On August 17, 2023, the Governor of Borno, Babagana Zulum, alongside his colleagues, announced the resolution of the National Economic Council.
It is pertinent to recall that shortly after President Bola Ahmed Tinubu announced the removal of fuel subsidy on May 29, 2023 the price skyrocketed from about N175 to about N545. Challenges with exchange rate have further resulted in price increases, especially after the government’s decision to float the rates.
To cushion the effect of the subsidy removal, the Federal Government initially announced a world bank intervention in the form of conditional cash transfers to poor households. According to the palliative, N8,000 will be shared among 12 million low-income earners spread across the country for a period of six months. The plan was for a total of $800 million loan facility to be utilised for the cash transfer.
Shortly after the announcement, the decision was met with condemnation and outcry by Nigerians. Citizens queried the impact of the conditional cash transfer implemented by the immediate Muhammadu Buhari-led administration. They, therefore, rejected what they described as a failed palliative program, which they said lacked accountability and transparency.
It was on this premise that the National Economic Council went back to the drawing board to seek an alternative measure to cushion the effect of the fuel subsidy.
Who Constitutes the National Economic Council?
The National Economic Council (NEC) in Nigeria was established by the provisions of the 1999 Constitution of the Federal Republic of Nigeria (as amended); Section 153(1) and Paragraphs 18 & 19 of Part I of the third schedule.
On assumption of office, Bola Tinubu inaugurated the National Economic Council which is headed by Kashim Shettima, the vice president. The economic body comprises all 36 state governors, the Governor of the Central Bank of Nigeria and other co-opted Government officials.
The primary function of this body is to “assist the president in the formulation and implementation of policies that will help to actualise its economic programs of the country.”
The NEC will also help to coordinate Nigeria’s economic planning efforts at both the Federal, State, and Local Government levels.”
At the inauguration, the president charged the newly inaugurated council to support his administration in transforming the economic Fortunes of the country.
Tinubu added that the task of growing the nation’s economy is quite enormous and that there must be “no excuse for failure”.
The National Economic Council (NEC) Rolls out Palliatives
Recently the National Economic Council disclosed that the Federal Government has approved the disbursement of N5 billion each to all the 36 States of the federation and the Federal Capital Territory.
While speaking after the NEC meeting, Governor Babagana Zulum added that the fund would be distributed to all states alongside five trucks of rice each to all the 36 state governors.
He added that the governors will use the disbursed funds to procure 100,000 bags of rice, 40,000 bags of maize, and fertilizers that will be distributed to the poor people in the respective states.
Therefore, the fund is doled out to the governors to enable them to procure food items for distribution to the poor in their respective states, not to be shared or distributed as cash gifts to the people.
Furthermore, the bone of contention is whether the N5 billion palliative is a “gift” from the Federal Government to the states or a loan facility that will be repaid.
Is the N5 billion a Gift or Loan?
The Borno state governor announced that 52 per cent of the funds were given to all states and the FCT as a grant to cushion the effect of the subsidy removal.
However, 48 per cent of the funds were given as loans that would be repaid by all states and the FCT.
Therefore, every state got a grant of N2.6 billion and a loan of N2.4 billion to be paid back on an instalment basis within 20 months.
The implication is that for the next 20 months, every state will have to pay back N120 million from the allocation received from the FG to service the loan received. Moreso, since the funds will be shared as a palliative between the State and Local Government, the two arms of government will make the repayment to the Central Bank of Nigeria.