The International Monetary Fund (IMF) has advised the federal government to remove petrol and electricity subsidies once the social protection scheme has been enhanced and inflation subsides.

IMF disclosed this in a report titled “Nigeria: 2024 Article IV Consultation”.

The suggestion followed a surge in Nigeria’s inflation rate, which rose to 33.20 percent in March 2024 — up from 31.70 percent in February.

IMF said about 15 million households or 60 million Nigerians will potentially benefit from an enhanced social intervention scheme the federal government developed with World Bank support.

“The authorities have recently approved an enhanced social transfer mechanism developed with World Bank support, and some initial payments have been made,” IMF said.

“In response to governance concerns, the authorities automated and digitalized the system to build a robust mechanism that delivers swift and targeted support to vulnerable households—some 15 million households or 60 million Nigerians potentially benefit from the scheme.

“Once the safety net has been scaled up and inflation subsides, the government should tackle implicit fuel and electricity subsidies.”

According to the IMF, the subsidies are costly and poorly targeted, with higher-income groups benefiting more than the vulnerable.

IMF also said with pump prices and tariffs below cost-recovery, subsidy costs could increase to three percent of gross domestic product (GDP) in 2024, compared to one percent of GDP in 2023.

SUBSIDIES TO DRIVE BUDGET DEFICIT UP

IMF said its staff projected a higher fiscal deficit than anticipated in the 2024 budget, adding that “higher implicit” fuel and electricity subsidies would drive the increase.

The federal government had projected N9 trillion budget deficit for this year.

Aside from the subsidies, IMF said other drivers are lower oil and gas revenue projections, continued suspension of excise measures included in the medium-term expenditure framework (MTEF), and higher interest costs.

“Staff factors in an under-execution of capital expenditure in line with past outcomes and estimates an FGN deficit of 4.5 percent of GDP relative to the 2024 budget target of 3.4 percent of GDP,” IMF said.

“For the consolidated government, this implies a projected deficit of 4.7 percent of GDP in 2024 —compared to 4.8 percent of GDP in 2023 measured from the financing side — which is appropriate given the large social needs and factoring in a realistic pace of revenue mobilization.

“Over the medium-term, staff projects consolidation in the non-oil primary deficit. With rising interest costs, government debt stabilizes towards the end of the projection period.”

On April 3, the Nigerian Electricity Regulatory Commission (NERC) approved an increase in electricity tariff for customers under the Band A category to N225 per kilowatt-hour (kwh), from N66 — to reduce electricity subsidy.

However, on May 6, electricity distribution companies (DisCos) said the tariff of Band A customers has been reduced to N206.80 per kwh.

On May 29, President Bola Tinubu announced petrol subsidy was gone, however, on August 15, 2023, TheCable reported the president was considering a “temporary subsidy” on petrol.

On April 15, Nasir el-Rufai, former governor of Kaduna state, said the federal government is spending more on petrol subsidy than before.

Also, Gabriel Ogbechie, chief executive officer (CEO) of Rainoil Limited, on April 17, said the federal government now spends N600 billion on petrol subsidy monthly.

Prince Harry and his wife Meghan wrapped up their three-day visit to Nigeria on Sunday, arriving in the country’s economic capital Lagos during a trip to promote his Invictus Games for wounded military veterans.

The Duke of Sussex arrived with his wife on Friday in Nigeria’s capital Abuja where they visited a school event on mental health, in a trip that also saw the prince meet wounded Nigerian soldiers in the country’s northwest.

On day three of the visit, Prince Harry and Meghan took part in a basketball event with the Giants of Africa Foundation in Lagos, an organisation that helps youth through engagement in the sport.

The prince practised dribbling basketballs with children at the exhibition event for the foundation, which is run by vice-president of an NBA team Masai Ujiri.

“The power of sports can change lives, it brings people together and creates community and there are no barriers which is the most important thing,” the prince said.

Harry, a former army captain who flew helicopters in Afghanistan, founded the Invictus Games 10 years ago to help bring wounded veterans into sporting events to aid with their recuperation.

The couple later met with Lagos State governor Babajide Sanwo-Olu and also attended a Lagos fundraiser.“He has seen a lot and is still soaking in a whole lot,” the governor said of the prince’s experience of Nigeria.

Nigerian heritage

On Friday afternoon, Meghan sat on an event for women in leadership with Nigerian-born World Trade Organization director Ngozi Okonjo-Iweala, where the Duchess discussed her Nigerian heritage and being a role model to women.

“I want to start by saying thank you very much for just how gracious you’ve all been in welcoming my husband and I to this country,” she said to applause, before adding, “my country”.

“It’s been really eye-opening and humbling to be able to know more about my heritage and to be able to know, this is just the beginning of that discovery.”

In Abuja, the prince had also taken part in a seated volleyball match with Nigerian veterans, some of who were missing limbs from combat in the country’s north where troops battle jihadists and heavily armed criminal gangs.

On the Duke’s volleyball team was former Nigerian soldier Peacemaker Azuegbulam, who lost his leg in combat in the northeast, and became the first African to win gold at the Invictus Games in Germany last year.

Before Nigeria, Prince Harry was in London on Wednesday to mark the 10th anniversary of the games.

His trips to the UK since he moved to the United States in 2020 always prompt fresh speculation over a potential reconciliation with his family. But he did not meet with his father King Charles on this trip.

Nigeria’s military forces are battling armed groups on several fronts.

A long-running jihadist insurgency in the northeast has killed more than 40,000 people and displaced another two million since 2009. Militants have been pushed back from areas they once controlled, but they now target convoys with roadside bombs.

In northwestern and central states, heavily armed criminal gangs, known locally as bandits, carry out mass kidnappings for ransom and raid villages from camps hidden deep in remote forests.

AFP

One alleged notorious member of Boko Haram, simply identified as Alhaji Wosai, has surrendered to the Nigerian troops of Operation Hadin Kai.

Zagazola Makama, a counter-insurgency publication focused on the Lake Chad region, said Wosai surrendered to the army on Saturday.

Wosai was said to have escaped from an enclave of insurgents in Garno village in Borno state.

“It was gathered that the terrorist surrendered on May 11, 2024, to the troops of 21 Armored Brigade after escaping from the enclave of the insurgents in Garno village in Borno State,” the publication said.

“Intelligence sources informed Zagazola Makama that he surrendered with 1ak 47 rifle and 1 Magazine filled with 7.63MM 39 MM Special ammunition.

“The militant is in the military custody for profiling.”

In April, a Boko Haram fighter identified as Sajeh Yaga reportedly surrendered to troops of Operation Hadin Kai in Borno state.

He was said to have surrendered to the soldiers after he “sneaked out” from the terrorists’ camp in Sambisa forest.

He also reportedly relinquished weapons, including an Ak47 rifle, four Ak47 magazines, six 7.62 MM special ammunition, and three mobile phones to the troops.