Minister: Source Of Funding For Transport Grants Not Yet Determined

The Senate yesterday said the N5,000 monthly allowance for 40 million Nigerians to mitigate the expected high cost of transportation, after the planned removal of fuel subsidy, was not appropriated in the 2022 budget.

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said on Monday that the Federal Government has proposed to give N5,000 as transportation allowance to 40 million Nigerians to cushion the effect of its planned fuel subsidy removal.

However, the Chairman, Senate Committee on Finance, Senator Solomon Adeola, who spoke on the issue at a press briefing yesterday in Abuja, said that there is no provision for such in the proposed 2022 budget.

Speaking with reporters after the submission of budget of MDAs being oversighted by the Committee, Adeola insisted that before the Executive can embark on such intervention, the proposal must come before the National Assembly.

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He said the proposal would cost the Federal Government N2.4trillion and sought to know the criteria that would be used to determine the beneficiaries of the allowance.

He said: “I don’t want to go into details. If there is something like that a document needs to come to the National Assembly and how do they want to identify the beneficiaries?, he queried.

“This is not provided for in the 2022 budget proposal totaling N2.4 trillion. For us, we still believe it is news because this budget we are considering contains subsidy and if we are passing a budget with subsidy in the fiscal document, we can’t speak because that is the document that is currently before us.

“So, this is not provided for in the 2022 budget. We don’t have anywhere in the budget where 40 million Nigerians will collect N5,000 monthly as transportation allowance totaling N2.4 trillion.

Also, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed has admitted that the Federal Government is still working out the details of the number of beneficiaries.

She said there was urgent need for the Federal Government to wean the nation off petroleum subsidies, adding that it could no longer sustain the N3 trillion per year subsidy, which has almost forced the Nigerian National Petroleum Company (NNPC) to virtually reduce its remittances to the Federation Account to zero.

On the N5000-a-month transportation grant to poorest Nigerians, Mrs. Ahmed said negotiations are still ongoing. She said the duration of implementation will be between six and twelve months.

The minister disclosed that the implementation will employ digital disbursement or transfers on available platforms.

“The Petroleum Industry Act has a provision that all petroleum products must be deregulated and in the 2020 budget, we made a provision to assume that at the maximum by the end of June, we must exit subsidy. So this last FAAC the subsidy cost to the Federation was N243 billion.

“So, if we look at a cost of about 250 billion per month, and it has been increasing consistently. So, we’re expecting something around N120 billion per month from NNPC and now we’re getting to a point where NNPC is remitting near zero. And if we don’t stop we will get to a point where will tell you pay me this for managing the fuel provision in the country. So if you take 250 billion times 12 months, that is about N3 trillion.

“If we don’t remove it, that is what it is costing us. This is money that we can use to apply to health and to education. The intervention we want to provide is for between 20 to 40 million people and there is still a lot of work going on. We have a committee that is chaired by His Excellency the Vice President, state governors and a few of us ministers as members.

“So, we have to have a landing as to the exact number between 20 to 40 million. We already agreed it will be N5000 and we have also agreed that the remittances have to be done digitally. So the e-naria will help, but also so are the various payment platforms that are currently available. What we will not do is paying people in cash. So the transfers that people will receive through one kind of electronic money or the other and it’s meant to be for a period of six, nine or 12 months.

“These are things that are still in negotiation because it’s still money that would have to come from the Federation Account. So everybody that is a member of FAAC will have to agree on the numbers. The maximum will be 12 months, the minimum will be will be six months.

“We thought it was important to do this to give people a chance to adjust before the other support measures that the government is working on materialise and that is the provision of alternative to PMS, which is CNG that is having mass transit vehicles converted to CNG.

“Also, the bringing on stream of petroleum refineries, including the Dangote Refinery so that it reduces even the need to import the PMS in the first place. So that’s the logic behind targeting the middle of next year.

 

“This money is meant to provide relief to the very poor and the vary vulnerable and from the experience we have had on the conditional cash transfer, it shows that that N5000 that some people think is small actually makes a difference to families. It helps them to provide not only their basic needs, but we’ve seen women who are caregivers of those farmers actually start doing small trade, and they’re able to maintain themselves thereafter.

