Fuel levies swapped for cash handouts

Nigeria is planning to give cash handouts to the poor, that may cost the government 2.4trn naira ($5.8bn) a year in a bid to replace fuel subsides. An Al Jazeera report notes the government will give 5 000 naira ($12) each to as many as 40m people every month, beginning from July when fuel subsidies end. A new petroleum law compels the government to allow market forces to determine gasoline prices. The cash transfers will happen over a period of six to 12 months, Finance Minister Zainab Ahmed, said. Cutting fuel support will support the ruling party’s long-term policy goals of freeing up revenue while allowing the party to bolster support among poor Nigerians ahead of the 2023 polls, the Eurasia Group said in a note to clients on Thursday. Cash support programmes have helped the poor from Togo to India but in a nation where few have bank accounts, the process may lead to corruption, said Cheta Nwanze, a lead partner with SBM Intelligence. The government will make sure that the payments go to the rightful recipients by using biometric verification numbers, national identity cards and bank account number, Ahmed said last week. It is working with the World Bank to design and fund the plan. The subsidies currently cost the government about 250bn naira a month, Ahmed said. The IMF recommended that the West African nation do away with the subsidies and implement a ‘well-targeted social assistance plan’ to cushion the negative impact of cutting subsidy on the poor.