Cushioning impact of Nigeria's petrol subsidy removal

Nigeria's incoming president, Bola Tinubu, is expected to provide palliative measures to ease the phase out of petrol subsidy by June this year. However, recommendations are to be made by the current government. Johnson Chukwu, Chief Executive Officer of Cowry Asset Management Limited, recently joined CNBC Africa to discuss the potential impact and challenges surrounding the impending fuel subsidy removal. Chukwu expressed his concerns about the current government's attempt to dictate the course of action for the incoming administration regarding subsidy removal. He emphasized that such decisions should be left to the discretion of the new government, considering the lack of strong public support following the recent elections. Chukwu argued that while he supports the removal of subsidies, the new government should have the freedom to develop its strategy on critical issues like this, rather than inheriting predetermined decisions. In light of the upcoming inauguration of the President-elect by May 29th and the proposed fuel subsidy removal, Chukwu underscored the complexities of the situation. He acknowledged the unsustainability of subsidies but highlighted the importance of careful planning to navigate the socio-political environment effectively. Chukwu recommended a phased approach to subsidy removal, coupled with addressing foreign exchange issues to prevent continued subsidization of imported fuel. When discussing potential palliatives for the public, Chukwu suggested targeted interventions such as cost-of-living allowances for low-income public servants and conditional cash transfers for the most vulnerable. He stressed the need for discriminatory interventions that prioritize those most impacted by the subsidy removal. In response to a question about the possibility of a supplementary budget to bridge any gaps resulting from delayed subsidy removal, Chukwu indicated that a new government would likely need to develop a supplementary budget to address various weaknesses in the current budget. Overall, Chukwu highlighted the importance of strategic decision-making and public engagement to effectively navigate the challenges posed by the fuel subsidy removal in Nigeria.