Data from the National Bureau of Statistics (NBS) shows that the average price paid for premium motor spirit (petrol) by consumers increased by 10.79 percent year-on-year to N161.17 in October 2020 from N145.48 in October 2019.1 This increase can be attributed to the removal of fuel subsidy which is driven by the government’s inability to generate sufficient revenue to fund the subsidy.2 Going forward, pump price is expected to be market-determined, as pump prices will no longer be fixed. From an environmentally sustainable perspective, the subsidy removal is a commendable development in disincentivizing the use of fossil fuel and incentivizing the use of renewable energy while reducing the crowding out of public revenue. However, the subsidy reform is being introduced in a worsening economic climate with implications on the living standard of most citizens. The government can leverage on the opportunity presented by the pandemic to introduce additional structural reforms such as streamlining government Ministries, Departments, and Agencies (MDAs) in order to make resources available for development spending.
December 14, 2020
Nigeria Economic Update (Issue 46)
Related
Nigeria Economic Update (Issue 2)
Recent ranking by the World Bank, portrayed Nigeria as having a poor business environment based on the ease of doing business in 2016. Although, Nigeria moved one position forward from previous (2015) ranking, to attain the 169th position out of the 190 global economies reviewed4. This poor rating is resultant of a myriad of factors, including: difficulties in starting a business, enforcing contracts, inaccessibility to credit, tax payment issues, as well as unreliable supply of energy, and labour market regulations. Going forward, improving the efficiency of tax administration by adopting the latest technology to facilitate the preparation, filling and payment of taxes will be beneficial for the business community.