The removal of fuel subsidy was only going to be a matter of time. This was the position of Mr. Tunji Oyebanji the guest speaker at the ICM Annual Dinner Lecture, 2022.
With fuel subsidy finally removed by President Bola Tinubu, the pains have hit home affecting both individuals and businesses. This is made worse by the absence of palliatives or any form of measures to cushion the impact.
The announcement by the President on inauguration day has seen a sharp rise in inflation, soaring cost of living, dwindling purchasing power and a drastic drop in the standard of living with millions of Nigerians pushed into the poverty net.
On the business side, operational costs have soared with additional burden of how to raise employee wages in order to narrow the gap in the rising cost of living.
With this policy no one is spared, every sector is affected. This was the opinion of Speakers at the ICM Webinar Series held recently to brainstorm on how to navigate the harsh conditions brought about by fuel subsidy removal.
Mrs. Foluke Adebisi, FICM
At the individual level, Mrs Foluke Adebisi, FICM advised that Nigerians should begin to take a deeper look at their expenditure habits by making a distinction between ‘wants and needs,’ prioritize essential purchases over luxury items. This involves creating a scale of preference and allocating funds accordingly. Moreover, individuals should consider alternatives to expensive branded products and opt for more cost-effective options that fulfil the same purpose. ‘’Why would you go for a Nike or a Gucci shoe for instance when you can get a non-branded shoe for a lesser cost?’’ she asked.
Additionally, embracing alternative energy sources such as inverters and solar energy can help individuals reduce electricity costs. Practicing energy conservation by switching off power supply to unused areas of buildings can further minimize expenses. Exploring options like bulk procurement of commodities, joining cooperative societies, developing multiple income streams, utilizing public transportation, and embracing ride-sharing can also alleviate the burden of increased energy costs according to Adebisi.
Purchasing energy efficient cars, electric vehicles and converting petrol dependent cars to CNG including our domestic generating sets are other ways costs can be drastically reduced.
From the HR standpoint, she advised organizations that can afford it, to provide staff buses for their employees and make provisions for flexi and hybrid work models. These measures reduce transportation expenses while emphasizing performance management to maintain high productivity.
To bridge the gap created by rising living costs, employers should introduce Cost of Living Allowances (COLAs) for their employees. Additionally, organizations should prioritize the physical and mental well-being of their staff by providing health and medical insurance coverage. This support will enable employees to concentrate on their work without unnecessary worries.
Engr Olusola Aina, FICM
In his contribution, Engr. Olusola Aina, FICM cautioned employers to creatively transition from dependence on fossil fuels to compressed natural gas which is comparatively cheaper by converting their diesel and gasoline generators. By transitioning to more cost-effective energy sources, operational costs can be significantly reduced.
Implementing energy-efficient measures like replacing high-energy consumption bulbs with low-energy alternatives and utilizing controls that activate electrical equipment only when necessary can lead to additional savings. Carpooling, remote work arrangements, and hybrid work models can further contribute to cost reduction efforts.
How Government Can Make The Policy Change Stick.
- Drastically reduce the cost of governance to demonstrate solidarity with the people and justify their sacrifices.
- Introduce tax holidays to mitigate the impact on businesses and encourage economic stability.
- Practice transparency and accountability by appropriately utilizing the savings from the fuel subsidy for infrastructure development and public welfare.
- Set an example by leading the way in adhering to the new policy and encouraging public trust.
While the removal of fuel subsidies presents significant challenges for individuals, businesses, and the government, adopting practical coping mechanisms can help alleviate some of the burdens. By focusing on needs over wants, exploring alternative energy sources, implementing cost-saving measures, and embracing flexible work arrangements, individuals and businesses can adapt to the new energy policy. Moreover, the government’s commitment to transparent and accountable governance will instill confidence and facilitate the successful implementation of the policy change.