How Nigeria Diverted money meant for 431,557 home projects to petrol subsidy – Reports
The N4tn earmarked by the Federal Government for petrol subsidy in 2022 can provide one-bedroom apartments for 431,557 Nigerian families, according to calculations by Financial PUNCH.
Under the National Housing Programme launched by the Federal Government and supervised by the Ministry of Works and Housing, a one-bedroom apartment costs a maximum of N9.269m and a minimum of N7.222m.
With N4tn budgeted for fuel subsidy, the Federal Government can secure 431,557 one-bedroom bungalows for homeless families at the cost of N9.269m.
On the other hand, with N7.222m for a one-room apartment in some states in Nigeria based on NHP rates, the Federal Government can extend the number to 553,832 one-bedroom bungalows for homeless families.
The NHP was established to provide adequate and affordable housing for the citizens. The first phase of the programme began in 2016 in 34 states of the Federation and the Federal Capital Territory, with an initial focus on state capitals.
There are mixed feelings regarding the success of the programme as many Nigerians who claim to have applied for the scheme say they cannot have access to the affordable housing programme.
-A wasteful petrol subsidy
Based on data obtained from the Nigerian National Petroleum Corporation, the Ministry of Finance and other sources, Nigeria spent N10.529tn on petrol subsidies between 2012 and 2021.
The subsidy, also tagged ‘under-recovery’ by the NNPC, is set to receive N4tn in 2022, which is about 23.35 per cent of Nigeria’s 2022 budget and 2-3 per cent of nation’s Gross Domestic Product.
While the government prepares to spend N4tn on petrol subsidy which favours mostly the rich, other critical economic issues are abandoned by the Federal Government.
The Academic Staff Union of Universities is demanding N200bn to revamp the education system in Nigeria, which is just five per cent of what the government of the President, Major General Muhammadu Buhari (retd.), is planning to spend this year on petrol subsidy.
If the government deregulates the petroleum industry and puts the N4tn into the health sector, per capita health budget for the year would rise from the current N4,100 to N24,000.
That means that this will reduce the number of Nigerians who die annually due to diseases.
Heart diseases kill 108, 578 Nigerians annually, according to the World Health Organisation, just as malaria sends 90,000 Nigerians to their early graves, said the National Malaria Elimination Programme.
Similarly, tuberculosis kills 157,000 Nigerians annually, while diarrhoea sends 100,000 children to their early graves, according to the Ministry of Health and the United States Agency for International Development respectively.
Cancer kills 72,000 Nigerians yearly, according to the Ministry of Health, but the country has only three public radiotherapy machines across the country.
Yet, what bothers the Federal Government is petrol, which benefits only the rich and the middle-class who have cars and power generators.
Also, the Institute of Statistics, which is the official data agency of the United Nations Educational, Scientific and Cultural Organisation, revised the number of out-of-school children in Nigeria from 10.5 million in 2010 to 8.7 million in 2014.
If the Federal Government decides to suspend the petrol subsidy and plough the money into the education system, each of the 8.7 million out-of-school children can have a budget of N459,770, which should be enough for each child to stay in school for at least two years.
The President of the Manufacturers Association of Nigeria, Mansur Ahmed, told The PUNCH that the petrol subsidy was a yoke on the Nigerian economy, arguing that placing much importance on petrol over issues of health and infrastructure was misdirected.
“We believe that subsidy is a yoke on our economy. First of all, the social sector is critical. Maybe people feel that fuel is so important, but if you compare it with health, education and security, you will notice it is nowhere near them.”
Professor of Energy Economics at Nnamdi Azikiwe University, Uche Nwogwugwu, condemned the N4tn petrol subsidy, saying that it was a tax on consumption.
According to him, the amount was enough to subsidise the cost of local refining, noting that channelling Nigeria’s scarce resources to subsidy when issues of funding education, infrastructure and security were on the front burner was a waste of money.
“Nobody knows the basis of the N4trn subsidy. We in energy economics say that any subsidy on petroleum is corruption. A lot of development can be done with N4trn and we can develop alternative energy sources of energy and renewable energy with that amount, to rely less on fossil fuel.”
Nwogwugwu stressed the need to invest in capital projects rather than on consumption in order to take many Nigerians off the poverty class.
An Economist and CEO of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, warned that subsidies would lead Nigeria to higher debt service, fiscal deficit, inflationary pressure and even naira depreciation
He said, “With this development, our macroeconomic outlook in the near term should be a cause for worry. The outcomes of these approvals include increased borrowing, higher debt service, surge in fiscal deficit, heightening inflationary pressure and a risk of further depreciation in the naira exchange rate.”
He added that there would be an increase in recurrent expenditure as debt service and fuel subsidy would gulp a significant part of the government’s revenue.
He also urged Nigerians to be prepared for more challenging times as necessary reforms for economic recovery and growth might not happen soon.
He said, “The implications are that we should brace up for more challenging times. There is no quick fix. Major reforms necessary to return the economy to a recovery and growth path are unlikely to happen in the near term. This is coupled with the distractions that come with electioneering and transition periods.”
He also lamented the presence of dysfunctional policies and regulations in the country, adding that there was reluctance on the part of both Executive and National Assembly to cut spending in a way to reflect the current weak fiscal position of the government.
-Housing crisis in Nigeria
A 2020 report by the Borgen Project, a not-for-profit organisation that addresses poverty and hunger, said there was a 17 million housing shortage, noting that the nation’s neglect of real estate was due to a lack of investment on the government’s part and its people’s subsequent inability to afford homes.
The Bureau of Public Service Reform in 2017 put the number of homeless Nigerians at that time at 108 million.
The bureau described the 100,000 houses built yearly in the country as insufficient, stressing the need to build more homes.
The World Bank recommends at least 700,000 units annually for Nigeria, but the government is scratching the surface and allowing its revenue to go to subsidies while millions of its citizens are homeless.
Source: punchng
