Loans, buses, farms….A breakdown of Tinubu’s subsidy ‘palliatives’

President Bola Tinubu gave a televised speech to the nation Monday evening in an effort to address growing discontent over the hardship caused by his administration’s twin policies of ending petrol subsidy and allowing the naira lose value.

If you found the president’s nearly 2000-word speech difficult to follow as he spoke about his government’s plans for families and businesses, we remade the speech into a shorter and straight-to-point question and answer text.

This version should allow you evaluate the offers and share what you think of them.

Here is a summary of the speech.

– Why was subsidy removed?

The subsidy cost us trillions of Naira yearly. Such a vast sum of money would have been better spent on public transportation, healthcare, schools, housing and even national security. Instead, it was being funnelled into the deep pockets and lavish bank accounts of a select group of individuals.

This group had amassed so much wealth and power that they became a serious threat to the fairness of our economy and the integrity of our democratic governance. To be blunt, Nigeria could never become the society it was intended to be as long as such small, powerful yet unelected groups hold enormous influence over our political economy and the institutions that govern it.

The whims of the few should never hold dominant sway over the hopes and aspirations of the many. If we are to be a democracy, the people and not the power of money must be sovereign.

– Naira devaluation?

Also, the multiple exchange rate system that had been established became nothing but a highway of currency speculation. It diverted money that should have been used to create jobs, build factories and businesses for millions of people. Our national wealth was doled on favourable terms to a handful of people who have been made filthy rich simply by moving money from one hand to another. This too was extremely unfair.

It also compounded the threat that the illicit and mass accumulation of money posed to the future of our democratic system and its economy.

I had promised to reform the economy for the long-term good by fighting the major imbalances that had plagued our economy. Ending the subsidy and the preferential exchange rate system were key to this fight.

– Given the hardship, will these policies be reversed?

Our economy is going through a tough patch and you are being hurt by it. The cost of fuel has gone up. Food and other prices have followed it. Households and businesses struggle. Things seem anxious and uncertain.

I understand the hardship you face. I wish there were other ways. But there is not. If there were, I would have taken that route as I came here to help not hurt the people and nation that I love.

What I can offer in the immediate is to reduce the burden our current economic situation has imposed on all of us, most especially on businesses, the working class and the most vulnerable among us.

– So what is the Tinubu administration offering?

Here are President Tinubu’s offers, clipped by sectors and subjects. His first offer goes to the manufacturing sector.

Manufacturing

To strengthen the manufacturing sector, increase its capacity to expand and create good paying jobs, we are going to spend N75 billion between July 2023 and March 2024. Our objective is to fund 75 enterprises with great potential to kick-start a sustainable economic growth, accelerate structural transformation and improve productivity.

Each of the 75 manufacturing enterprises will be able to access N1 Billion credit at 9% per annum with maximum of 60 months repayment for long term loans and 12 months for working capital.

Small businesses

Our administration recognises the importance of micro, small and medium-sized enterprises and the informal sector as drivers of growth. We are going to energise this very important sector with N125 billion.

Out of the sum, we will spend N50 billion on a Conditional Grant to 1 million nano businesses between now and March 2024. Our target is to give N50,000 each to 1,300 nano business owners in each of the 774 local governments across the country.

In like manner, we will fund 100,000 MSMEs and start-ups with N75 billion. Under this scheme, each enterprise promoter will be able to get between N500,000 to N1 million at 9% interest per annum and a repayment period of 36 months.

Agriculture

In the short and immediate terms, we will ensure staple foods are available and affordable. To this end, I have ordered the release of 200,000 Metric Tonnes of grains from strategic reserves to households across the 36 states and FCT to moderate prices. We are also providing 225,000 metric tonnes of fertilizer, seedlings and other inputs to farmers who are committed to our food security agenda.

Our plan to support the cultivation of 500,000 hectares of farmland and all-year-round farming practice remains on course. To be specific, N200 billion out of the N500 billion approved by the National Assembly will be disbursed as follows:

• -Our administration will invest N50 billion each to cultivate 150,000 hectares of rice and maize.
• -N50 billion each will also be earmarked to cultivate 100,000 hectares of wheat and cassava.

This expansive agricultural programme will be implemented targeting small-holder farmers and leveraging large-scale private sector players in the agric business with strong performance record.

Transport and Infrastructure

It is in the light of this that I approved the Infrastructure Support Fund for the States. This new Infrastructure Fund will enable States to intervene and invest in critical areas and bring relief to many of the pain points as well as revamp our decaying healthcare and educational Infrastructure.

The fund will also bring improvements to rural access roads to ease evacuation of farm produce to markets. With the fund, our states will become more competitive and on a stronger financial footing to deliver economic prosperity to Nigerians.

Part of our programme is to roll out buses across the states and local governments for mass transit at a much more affordable rate. We have made provision to invest N100 billion between now and March 2024 to acquire 3000 units of 20-seater CNG-fuelled buses.

These buses will be shared to major transportation companies in the states, using the intensity of travel per capital. Participating transport companies will be able to access credit under this facility at 9% per annum with 60 months repayment period.

Minimum wage

In the same vein, we are also working in collaboration with the Labour unions to introduce a new national minimum wage for workers. I want to tell our workers this: your salary review is coming.

Once we agree on the new minimum wage and general upward review, we will make budget provision for it for immediate implementation.

– How much has been saved by removing subsidy and how will it be spent?

In a little over two months, we have saved over a trillion Naira that would have been squandered on the unproductive fuel subsidy which only benefitted smugglers and fraudsters. That money will now be used more directly and more beneficially for you and your families.

For example, we shall fulfill our promise to make education more affordable to all and provide loans to higher education students who may need them. No Nigerian student will have to abandon his or her education because of lack of money.

– What if the price of petrol gets out of hand?

We are also monitoring the effects of the exchange rate and inflation on gasoline prices. If and when necessary, we will intervene.

Follow Pluboard on Twitter and Facebook, and share you think of the government’s plans.