Subsidy removal: Families, workers devise survival strategies amid rising prices

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Subsidy removal: Families, workers devise survival strategies amid rising prices

Many households in the country are coming up with new strategies to survive the difficult times occasioned by the removal of subsidy on petrol and rising inflation, which peaked at an 18-year high of 22.41 per cent in May amidst weakening purchasing power.

Some of the strategies include cutting down significantly on luxury items; many households coming together to buy foodstuffs in bulk, some making their purchases from rural areas, where they are relatively cheaper; cutting down on energy consumption; and looking for different means to supplement family income, among others.

President Bola Tinubu had on Monday, May 29, 2023, announced shortly after his inauguration that the era of subsidising petrol consumption was gone. This was immediately followed by marketers increasing the pump price of Premium Motor Spirit to N500 per litre from around N185.

The increase in the pump price of the commodity led to sharp rises in transport fares and the prices of most commodities and services.

The removal of subsidy and the attendant escalating prices forced the organised labour to issue a strike notice, but after a series of meetings with officials of the Federal Government, the Nigeria Labour Congress and Trade Union Congress announced the suspension of the strike to allow for the government to come up with appropriate palliatives to cushion the effects, including wage increase for workers.

Negotiations between the government and organised labour on the development continue next week.

Some residents of the Lekki area of Lagos State lamented the surge in the cost of living in the country and pointed out that the areas most affected were transportation and feeding.

They have also adopted diverse coping mechanisms with the new reality in the country.

Emmanuel Adetunji, a businessman, told Saturday PUNCH that his wife was now buying foodstuffs in bulk from the Mile 12 Market, as it was more expensive to buy such from the Island.

He said, “We no longer buy food items on the Island. My wife sends someone to Mile 12 monthly to buy food items for the house. It is more economical for us.

“Also, in terms of power, we switch to the inverter during the day, whether or not there’s light, and turn off the prepaid meter and avoid the use of the generator. We only use the generator if it is inevitable or the inverter batteries are running low.”

Adetunji said he was considering selling his two-horse-power air conditioners and replacing them with 1HP in order to burn less fuel.

“We no longer switch on air conditioners during the day; I got rechargeable fans for every room,” he added.

For Dupe Gbolahan, her family has since switched to renewable energy and replaced the generator with solar panels.

She said with solar panels and inverters, her family had been able to cope better since the fuel subsidy removal.

Gbolahan stated, “At least, we know that it is only the cars we are fuelling and my work is remote, so I only go out when necessary.

“We were lucky to get our solar panels late last year, when the price was still fair. Now, I learnt that the prices have increased because more people are rushing to get them since the subsidy removal.

“We have a big generator but we hardly use it; instead, we use our solar panels and an inverter. That has been our saving grace.”

When one of our correspondents contacted a company that sells inverters and solar panels in Lagos, a representative who did not want his name mentioned, confirmed that since subsidy was removed on petrol, the demand for solar panels and batteries had increased.

He said, “The demand for solar panels increased during the fuel scarcity, but since the subsidy removal it has doubled.

“Renewable energy is the new trend with the state of things in the country. It is the only way people can cope now.”

A resident of Gateway Sparklight Estate, Magboro, Ogun State, Christiana Ilemobayo, said the past one month had been tough for her family as the available income was not adequate to meet the needs of members of the household.

Ilemobayo stated, “My husband is the breadwinner of the family and had been complaining that his income was inadequate to meet our needs before the fuel subsidy was removed. Our eldest child is in a private university and we have two sons in private secondary schools; my husband has been responsible for their schooling and taking care of the family. I earn less than N45,000 monthly as a private school teacher.

“Since the fuel subsidy removal, my husband has been moody and always complaining of inadequate funds; I pray every day that he won’t enter into depression and that we won’t have any health crisis. My youngest son’s school just wrote to us that the bus fare has increased by N10,000 for the current term and I know that school fees will increase by next session.

