Nigeria moves to cushion impact of petrol subsidy removal

Nigeria has taken a significant step towards economic recovery by creating an infrastructure Support Fund aimed at aiding investment in critical areas of the economy to cushion the impact of the petrol subsidy removal. Chamberlain Peterside, the CEO of Xcellon Capital Advisors, shared valuable insights on this development during a recent interview with CNBC Africa. Peterside, drawing on his experience as a former Commissioner of Finance in River State, highlighted the importance of infrastructure investment at the sub-national level to address the challenges arising from the subsidy removal. He emphasized the need for careful administration of the funds saved from the subsidy removal to ensure equitable distribution among the states. One key concern raised by Peterside was the effective implementation of the infrastructure fund set up by the federal government. He stressed the importance of focusing on local infrastructure assets within the states, such as renewable energy projects and gas-powered vehicles, to enhance productivity and GDP growth at the regional level. The discussion also delved into the economic impact of sharing federal allocations with the states. Peterside commended the decision to share only a portion of the raised funds, as distributing the entire amount could lead to inflation and impulsive spending by states. He urged for a strategic utilization of the windfall from the subsidy removal to support infrastructure projects, improve wages, and boost SMEs. Moreover, Peterside touched upon the challenge of revenue generation for states, especially in a difficult economic environment. He emphasized the need for states to invest in technology and capacity building for efficient revenue generation rather than resorting to aggressive tax collection measures. By building a solid revenue generation infrastructure, states can expand the tax net and enhance revenue in the long run. Overall, the conversation with Chamberlain Peterside underscored the critical role of infrastructure investment, prudent financial management, and strategic revenue generation in steering Nigeria towards economic recovery and sustainable growth in the post-subsidy removal era.