Subsidy removal, palliatives and Ogun State example

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THERE is no doubt that the removal of subsidy on Premium Motor Spirit (PMS) by the Federal Government is a bitter pill to swallow. Across the country, Nigerians are groaning as a result of widening poverty. On the one hand, the Bola Ahmed Tinubu government has given cogent reasons why subsidy had to be removed, among them the accustomed opacity and massive corruption that had characterized the process leading to the short-changing of the very masses that it is supposed to cater for. On the other hand, while understanding the government’s move, the vast majority of Nigerians, including the organised labour, are still complaining about the difficult position the action has put them, with rising inflation and the drastic impact on disposable income. And while the problem continues to persist nationwide and governments at various levels grapple with the provision of countervailing measures to cushion the impact of the liberalisation of PMS and the vagaries of the global market on ordinary Nigerians, it is important to recognise and appreciate the efforts of state governments pioneering the response to the difficult situation. In this regard, the efforts by the Ogun State Government led by Prince Dapo Abiodun are quite noteworthy.

As part of efforts to ameliorate the effects of subsidy removal on the Ogun populace, the Abiodun administration recently approved some measures for immediate implementation, but the point of interest is that long before President Tinubu announced the decision on fuel subsidy in his May 29 inaugural address, the Ogun helmsman had anticipated the corollaries of a potential removal of subsidy on PMS and charted a data and science-driven course to ameliorate the impact on the populace. Among other measures, it decided to roll out a gas-powered public transport system, with the state’s wifi-enabled buses converted from PMS to gas-powered vehicles. The thinking, which has now proved quite prophetic, is that a with gas costing significantly less than PMS and offering better value, public buses would cost much less and offer the people relief as they commute from one point to the other.

While discussions with the organised labour were still ongoing in various states, the Abiodun government announced a cash palliative of N10,000 for public servants and pensioners for a period of three months in the first instance, beginning from July. Ogun having taken the lead, Adamawa and Kwara followed suit. But the Abiodun strategy is much more than this cash-based palliative; it is multi-pronged, involving the use of a social register developed during the COVID-19 crisis to distribute relief items to the Ogun populace; encouraging transport workers to transit from PMS powered to CNG-powered system; e-mobility, meaning the rollout of battery-powered motorcycles and tricycles, and bulk purchase of food to be sold at controlled prices.

Commendably, the government approved hazard allowance for health and medical personnel in the state and peculiar allowance for public servants. It ordered the immediate release of letters of promotion in respect of 2021 and 2022, the payment of March and April, 2023 leave bonuses for public servants, and immediate cash-backing for the quarterly payment of gratuities to pensioners. That was not all: the state’s ministries, departments and agencies are to work out modalities for ensuring that 20 percent of their staff strengths are off-duty daily to ease the subsidy situation, while the government is to immediately begin distributing food palliatives (rice, garri, beans, maize etc) to vulnerable citizens. In addition, the Gateway Trading Company has been mandated to establish food distribution outlets across the state, and sell the items at the rates obtainable in the market before the removal of fuel subsidy.

Besides, the state is establishing a commodity exchange to ensure optimization of current and future investment in the agro-allied sector of the economy, and distributing fertilizers and other farm inputs to farmers at subsidized and controlled prices. It is also launching electric motorbikes and tricycles all over the state and converting its mass transit buses to CNG, including staff buses and public transportation buses. It will in fact acquire additional new CNG buses to ease transportation in the state, charging small fares. The government is also supporting micro, small and medium enterprises through special schemes to boost production capacity and employment generation

According to Governor Abiodun, “We have two types of palliatives: cash transfer and technology transfer. If you buy food at controlled prices at designated areas, it saves a lot of money. If your transport cost is lower, your disposable income will be higher and the standard of living will consequently be better. Buses converted to CNG have been test run and people will henceforth be refilling their vehicles at designated points. Again, the e-mobility strategy started even before subsidy removal. We look so far ahead of others now because with or without subsidy removal, we wanted to do it. E-mobility will apparently make life easy for the people and, in any case, we are working on the three roads that are of utmost economic potential across local governments, with local government authorities and community development associations collaborating. The whole idea for people to tell us what they need so that we would be spot on in determining what should be given preference.

“We are also setting up a bulk purchase system. We buy food in bulk and give it out at controlled prices. Because the two most visible issues surrounding subsidy removal are on food cost and transportation, we are converting all our buses to CNG and electric-powered and that would significantly bring down the cost of transportation. The social mobilization programme is in place. Ogun State has a social register developed during the COVID-19 crisis when even the Federal Government acknowledged our leading role in containing the virus. We created a database that we used in providing palliatives to the people then, and a while ago, we set up social investment officers (about 25,000 people, five in each designated area) to ensure that the distribution of palliatives is fool-proof because, among others, the beneficiaries are going to be contacted on phone to indicate whether or not they got the palliatives.” Pointing out that private sector operators were being encouraged to put palliatives things in place for their staff, the governor noted that the conversion of motorcycles and tricycles to batteries is to bring down the cost of transportation.

In accordance with the governor’s promise, the payment of the monthly N10,000 transport stipends to Ogun workers has commenced in earnest. Foresight is the ability to anticipate future events and roll out strategies for coping with them. That’s what has become quite evident in the Abiodun government in Ogun State.