridden fuel subsidy regime are twin-evils that have clogged the wheel of the nation’s march towards development in the last decade. Government should do the needful by immediately putting in place a process and enlightenment machinery that will lead to the deregulation of the downstream oil sector and a deliberate disengagement from the debt burden,” he said.
Leave a Reply