The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has said the federal government’s planned removal of the subsidy on Premium Motor Spirit (PMS) also known as petrol could shut down businesses especially the Small and Medium Scale (SME) ones.
John Udeagbala, president of NACCIMA revealed this at the association’s 2023 second quarterly press briefing on Thursday.
“NACCIMA and indeed the organised private sector of Nigeria are not against subsidy removal from fuel; however, we are concerned about the impacts of the subsidy removal on our businesses which are already burdened with so much economic pressures and difficulties, leading to the shutdown of many SMEs and more unemployment in the country”, he said.
He said the greater challenge was that the government has not shown any tangible productive plan to cushion the impacts of the subsidy removal other than to borrow additional $800 million which, according to them, is meant to cushion the impact of the fuel subsidy removal.
Last year, Zainab Ahmed, minister of finance, budget and national planning, said the federal government would commence a phased removal of petrol subsidy from June 2023.
She said provision for the removal of the subsidy had already been made in the 2023-2025 Medium-Term Plan.
Experts say the removal could surge Nigeria’s inflation rate which is already at its highest levels in 17 years.
Udeagbala recommended that the federal government should urgently fix the country’s four refineries which remain comatose for the past 16 years to end petroleum products importation into the country.
“Aside from production of basic fuel products there are other heavier distillates and by-products of these refineries which are also critical inputs for industries such as LPFO, SRG, Carbon Black, etc. This, we believe, will help to generate further employment opportunities for our citizens particularly the teeming youths,” he added.
According to him, it will also address the impact of fuel subsidy removal without adding additional debt burden on the nation.
“Besides, our ability to provide some basic raw materials internally will help our industries to compete better to benefit from the African Continental Free Trade Agreement,” he said.
For the incoming government which takes effect in May, the association advises them to consider reduction in the size of its government functionaries in order to reduce cost and save funds for infrastructural development.
“There is also the need to make elective positions and principal appointments into various government agencies and offices and ministerial offices less financially attractive and redirect attention into the production economy in order to revive the ailing Nigerian economy,” Udeagbala said.
NACCIMA added that it was worried by the recent proposal of the outgoing government advising the incoming one to increase Value Added Tax (VAT) charges from 7.5 percent to 10 percent.
“We are concerned by this situation and therefore call on the incoming government to reconsider any thoughts on further tax increase, especially VAT,” he said.
“It is barely two years since the VAT rate was increased from five percent to 7.5 percent and therefore such advice is ill-timed.”