Public affairs analyst Dotun Ojon has explained the far-reaching consequences of the fuel subsidy removal, noting that the burden has simply shifted from the government to the people. During a Breakfast Programme on News Central TV on Monday, November 25, 2024, Ojon offered a detailed breakdown of how this policy affects the Nigerian economy and its citizens.
The Subsidy Shift
Ojon emphasised that the removal of the fuel subsidy does not eliminate the cost—it merely shifts the financial responsibility from the government to the public. He explained:
“Subsidy only moved from government to the people; when government stops paying, the people start paying.”
Understanding the Budget and Borrowing
Ojon also touched on the broader issue of the nation’s budget and its implications. He clarified that when a budget shows a deficit, it signals the government’s intention to borrow to fill the gap. This, he said, is a well-understood reality, not a new development. He further stated:
“When you have a budget of X amount, and your revenue is only Y, you’ve indirectly approved borrowing. It’s not a surprise; it’s a reality that those of us who read the budget are aware of.”
He noted that at the start of each fiscal year, the government typically faces a funding shortfall. If the projected revenue does not meet the required amount, borrowing is the usual solution to cover the gap. This borrowing, Ojon argued, is often planned at the start of the year, and should not come as a shock to lawmakers or the public.
Economic Pathways: The ‘Lift’ or the ‘Staircase’
In his analysis, Ojon presented two potential economic pathways for the country. One is the “staircase” approach, where the government takes gradual steps, ensuring the budget can be funded without excessive borrowing. The other is the “lift” approach, where borrowing is used to quickly achieve goals but may come with significant risks, such as not using borrowed funds effectively.
“You either take the staircase or the lift in economic freedom,” Ojon said. “The problem with the lift is that it’s a risky move, especially in a place where power is epileptic—you can get stuck.”
The Challenge of Budget Implementation
Ojon also raised concerns about Nigeria’s historical budget performance, which usually hovers between 50% and 70%. He pointed out that while budgets are approved, the actual spending often falls short of expectations, leading to incomplete projects and unmet goals.
“The fear now is that even if money is borrowed, it might not be used for its intended purpose,” he warned. “At the end of the day, budget performance usually does not exceed 70%, which is concerning.”
Accountability and Responsibility
He stressed the importance of accountability and responsibility in the budgeting process. He emphasised that Nigerians, through their representatives, implicitly approve the government’s borrowing decisions when they approve a budget, even if the deficit is large.
“When you approve a budget with a wide deficit, you’ve given indirect approval for borrowing,” Ojon explained.
In conclusion, Ojon acknowledged that while the current situation of borrowing and fuel subsidy removal is in line with the government’s plans, the true challenge lies in ensuring that borrowed funds are effectively used to benefit the country and its people.
