NLC: WHY WE SUSPENDED PLANNED NATIONWIDE STRIKE OVER SUBSIDY

In a similar vein, Nigerian Economic Summit Group (NESG), yesterday, advised the federal government to overcome resistance to its laudable removal of petrol subsidy by effective communication of the benefits and mitigation strategies in place to cushion its adverse effect.

The planned indefinite nationwide strike action, previously scheduled to commence today, to protest last week's withdrawal of fuel subsidy by the federal government was on Monday night called off by both NLC and Trade Union Congress (TUC). Stopping the planned industrial action was one of the seven-point resolutions reached at the end of a negotiation meeting between the federal government, TUC, and NLC.

Justice Anuwe had on Monday stopped the planned nationwide strike. The order of the court was sequel to an application by the federal government, which was hinged on the heavy impact the strike would have on all aspects of the economy.

Removal of petrol subsidy was one of the highlights of President Bola Tinubu’s inaugural address on May 29. The announcement of an end to the fuel subsidy regime was followed by increase in petrol price by the Nigerian National Petroleum Company (NNPC) Limited.

The price hike elicited quick reactions from both NLC and TUC, which accused the government of failing to engage in necessary consultations before removing the fuel subsidy.

In a communiqué issued after an emergency National Executive

Committee (NEC) meeting of the congress, summoned to discuss the outcome of the dialogue with the federal government on the petroleum products price hike, NLC said it took into account the restraining court injunction.

The communiqué signed by NLC President, Joe Ajaero, and General Secretary, Emma Ugboaja, said NLC suspended the strike to demonstrate to the federal government the need to comply with the laws of the land.

It also stated that it considered the willingness of the government to dialogue on the issues, the general mood of the nation after the last elections, and the need to pursue national stability.

The NLC explained in the communiqué, "Taking into account that the federal government has procured a court injunction restraining Congress from proceeding with the proposed nationwide strike, as the NEC-in-session had ordered to begin, Wednesday, the 7th of June, 2023;

"Recognising the willingness of government for continuous engagement through dialogue and to offer reasonable palliatives in due course to cushion the effect of its policies and some levels of understanding reached.

"Considering the mood of the socio-polity after last elections and the need to pursue national stability and, consequently, the NEC-in-session resolved as follows:

“To commend and applaud the diligence of the Congress' leadership in carrying out the assignment given to it by NEC.

"To demonstrate to the federal government the need to comply with the laws of the land, especially as it concerns obedience to the rulings of the courts and their brazen disregard to the 2023 Appropriation Act.

"To, therefore, support and accept the decision of the leadership of Congress to suspend the proposed strike action in compliance with the flawed rulings of the NIC and also allow negotiations to flow freely and enable final agreement during or after the 19th June, 2023 negotiation round with the federal government."

NLC, however, disapproved the ruling of the National Industrial Court (NIC), describing it as continuous weaponisation of the instrument of ex-parte injunction in favour of government against the interest of Nigerian workers. It said the action of the industrial court was in defiance of the position of the Supreme Court on the use of ex-parte injunction.

"All Affiliates and State Councils of Congress are hereby directed to suspend further action and mobilisation until the outcome of the final negotiations," NLC said.

It urged its branches and affiliate unions to remain vigilant and be on stand-by, in case there was need to continue the strike.

KPMG Report Predicts 30% Inflation Rate, Seeks Cushioning Measures

Meanwhile, in a policy brief released by KPMG, the organisation projected that inflation rate would decline from 2024. It also noted that from experience, the general rise in prices of goods and services would not markedly impact food and transportation costs.

Whether one-off or gradual, the report stated that the removal of fuel subsidies would result in a temporary increase in inflation, which was at 22.22 per cent, as at April 2023. It said its prediction aligned with the World Bank projection that a one-off adjustment would lead to higher inflation in 2023 and 2024, and lower thereafter.

KPMG stated in the report, “Our internal macro model also supports the World Bank's findings with a forecast of an increase of about six per cent over June 2023 inflation rate to bring it to about 30 per cent.

“In mid-2024, however, all other things remaining constant, and as year-on-year base effects kick in, the pace of inflation will drop significantly, though overall prices of goods and services will remain elevated.”

However, as inflation was already high and sure to increase, the report forecasted that more Nigerians would be pushed into poverty, unless compensating measures to shield them, at least partially, from the price shock were put in place.

KPMG hinged the length of the inflationary trend on a number of factors, including the extent to which some of the inflationary impacts of increases in petrol prices had already been incorporated since the effective market price was already above the officially regulated price in many parts of the country.

Besides, it explained that the “pass-through” from increases in petrol prices to transport and food prices, from previous experiences, when fuel prices were increased, significantly suggested it was likely to be limited.

According to the firm, the capacity of the Central Bank of Nigeria (CBN) to manage inflationary pressures through effective monetary policy would be a major factor in halting the inflationary pressures.

However, KPMG stated that the CBN, like monetary authorities the world-over, was struggling to contain runaway inflation while there were legitimate questions regarding the efficacy of interest rate hikes to contain inflation given the significant supply-side and geopolitical drivers.

These drivers, it said, ranged from China’s erratic recovery from COVID-19 to the multifaceted impact of the Russia-Ukraine war.

It stated, “However, for gradual or immediate deregulation to be effective, several conditions will have to be met, vis-a-vis establishing a robust and sustainable market for eligible importers to access, on a non-discriminatory basis, sufficient supply foreign exchange liquidity at the same rate for all eligible fuel suppliers.

“This will require significant and far-reaching reforms to CBN's current approach to foreign exchange management to enhance supply of FX and bring down the parallel market rate.”

In addition, KPMG noted that communicating the removal of fuel subsidies to the Nigerian public would be an important aspect of the process. It maintained that it was important to provide clear and transparent information to Nigerians about the rationale for the removal of subsidies.

The expected benefits as well as the compensatory measures that will be put in place to cushion the effect on the poor and vulnerable, KPMG advised, should be properly communicated.

The global financial services provider stressed, “Adequate communication with stakeholders is crucial to ensure that the rationale for subsidy removal is well understood and to manage public expectations. In the past, inadequate communication has led to widespread public protests and unrest.

“To effectively communicate the subsidy removal, the government can use a range of communication channels, including social media, print and electronic media, town hall meetings, and community outreach programmes.”

The organisation said reducing the cost of governance, increasing public trust and strengthening the social contract between citizens and state will go a long way in engaging Nigerians to support the subsidy removal reforms of the President Bola Tinubu government.

It said a critical lesson to learn from Nigeria’s past experiences with fuel subsidy removal related to the presence or absence of political will. In the past, it said implementation had been hindered by corruption, inefficiencies, disinformation, as well as opposition from interests and lobbyist groups.

KPMG cautioned that the removal of subsidies on petrol in Nigeria remained a complex issue that required careful consideration in terms of its potential economic, social, and political impacts.

While subsidies provided some benefits, it argued that they had also been a significant drain on the country's resources and had contributed to inefficiencies and corruption.

Furthermore, the organisation said a robust coordination with the states as well as with the fiscal authorities and CBN in managing the monetary aspects of deregulation and subsidy removal was key.

Without foreign exchange reforms, and an elimination of the gap between the official and parallel exchange rate, KPMG argued that