Nigeria's Senate on Thursday approved a request by President Bola Tinubu to borrow $800m (R14.42bn) from the World Bank to help cushion the effect of high fuel prices after ending a popular but costly petrol subsidy.
Tinubu requested the Senate's consent earlier on Thursday for the loan, which had previously been approved by the government of former president Muhammadu Buhari, to help scale up the national social safety net programme, according to a letter to lawmakers.
“The purpose of the facility is to expand coverage of shock responsive safety net support among poor and vulnerable Nigerians,” Tinubu said, adding 12-million poor households will be paid 8,000 naira (R186) per month for six months, “with a multiplier effect on about 60-million individuals”.
Dele Alake, a spokesperson for the president, said the government will distribute free grains and fertilisers to poor households and subsistence farmers, while large-scale farmers will get them at a discount as part of immediate measures to curb the effect of scrapping the subsidy.
Authorities in Nigeria, Africa's largest economy, also plan to raise the minimum wage, with details expected to be finalised next month when talks with the main labour unions are set to be concluded.
Tinubu, who is embarking on Nigeria's biggest reforms in decades to tackle issues such as a high debt burden, scrapped the fuel subsidy when he took office at the end of May.
The subsidy kept prices cheap for decades but had become increasingly expensive — it cost the government $10bn (R180.35bn) last year — leading to wider budget deficits and driving up government debt.
The House of Representatives, the lower chamber of parliament, also approved Tinubu's request to amend the 2022 supplementary budget to allow the government to spend 500-billion naira (R11.59bn) to “cushion the effects of the removal of fuel subsidy”.
The changes will allow the government to redirect spending previously budgeted for other projects.
Reuters
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.