Home News U.S urges Nigeria to discontinue fuel, electricity subsidy payments

U.S urges Nigeria to discontinue fuel, electricity subsidy payments


The United States Agency for International Development (USAID) has advised the Nigerian Government against continuation of the nation’s fuel and electricity subsidy regime, saying the funds being used on subsidy could be deployed to develop needy sectors of the economy.

Specifically, the agency pointed out that continuation of subsidy payments could hamper fixing Nigeria’s critical sectors such as education and health care services.

The USAID Country Mission Director, Stephen Haykin, who represented the US Ambassador to Nigeria, Stuart Symington, gave the advice on Tuesday at the 10th Anniversary Colloquium of the Financial Nigeria Magazine in Abuja.

Haykin noted that the inability of the country to recover the cost of electricity as well as the failure to recover the full cost of production from pump prices of petroleum products meant that critical funds were being diverted instead of being invested in critical needs in education and healthcare.

The USAID Director said: “One proximate cause of poor health, education and nutrition standards is low public expenditure. This, in turn, is related to very low public revenues due in fact to low tax rates and weak systems for tax collection.

“Low social spending is also as a result of transfers from government to petroleum and power sectors because fuel and electricity tariffs are below cost recovery levels.

“Fiscal, trade and other macroeconomic policies tend to act as breaks on private sector initiatives on economic growth. Weak governance due to inadequate capacities or lacks of checks and balances also slows social and economic development”, Haykin added.

Earlier in his keynote address at the forum, Nigeria’s former Minister of Health, Muhammad Pate, disclosed that about 40 percent of under-five children in Nigeria were experiencing stunted growth while the Nigerian political elites were serving themselves rather than the people.

He explained: “After extracting almost a trillion dollars’ worth of oil since our national independence, we have a situation where poverty is going on. We have effectively squandered an opportunity to utilise the natural resources that we obtain purely by chance, not by hard work.

“Instead of investing to uplift our people’s lives, our political elites by commission or omission choose the path of short-term comfort and purchase of loyalty through economically unwise or corruption-riddled national expenditure at the expense of economically sound investments in both human and physical aspects to transform our nation.

“For a country to realise its demographic dividends, it must first undergo demographic transition, which means a shift from high fertility and high child mortality to relatively lower fertility and child mortality”, the former minister added.