“What I now do is to beg my sister-in-law, who lives in the Moniya area of Ibadan to help us buy foodstuffs like garri, yam flour, yam, smoked fish and others, and package them and send them through commercial bus drivers for a token. This has led to some savings. I also partner with friends to buy a whole ram and share the meat as well as frozen fish in packs for sharing. I have also reduced the heavy meal to just dinner.”

A retired public servant in the Isolo area of Lagos, Mr Gabriel Olohunwa, said he was discussing with the parents of some schoolchildren in his neighbourhood so that he could be picking the pupils from their respective homes and dropping them in schools and returning them home in the evening for a token in order to supplement his pension and the little coming in from his building materials shop, adding that it would be a win-win situation for him and the parents as he would not charge as much as the school buses.

A local government worker in Ila Orangun, Osun State, Ismaila Adepoju, said he would expand his farming venture the next planting season so as to make extra income from the produce, but was fencing his compound now to turn the land not yet built into a vegetable garden and hopes to sell the vegetables to residents.

Similarly, a civil servant in Ilorin, Kwara State, Taofeek Lawal, said he would fully utilise the opportunity given by the state government for civil servants to work for only three days in a week to focus on his farming and trading activities.

A security guard in Igbo-Efon, Lekki, Jafaru Ibrahim, said he usually visits the Eti-Osa Local Government Secretariat during the day after his boss must have gone to work to raise extra cash.

Ibrahim said, “I am being paid N40,000 monthly as salary and that is barely enough to cater for myself in this economy as well as my two wives back home in the North and my children.

“I have to send money to them monthly; that is why I come here during the day to wash cars for people who visit the secretariat in order to raise extra cash. I am also considering sending one of my wives back to her parents, because I can’t cope again.”

A banker, Chisom Okere, who visited the local government office to get her National Identification Number sorted, said the cost of living had put her family on the “hot seat.”

She said, “The areas most affected by this subsidy removal are transportation and feeding. The prices of things have risen astronomically and it is almost unbearable for the ordinary citizen.

“We now ration food portions in my house and manage our resources. About half of my salary goes for transportation and nobody is increasing salaries. The country is hot now.”

At the Oworonshoki bus park, commuters were saddened by the recent hike in transport fares, but many said they had no choice but to cope with the situation.

A student of the University of Ilorin, Mary Oluwasegun, who was boarding a bus to Ibadan at the park said, “We don’t have a choice but to adapt, this is the new Nigeria we find ourselves in. We won’t stop going to school because things are expensive.

“Although in Ilorin, the cost of living is not as high as Lagos, it is still a challenge because we are spending more.”

The fare to Ibadan was N2,500 as against N1,500 before the removal of fuel subsidy.

Also at the Mowe, Ibafo Park, the transporters put the fare at N1,000 as against N500 before subsidy removal.

One of the drivers, who spoke to Saturday PUNCH, said the bus operators were not to blame for the hike in fares.

“Before Tinubu became the President, we were charging N500 to Mowe from Oworonshoki, but now it is N1,000 since the subsidy was removed. What we the drivers make is very little; it is not enough, considering how much we spend on fuel daily,” he stated.

A commuter, who spoke on condition of anonymity, said he was just “managing” to survive.

The young man, who boarded a bus to Abule-Egba, said the fare was formerly N400 to his destination but is now N700.

He lamented, “I don’t think what has been done to Nigerians is fair. Even if subsidy was to be removed it could have been done in a more humane way, now they want to increase electricity tariff as well. What wickedness is this?

“Nobody is increasing salaries, things have not got better, why do they keep doing this to us? Many of us are just living from hand to mouth, managing to survive.”

A credit officer at a microfinance bank, Okechukuwu Anslem, since the hike in the prices of commodities and transportation, he had devised creative measures to survive.

“Instead of buying what I usually buy before the increase, I now look for cheaper alternatives that I can easily afford so that I don’t run into debt in the long run. Salaries are not increased and the prices of commodities are going up,” he said.