“So in a way, it is not just consumption, it also helps to improve the productive activities of people that are at the bottom of the pyramid and remember, during the COVID-19 pandemic, we had more people becoming vulnerable, especially in the urban area. So we’re not covering the rural areas but also the overburden, the urban poor.

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“This exercise of the registration will be led by, on the part of the federal government, the Ministry of Humanitarian Affairs has that responsibility, they’re already developing this register, but the states are also going to be actively involved in providing this electronic register through which the transfers will be undertaken,” she explained.

Ahmed also noted that the impact of the the economic growth being recorded will not be felt until it surpasses population growth rate.

“Let me say that, again, the Nigeria economy is growing and right now we have witnessed four consecutive quarters of GDP growth. We’ve also said that we aspire to continue to push this growth to the point when the group supersedes the growth in our population, because that’s the time that people will actually feel the benefits.

“So we’re pushing the bar, at the third quarter of 2021, the average annual growth is now 3.3%. Our population growth is roughly about 3.2%. So we still need to do a lot more for people to feel this, but the fact that the service sector is now in positive territory, it also means that people will actually begin to feel the difference, because it’s the service sector that has the first direct impact on people.

“So it is it is transport, hotel services, air services, health services, it’s when those sectors begin to improve. Also in the case of Nigeria, because agriculture is very important, the growth of agricultural sector is also important for people to feel the difference because agriculture employs a large number of people.

“So at a increased growth rate of 1.22%, we still need to do much more in expansion of growth in the agricultural sector”, she explained.

On her briefing to Council on the third quarter GDP report for 2021, which was released on Thursday last week by the National Bureau of Statistics (NBS), she noted that the result showed an improvement from the contraction that was witnessed in 2020.

The minister recalled that Nigeria had negative growth in Q2 and Q3 2020, noting “we entered into a recession technically and then exited recession by the fourth quarter of 2020.

“So, this report shows that we now have four consistent quarters of growth from Q4 2020 to Q3 2021. The GDP third quarter report shows a growth of 4.03% in the third quarter 2021 compared to a contraction of minus 3.62% in the third quarter of last year.

“So, part of the economic activities that were the major drivers of growth within this reporting period is services which grew by 8.41%. Growth in the service sector was largely driven by better performance in the rail transport sector, pipeline sector, air transport, financial institutions, road transport sector, water transport as well as crude.

“Agriculture also grew by 1.22%. This is a slight dip compared to the 1.3% in the second quarter of 2021. And the reason for the dip has to do with a slight slowdown in agricultural activities in some parts of the country due to security.

“The growth in agriculture that is reported in this quarter is largely driven by crop production. The growth in industry has been consistent, but we have seen a slight slowdown compared to the last quarter 2021 and the contraction of the industry is driven by the poor performance of the crude oil and natural gas sectors, coal mining, quarrying, minerals as well as oil refinery.

“The Q3 GDP report indicates that the oil sector’s contribution to the GDP today stands at 7.49% while the non oil sector contribution to the GDP stands at 2.51%. This indicates that the Nigerian economy is truly very diversified with the oil sector contributing just 7.49%.

“So, factors that are responsible for this growth include the commitment of the government to continued containment of the COVID-19 pandemic, as well as the implementation of fiscal and monetary measures to support businesses contained in the Economic Sustainability Plan.

“It includes the improvement that we’ve witnessed in the rail transport sector, pipelines, air transport, road transport, as well as water transport. It includes improvement in the transportation and the free movement of people as well as goods as the containment measures have been really improved.

“We’ve seen also improvement in the financial services sector with higher supplementary incomes compared to 2020. There’s been improvement in electricity generation and distribution during this quarter as well as improvement in water supply, sewage and waste management and remediation activities.

“There is also indication of higher trade activities which have significantly improved compared to 2020 because of the containment measures that slowed down trade significantly. Also reported is the inflation numbers for the month of October 2021 at 15.99%.

“This is consistent with the decline that we have seen in inflation from April 2021 to date. We expect this decline to continue through the rest of the year and also throughout the year 2022. On the other hand, we have seen an adjustment that has been done in the inflation largely caused by the improvement in the food basket in the inflation mix. And this is largely due to the agricultural harvest which constitutes 50% of the basket and inflation”, she said.

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