Nigerian labor unions held meetings with the government Tuesday to discuss the removal of fuel subsidies that have led to increases in fuel prices and the threat of strikes. The meetings come a day after the president announced a $650 million financial package to assist households hurt by economic reforms.
During a televised address, President Bola Tinubu defended his decision to scrap the fuel subsidy, saying it only benefited a few so-called elites. Tinubu said he was aware of the hardships that the decision caused citizens and promised his government was working to help.
The latest measures announced by the president include allocations for a review of the minimum wage, support for micro-, small- and medium-scale enterprises, and the purchase of 3,000 gas-powered buses to reduce the cost of transportation.
Tinubu also ordered the immediate release of 200,000 metric tons of grains to households, in an effort to lower prices, and 225,000 metric tons of fertilizers, seedlings and other inputs to farmers.
"I had promised to reform the economy for the long-term good by fighting major imbalances that have plagued our economy," Tinubu said. "Ending the subsidy and preferential exchange rate system were key to this fight. This fight is to define the fate and future of our nation."
Upon assuming office in late May, Tinubu embarked on some of Nigeria's biggest reforms in decades, including floating of the country's currency, the naira.
Fuel prices have more than tripled since the subsidy removal and the currency has weakened against the U.S. dollar. The developments increased pressure on the government to ease the suffering caused by the policies.
Authorities say the decision will pay off in the long run. On Monday, Tinubu said the country has saved $1.32 billion since scrapping the subsidy in late May.
"Such a vast sum of money would have been better spent on public transportation, health care, schools, housing and even national security," he said.
But economist Isaac Botti said authorities should have implemented measures in advance to cushion the effect of removing the subsidy.
"What the government ought to have done was to create the shock absorber, but trying to salvage a crisis after it has occurred for me is an afterthought," Botti said. "So what the president expressed in his speech were things he should have done or should have been out in place before the pronouncement of subsidy removal."
Botti said Nigeria needs to consider local refining of oil if it is going to bring down soaring fuel prices.
"What is the plan [including] short, medium and long term to address the issue of refining petrol in this country? Whatever measures the government is bringing on board should be able to address the realities on ground," he said.
Last month, Tinubu announced plans to transfer $10 million to $12 million to poor households in a bid to ease the impact of the subsidy removal.
Meanwhile, the labor unions met with government officials hoping to reach an agreement that will prevent workers from holding a planned protest on Wednesday.