He explained that devising other means like boarding a bus or tricycle by the roadside instead of in the park no longer worked as transporters now charged the same fares.

“Places where we usually board tricycles to, when I have some time on my hands, I trek to cut costs,” Anslem added.

A software engineer, Desmond Nnebue, noted that his recurring expenses on transportation, food and data subscription had gone up.

As a result, Nnebue stated that he had reduced the number of times he goes out, noting that he mostly works from home now.

Walking short distances, instead of boarding public transport is another strategy the software engineer has adopted.

Pelumi Lawrence, a content writer and freelancer stated that the rising transport fares made him opt for virtual work engagements “to cut down on cost.”

He added that he had reduced his fuel consumption and only buys fuel when necessary.

Speaking on his survival strategies, he highlighted, “Virtual consultations instead of physical meetings. Cut down on cost. Get fuel when necessary. Thankfully, power has improved in my area so my consumption of fuel has reduced.”

Lawrence said the situation had made him conscious of not wasting food anymore.

“I trek some distance to save cost at the few times I have been out since the subsidy removal. I now have behavioural changes. One tends to be more cautious about what he does now to avoid wastage,” he added.

A freight forwarder, Sylvester Adjekuko, noted that he had been negatively impacted by the rising prices.

Adjekuko said, “To adjust to the situation, he added that he had begun to walk short distances and board public transport.

“I used to drive most of the time, but since the fuel price increased, I have to prioritise the places I drive to and use public transport for others.”

“I used to turn on my generator for about four to five hours daily, but now, I hardly run my generator.”

Cautious spending and walking some distances are the strategies a builder, Temidayo Bada, employed to survive the rising cost of goods and services.

On his part, a political scientist, Uwabor Iyawa, stated that the removal of subsidy had led to an increase in the cost of living, poverty, food insecurity and social unrest.

Iyawa said, “With higher food prices, Nigerian citizens now struggle to afford necessities, which will lead to a decline in living standards, considering that the minimum wage still stands at N30,000.

“This has also pushed more Nigerians into poverty, particularly those already struggling to make ends meet and also causing food insecurity as many Nigerians cannot afford a healthy and balanced diet.”

He warned of the possibility of an increase in social unrest if food prices continued to rise.

A security guard at a private company in Arepo, Obafemi-Owode Local Government Area of Ogun State, Bamidele Adeolu, explained that while the transportation fare from his house to the office had more than doubled and the management had so far failed to address the situation.

He said, “It really affects me a lot. Before I used to spend N500 on transportation from my house in Bariga to the office and sometimes I beg my colleagues who have cars for a ride to Berger and from there, I would spend between N200 to N300.

“Everything has changed now because I now spend N1,000 or more on transportation in the morning, but once I am on night shift, I spend nearly N2,000.

“What we are trying to do now is to adjust to the situation. We work on schedules now, especially for people living in Lagos such that they only come to the office twice or thrice a week. We learnt that they also want to remove the subsidy on electricity so we do not know how that is going to affect us too.”

He added that his family had gradually developed the habit of buying large quantities of food items from neighbouring countries in collaboration with friends and relatives residing closer to border posts.

Mrs Eunice Ademola, who deals in coconut, said the cost of moving her wares from Badagry in Lagos to Magboro in Ogun State had risen from N5,000 to N15,000.

A commercial driver, who plies Agege to Mowe, Idris Ayodele, said, “I am a driver but I have a bar too. Since the fuel subsidy was removed and fuel price rose, I only go on five trips daily, after which I resume in my bar. I always hand over the bus to my boy and he must deliver N10,000 every evening. That is the way I’m trying to sort myself out at this moment.”

In the Federal Capital Territory, there has been an increase in transport fares to most destinations.

For instance, the fare from Kuje to Area 1, which used to be N400, has risen to N800, while that from Gwagwalada to the Central Area has increased from N500 to N900.

