By Olusegun Obisanya
An economic expert, Mr Femi Olunuga has disclosed that the Federal Government has taken the right economic step by removing the controversial petroleum subsidy that had denied the nation and citizenry development for a long time.
He warned that Nigeria must not go the way of Ghana that is having difficulty meeting its international obligations to the country’s creditors.
Olunuga, a Fellow of the Institute of Chartered Accountants of Nigeria (ICAN), spoke in Lagos recently on the state of the nation.
He described subsidy as a “fraud by few people,” is “systematically” killing Nigerians and deny the country of the long time needed economic development.
According to the expert, an Associate Member of the Chartered Institute of Taxation of Nigeria (CITN), the country can no longer afford to borrow money that will end up in the bucket of few people at the detriment of the masses.
Olunuga said, “Ordinarily, if one is not informed about the long term implications of subsidy, one would have kicked against it or even prayed against it. But if you understand the subsidy system, it was a highly corrupt system that deceives the generality of the people and kills them systematically.
“But the government, because of the powerful forces that were benefitting from it was reluctant to stop it. But in recent years, the nation’s economy suffered a terrible blow. And the debt burden of this nation has gotten to a point where we can no longer continue to borrow to finance subsidy. Even if we wanted to borrow, the lenders are now seeing clearly that we may not be able to repay.
“So, if the government in power today had refused to withdraw subsidy, number one, the budget we are operating already stipulated that after June 2023, there will be no fund for subsidy. Now, to go and appropriate money that we do not have will mean we are now voluntarily going into slavery.
“In recent years, we hear about the economy of Ghana doing well but over the last one year, they have gone into a terrible state such that people are protesting on the street that government bonds were not been honoured. The interests that were to be paid to bondholders, the government could not pay in Ghana.
“The maturing bonds, the government of Ghana could not pay, international creditors were shouting to the high heavens that Ghana could not meet their obligations. Must we in Nigeria get to that stage.”
Quoting figures from the Nigeria Bureau of Statistics (NBS), Olunuga, who is also a consultant, more than 70% to 80% of the nation’s income is being used to service debt.
“And by July, about $500m foreign loan taken will be due for repayment. With dwindling income and already running a budget deficit, we have an obligation maturing in July, there’s no way the government could have sustained it.
“So, the president did what was right on the inauguration day, making it clear there is no more subsidy, and you can see within two weeks, he has set the machinery in motion to ensure that the necessary cushioning effects to mitigate the burden of subsidy removal is being done.”
