Nigerians from across the country are lamenting the hardships in the land, crying out for urgent measures by the government at all levels to mitigate their suffering which is becoming intolerable.
Failure to genuinely tackle the myriad of difficulties and deprivation the citizens are suffering could inflict dire consequences on the country in no time.
The 36 state governors recently raised the alarm that they may not be able to pay salaries in the coming months as a result of dwindling revenue from the federations account.
The Lagos Chamber of Commerce and Industry is equally warning that Nigeria’s economy might relapse into recession in the second half of 2022, due to the burden of petrol subsidy and government’s dwindling revenue.
The Governors under the auspices of the Nigerian Governors Forum had expressed their concern in a recent presentation before the House of Representatives ad-hoc committee investigating the daily consumption of premium motor spirit, otherwise called petrol, in Nigeria.
NGF Head of Legislative Liaison, Peace and Security, Fatima Usman-Katsina, had accused the Nigerian National Petroleum Company Limited of arbitrary deduction from revenue accruable to the federation account as well as the dwindling fortune of remittances to the federal coffers.
Usman-Katsina said FAAC net oil and gas revenues have been declining since 2019 and were projected to decline significantly in 2022 by between N3 billion and up to N4.4 billion unless action was taken urgently.
Most states are already experiencing fiscal stress, with 30 out of 36 states recording fiscal deficits in 2020, including Lagos and every oil-producing state except Akwa Ibom.
President Muhammadu Buhari said at the official unveiling of the NNPC Limited on Tuesday last week that the new entity was henceforth free from institutional regulations.
Buhari stated that the oil firm would from now on conduct itself under best international business practices.
The NNPC also made it clear that it would no longer remit any money to the Federation Accounts Allocation Committee for sharing to the three tiers of government monthly.
It said this was based on its latest transition from a public corporation to a limited liability company and that it currently owed no money to FAAC, as all monetary arrears to the committee were owed by the old corporation and not the new oil company.
Before its official unveiling as a limited company, the NNPC had failed to make any remittance to FAAC since this year. It had consistently deducted the amount it spends on fuel subsidy monthly, a development that had eroded the funds which it would have remitted to the committee.
Findings showed that between January and May this year, the oil company had spent N1.274trn on petrol subsidy, being the sole importer of the commodity into Nigeria. The Chief Executive Officer, NNPC Limited, Mele Kyari, stated that the firm was now a private outfit and had nothing to do with FAAC anymore.
With the coming into effect of the Petroleum Industry Act, gross oil and gas revenues could be much lower than currently projected because of the new fiscal terms and the earmarking of deductible revenues specified in the PIA, and that could reduce net oil and gas revenues even further.
Also on Tuesday last week, the Central Bank of Nigeria raised the Monetary Policy Rate from 13 percent to 14 percent.
“If the spate of insecurity, political and economic uncertainties in the country are not tackled promptly, government business may be grounded as the states are due to suffer heavy financial losses”
CBN Governor, Godwin Emefiele who announced this during the 286th meeting of the Monetary Policy Committee held in Lagos, said it was the right option considering economic realities.
“The committee resolved that the most rational policy option would be to further strengthen its tightening stance in order to effectively curtail the unabated rising trend of inflation,” Emefiele said.
While the apex bank increased the MPR rate, it, however, retained other parameters.
The asymmetric corridor remains +100 and -700 basis points around the MPR, and the Cash Reserve Ratio is at 27 percent.
Tuesday’s rate hike marks the second time the MPC will raise the interest rate in two months.
The MPC increased the rate from 11.5 percent to 13 percent on May 24.
Many Nigerians are worried about the implication of the new interest rate on the economy.
Although the MPC expects the step to tame inflation, however, the opposite may be the case.
The MPR hike will burden manufacturers and investors because the factors driving inflation in Nigeria are different from factors driving inflation in other countries that the CBN is comparing Nigeria with.
At the moment, Nigeria needs well-coordinated fiscal and monetary policies that would sustain the pace of economic recovery in 2022, encourage foreign capital inflows into the economy and enable Nigeria to navigate growing global uncertainties.
There are heightened fears of contracting output, constrained production, and recession risks as we navigate the murky waters of 2022.
The naira has lost its value in view of the situation whereby people spend so much to get a small quantity of goods in return. The high cost of goods and services has always distorted the family budget.
It is our point that the Federal Government should take proactive measures that would boost agricultural output and ensure food security in a manner that would discourage continued dependence on food imports.
We are all aware that food scarcity is looming large on the horizon, and if nothing smart and quick is done, it would further exacerbate the plight of the poor.
The Federal Government should also create an enabling investment environment for the advancement of the Nigerian economy and the good of all investors and economic players through the right policy and regulatory framework.
The current parlous state of the country, especially security and economy, may paralyze political and socio-economic activities in the states if these hydra-headed problems are not tackled speedily as government business and social life of the people may be adversely affected.
If the spate of insecurity, political and economic uncertainties in the country are not tackled promptly, government business may be grounded as the states are due to suffer heavy financial losses.