Similarly, the cost of commuting from the airport junction to Lugbe has risen from N200 to N300. The fare from AYA to the Central Area is now N300 instead of N150, while from the Central Area to Kuje costs N800 instead of the previous N500.

The cost of transportation from Lugbe to Berger has increased from N200 to N400, and from Wuse to Lugbe has risen from N300 to N500.

Also, the fare for tricycles from the airport junction to Lokogoma has increased from N150 to N200.

It was observed that there were few vehicles on the road as many car owners had now abandoned their vehicles, preferring to take cabs to their places of work or carpool with co-workers who charge little amounts to fuel the cars.

Low and middle-income earners and civil servants who spoke to our correspondents also highlighted various coping mechanisms.

A school teacher, who simply identified herself as Mrs Musango, said borrowing from her close friends had been a saving grace as her monthly income could barely take to work and make her buy essential items for her family.

The private secondary school teacher, who lives in a suburb of the FCT but whose workplace is close to the city centre, bemoaned the inability to skip work as it affects productivity in teaching and the grades of the students.

A civil servant, who did not want his name in print, disclosed that he was no longer going to the office every day as his total salary could only fuel his car four times.

The man, who teaches at a federal school located in the Kwali Area Council stated, “As a civil servant, I have had to cut the days I go to work to a maximum of three times a week.

“My entire salary in a month can only fill my car tank four times, and that has made me restrict my movement to only important places.

“Nobody will even ask questions about the reason for being absent from work.”

When asked about the coping mechanisms deployed to meet the needs of his family, the father of two noted that frivolities and other unnecessary spending had been dropped.

He added, “For my family, we buy our food in bulk but I spend more on day-to-day essential needs as prices of things have pushed up considerably.

“I have also instructed my children not to ask me for money for picnics or other frivolities in the meantime because the pain is just unbearable.”

An employee of a marketing and advertising agency in Abuja, Blessing Sokowoncin, said despite the increase in allowances by her employer to cushion the effects of the hike in the price of fuel, she had continued to carpool with colleagues to save cost.

She said, “Well, my company was nice enough to give the workers an extra allowance just to cushion the effect of the hike in the cost of transportation and feeding. I’ve always hitched a ride with colleagues, so nothing has changed. For feeding, I think I even eat more now. I consciously make sure that I eat breakfast every day.”

On his part, a 200-level Paramedic Technology student of University of Abuja, Promise Mekwelle, stated the hike in transportation fares had tremendously affected students living outside the campus as they most times result in trekking in large numbers to meet up with classes.

A 200-level student of Accounting in the same institution, who gave his name only as Abiodun, stated that he and some of his colleagues trek long distances to attend lectures because of the hike in transportation fares.

Abiodun explained, “Most of us now attend only our core courses. My friends and I specifically trek to school as early as 5am whenever we have a 7.30am lecture to avoid lateness. Aside from the school hostel, the closest location where students stay here is about 40 minutes on foot, which now costs each student at least N500 daily by buses to attend lectures.

“Feeding is the worst part of it because it’s when one eats that he or she will be able or have the energy to work. Our parents are not even giving us money again, because they don’t have any.”

The Creative Director of Ilorin, Kwara State-based Toubie’s Creations, Aiyenigba Tobi, said he had been forced to increase the prices of his shoes and other fashion accessories, noting that the result was a decline in patronage by customers.

Another corporate worker in Abuja, Glory Ufedo, said she has had to cut feeding to only once a day and “became shameless” in asking for rides from other colleagues.

“I eat once a day. My office has a remote working arrangement for two days a week. Sometimes, I become shameless and ask for free rides whenever I can. I stopped using car-hailing apps, and I take buses too whenever I can.”

Experts give opinions

An economist, Dr Olalekan Aworinde, said the situation caused by individuals’ low purchasing power would affect their standard of living.

