By Akanimo Sampson
Intelligence report by Menas Associates, a political risk consultancy, has warned that the removal of fuel subsidy and the hike in electricity tariff will alienate the support base of President Muhammadu Buhari.
‘’The simultaneous removal of consumer subsidies on petrol and electricity prices is a radical departure from virtually everything that President Buhari has, for many years, stood for’’, the intelligence report says.
Continuing, Menas says while it is being seen as an indication of the emergence of new thinking that could dictate future governance, ‘’it is likely to alienate the president’s most loyal traditional support base amongst the poor of Northern Nigeria.’’
Menas in its intelligence report explains that it was the severe economic impact on the country’s finances, caused by the dramatic fall in international crude oil prices that triggers the policy change.
According to the report, the economic impact enabled key people in government, to convince President Buhari that the time has come to finally remove the subsidies which was something he had previously strongly opposed.
‘’The fact that Federal Government revenues have fallen by more than 60% this year means that it can no longer fund its current budget which made it inevitable that Buhari was forced to agree to such a radical change in policy.
‘’External pressure from both the International Monetary Fund (IMF) and the World Bank has also forced the Federal Government to take some of the difficult decisions that have recently been announced’’, Menas says.
Nigeria is currently seeking a $1.5 billion loan from the World Bank, and a pre-condition for the advance to be approved, is the implementation of some of these policies.
President Buhari’s new disposition does not, however, come without potential risks. The powerful trade unions are threatening to go on strike to protest about the cut in consumer subsidies.
‘’His traditional support base, particularly the poorer Nigerians in the North, are going to be particularly hard hit by the higher prices and this could create problems for Buhari though he is obviously not seeking re-election in 2023.
‘’Instead it may be the ruling All Progressives Congress (APC) that could pay the political price of such a loss of support in the next general election’’, excerpt from Menas’ intelligence report on Nigeria says.