Tunji Ogunyemi, a professor at Obafemi Awolowo University (OAU), says 15 states in northern Nigeria would collapse within three months if petrol subsidy is restored.
Ogunyemi spoke during an interview on Open Forum 360, a
podcast hosted by Dare Adekanmbi.
Atiku Abubakar, presidential candidate of the African
Democratic Congress (ADC), had said he would restore petrol subsidy if elected
president.
Ogunyemi, however, warned that restoring the subsidy would
have serious implications for the finances of the country.
He said a return to the subsidy regime would reduce accruals
to the Federation Account, on which most states depend to fund their
operations.
“I think it is calamitous, to say the least, if we reverse
the subsidy regime in Nigeria in favour of returning the subsidies,” he said.
“It will lead to four disabilities. The first is that there
will be reduced accrual to the Federation Account.
“The Federation Account is the jugular of more than 30
states in the federation. Only about four states in Nigeria can survive without
the Federation Account.”
Ogunyemi listed Lagos, Delta and Rivers as states that could
cope without relying heavily on the monthly allocations.
He cited Taraba as an example of a state that cannot survive
without federal allocation.
“So if you now say reduce the accrual from account, I tell
you more than about 15 states in the north will collapse. They will collapse
within three months,” he said.
The professor said the impact would be severe, warning that
states would struggle to pay workers and pensioners.
“The second is that states will return to a regime of
incapacity to pay salaries, let alone pensions,” he said.
EFFECTS ON FEDERAL GOVERNMENT
Ogunyemi also warned that a reduction in federal revenue
would affect the federal government’s ability to meet its expenditure
obligations.
He said between 60 and 70 percent of the federal
government’s total expenditure goes to recurrent expenditure.
“That is consumption expenditure. You reduce the revenue in
that respect, you will see a situation in which government will not be able to
support its minimum expenditure, let alone go for capital expenditure,” he
said.
“The fourth and the final one is that Nigeria will not be
able to meet its debt obligations.”
The professor said that failure to meet debt obligations
could affect Nigeria’s financial standing and creditworthiness.
Ogunyemi said Atiku might have been seeking political
visibility and votes with the proposal to restore subsidy.
The professor said Atiku, as a former vice-president, should
be clearer about the implications of his policy proposal.
“I think it is playing to the gallery, with due respect to
him. He should be a little less opaque about his policy,” Ogunyemi said.
“You don’t want to get political support through votes or
more votes by wanting to cut the jugular of your country.”
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