Abia State Governor, Alex Otti, has offered a roadmap for utilizing subsidy savings to address various economic and social challenges facing Nigeria, emphasizing the importance of strategic investments in critical sectors and the empowerment of the nation’s youth and entrepreneurs.
The Abia governor proposed ways the Federal Government can utilize savings from the removal of petrol subsidy, among others, to assist the vulnerable Nigerian population that is most impacted by the subsidy removal.
He made the proposal in a public lecture he delivered titled “Fuel Subsidy Removal: Dealing with the Challenges, Harnessing the Opportunities” during the 63rd Founders’ Day celebration at the University of Nigeria, Nsukka.
Otti recommended that at least 25% of the approximately N1 trillion saved from last year’s expenditure due to subsidy removal should be allocated to support 20 million impoverished Nigerians for 5 months.
Governor Otti also suggested channelling another 25% of the subsidy savings into public works initiatives, engaging the nation’s unemployed youth in government-funded infrastructure projects, including road construction and mass housing development.
He added, “To support MSMEs, which are critical engines of economic growth, we recommend that LGAs, states and the federal government must channel a part of their receipt from subsidy savings to that segment. Again I would recommend 25%, to support MSME businesses through training and capacity building, exposure to local and domestic markets, infrastructure support and lastly, provision of structured financing to existing and intending entrepreneurs.
“I am of the view that the best way to harness the energy and creativity of our young people is to expand the enterprise space, take off the many restrictions that have been known to frustrate businesses such as multiple taxation and harassments by thugs. Additionally, we must give them the institutional support they need to compete on the same level as their peers from Southeast Asia. This is the best time to support our farmers, founders of innovative startups, fashion designers, entertainers, small-scale manufacturers and all the other individuals who are doing great things across Nigeria.
“Lastly and for me, most importantly, there is no better time to invest in our power generation and distribution value chain than now. One more time, I would recommend we do this with the remaining 25% of the over N4 trillion we paid for petrol subsidy in 2022.”
This way, the governor said the government would be able to combat youth unemployment, reduce poverty rates, and enhance the nation’s public infrastructure.
He stressed the urgency of increasing power generation capacity from various sources and learning from successful strategies employed by other developing economies with similar demographics and economic systems.
Additionally, Governor Otti called for incentives to encourage private sector players, including major oil companies like NNPCL and NLNG, to invest in the electricity sector.
The investments, he said, would help alleviate the impact of petrol subsidy removal by improving electricity supply for businesses and households.
Governor Otti concluded his address by highlighting the “golden opportunity” for local refining of petroleum products now that subsidies have been removed, allowing market forces to operate more freely.
He encouraged investors to explore this opportunity by building modular and standard refineries, considering the market dynamics and business viability.