The withdrawal of fuel subsidies by President Bola Tinubu’s administration, according to Dr. Alex Otti, the governor of Abia State, was the right choice for Nigerians.
The lack of investment in local refining, he said, has had serious economic repercussions, including job losses and the slowing of the expansion of allied companies.
Dr. Otti argued that the Federal Government should have engaged in more strategic planning and communication before reducing the subsidy to protect the public from the anticipated shocks. He was speaking as the 63rd Founders’ Day lecturer of the University of Nigeria in Nsukka, Enugu State.
While speaking on the theme: ‘Petroluem Subsidy Removal: Dealing with the Challenges, Harnessing the Opportunities,’ he said that the petrol subsidy should have been removed 10 years ago to place the nation on the path of sustainable national development.
The biggest winners, according to him, were wealthy businesses who could pool their resources to invest in gasoline importation under the previous regime, which only approved subsidy payments for imported petrol. According to him, this system supported arbitrage, waste, and other types of corruption because it lacked efficient monitoring and reporting mechanisms and was purposefully manipulated by well-connected people working with dishonest officials.
According to Governor Otti, the complicated subsidy system encouraged a lot of unhealthy behaviours, and in the end, rather than benefiting from the significant investment as had been intended, the poor ended up financing the extravagant lifestyle of the wealthy and well-connected.
“One thing I have learnt in communicating policies and plans is that you can never get everyone to agree with your proposals. However, sincere and clear communication, using various channels would help on two fronts: buy you genuine public support and give your audience an opportunity to understand your intentions better.
“The removal of fuel subsidy was clearly the right decision and should have been done about ten years ago or earlier but even then, I am of the considered opinion that more could have been done to insulate the public from the anticipated shocks.
“Being a policy that would introduce shock into the system, I believe it should have been communicated better. I do not think that much was done to properly educate the public on the issues at stake,” he said.
He further cited examples from other nations, like Angola and Senegal, where governments strategically retained subsidies on essential products for the poor.
Advocating for a more comprehensive policy framework to support specific areas of needs as identified by the World Bank, he stated that measures such as subsidized mass transit, cash transfers, food assistance, and low-interest agricultural loans should have been considered to support the urban and rural poor.
He advocated for the quick adoption of strong policies to address rising poverty and unemployment and voiced concern that the subsidy’s elimination has worsened living conditions for citizens.
The Vice Chancellor of the University, Professor Charles Igwe, stated in his welcome speech that the Founders’ Day lecture is reserved for individuals of exceptional accomplishments and that it aims to create an opportunity for serious reflections and discussions on issues of national and global interests.
The Vice Chancellor praised Governor Otti as a top-notch economist, banker, and dynamic manager of people and resources and mentioned that the speaker belonged to a select group of University graduates after receiving an Honorary Doctorate from the school.