Bismarck Rewane, the Chief Executive Officer of the Financial Derivatives Company, clarified that the fuel subsidy in Nigeria was not entirely removed but reduced. He made this assertion during an appearance on Channels Television’s Sunday evening program, where he shed light on the implications of the subsidy reduction and its effects on Nigerian salary earners.
Contrary to the initial perception that the subsidy had been completely removed, Rewane clarified, “At the inauguration, it was said that subsidy was gone but subsidy was actually reduced.”
Elaborating further, he discussed the convergence of exchange rates and the consolidation of multiple windows into one, emphasizing that the consequence of these actions resulted in the transfer of money from consumers to the government.
Rewane explained, “Subsidies are reversed taxes; if you reduce them, you increase the people’s taxes and reduce their income. What has happened is that government revenue has increased by 44% between May and June. Money has been transferred to the government but what is the government doing with it?”
He went on to highlight the impact on consumers, particularly salary earners, stating that the minimum wage, which was approximately $40 in 2002 and increased to about $70 in 2019, has now been reduced to $24. This reduction in the minimum wage in dollar terms underscores the challenges faced by Nigerian workers in the face of the subsidy reduction.
The financial analyst’s insights provide a nuanced perspective on the recent changes in Nigeria’s subsidy policy and draw attention to the broader economic implications, especially for those dependent on fixed wages. As the government grapples with increased revenue, the public remains keenly observant of how these funds will be utilized to address both economic challenges and the welfare of citizens.
