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Govs say subsidy’ll hamper salaries in 2022, back N5,000 grant

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Governors of the 36 states of the federation have agreed to back the Federal Government’s plan to give poor Nigerians N5,000 transport palliative, arguing  that if the fuel subsidy regime continues, state government will be unable to pay salaries in 2022.

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The Governor of Kaduna State, Nasir El-Rufai, disclosed this on Tuesday during the launch of the World Banks’ November 2021 Nigeria Development Update report in Abuja.

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El-Rufai decried the high cost of fuel subsidy, which according to him, is not reasonable.

He stated that the Nigerian Governors’ Forum had met and agreed to back the Federal Government’s transport palliative scheme.

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He said, “This is why the Nigerian Governors’ Forum met and agreed to support the Federal Government’s social compact. Withdraw this subsidy by February, use the N250bn per month that would have been lost between February and May to do this conditional cash transfer that would put money in the pockets of Nigerians and alleviate not only the cost of transportation but the 2-3 per cent job inflation that is expected when the subsidy is eliminated. We cannot sustain it. We cannot continue with it.

“I don’t want to predict what will happen when 35 out of 36 states cannot pay salaries of civil servants, or even have any money to run the government. We will not have enough money to pay salaries. Already, some states are building up arrears, even oil-producing states are struggling to pay salaries.

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“So, we support the plan to do conditional cash transfer for six to twelve months, N5,000 a month to the most vulnerable households. This is the position of the state governments and I have been mandated to communicate this.”

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Earlier, the Federal Government had announced plans to replace the controversial fuel subsidy with an N5,000 monthly transportation subsidy to the poorest Nigerians.

The Minister of Finance, Budget and National Planning, Zainab Ahmed, said this during the launch of the World Bank’s report.

According to the minister, the transport subsidy will go to about 30 to 40 million Nigerians.

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She said, “The subsidy regime in the oil sector is unsustainable and economically disingenuous. Ahead of the target date of mid-2022 for the complete elimination of fuel subsidies, there is a lot of work to do to eliminate the subsidy in a manner that would be consistent with the plans of the government and also to carry stakeholders and Nigerians along.  We are working with our partners on measures to cushion the potential negative impact of the removal of the subsidies on the most vulnerable at the bottom of the pyramid, at least 40 per cent of the population.

“One of such is to institute a monthly transport subsidy in the form of cash transfer of N5,000 to between 30 – 40 million Nigerians. We aim to do this using digital platforms, there will be no physical cash transfers.”

The minister added that it would be based on a register for poor households in the country, stating that the government hopes to achieve this by the first quarter of 2022.

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