He said, “It is something that is very glaring and everybody can see the impacts of the removal of fuel subsidy at the present time. It will have temporary, short term and long term effects. The temporary effect is what we are seeing now. This is to tell you that the level of inflation has risen despite all the measures by the CBN to control it.

“The implication is that it reduces the standard of living of the people and reduces the purchasing power of the individuals, because the prices on goods and services have increased. The salary earners, who are fixed income earners, will also suffer during this period and the baskets of goods they are likely to consume is also likely to reduce, particularly for people selling at the market.

“Their sales will also reduce over time. In the education sector, private tertiary institutions are going to suffer from parents withdrawing their kids to public institutions. That means we are likely to see a situation of inter-school transfers.”

A professor of Food Science and Technology and President/Chief Executive Officer, Consumer Advocacy for Food Safety and Nutrition Initiative, Olugbenga Ogunmoyela, expressed worry over the constant rise in food prices since the COVID-19 epidemic.

He stated that this had impacted the purchasing power of the average consumer, noting that the fuel subsidy removal would worsen the situation.

Ogunmoyela said, “The rising cost of food prices has been alarming, especially since COVID-19. The impact has therefore been evident over the last two years in view of the reduced purchasing power of the average consumer. This is why we must be worried with statistics showing, for example, that about 37 per cent of our children are stunted (suffering from prolonged chronic malnutrition), and 11.6 per cent are suffering from wasting (indicative of recent acute malnutrition).

“The recent fuel subsidy removal will exacerbate this, which is why it is consoling that the government is thinking of palliatives in various forms to mitigate the effects.”

The CAFSANI president added that the inability of many families and households to afford three basic meals a day had led to a reduced calorie consumption and burden of malnutrition.

He decried the compromise on food hygiene and quality, stating that this had led to the incidence of food-borne diseases.

On measures citizens can take to cope with the rise in food prices, the don urged individual families to embrace home gardening and domestic livestock rearing.

He emphasised that a well nourished population would increase national productivity.

On his part, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the rise in food prices and fuel subsidy removal had impacted families greatly.

As a result, he noted that families had begun to rationalise and rearrange their priorities on spending.

Yusuf said, “For the average family, the costs of food and transportation are big components of family budgets. Now that the prices of those two have gone up, the impact on many families has been severe. A lot of families are now struggling, they are rationalising the food they eat and the places they go to.

“This is affecting their demand for other products because when you spend a lot more on all those daily things, you have less to spend on other products, which also affects other sectors of the economy.”

He called on the President to implement measures to cushion the effects of the fuel subsidy removal.

“We expect him (Tinubu) to reciprocate the understanding that Nigerians have shown by quickly coming up with impactful palliatives that he has promised. The palliatives must be something that improves the lives of Nigerians,” the CPPE CEO added.

MAN on electricity tariff

Meanwhile, the Manufacturers Association of Nigeria has described the plan to increase electricity tariff from July 1 as outrageous.

The association said the real sector was currently uncompetitive from the high cost of generating power from alternative sources.

The Director-General, MAN, Mr Segun Ajayi-Kadir, said this in an interview with the News Agency of Nigeria in Lagos on Friday.

NAN recalls that the Nigerian Electricity Regulatory Commission said the increase in tariff was in response to the rise in the pump price of PMS, inflation and the convergence of the exchange rates, which has resulted in the naira trading at 750 to the United States dollar.

Ajayi-Kadir said a 40 per cent tariff increase at this time would engender higher costs of production, lower profit margins, manufacturing activities’ paralysis and lower revenue remittances to the government, among others.

He stated that the absence of stable, effective and fairly-priced electricity supply had been a long-standing challenge for manufacturers, which compelled them to supplement with alternative energy sources.

Regrettably, he noted that the available alternative energy sources had become exorbitantly expensive.

The MAN DG said manufacturers spent at least N144.5bn on alternative energy in 2022, up from N77.22bn in 2021.

He said the fact that the government itself owed N75bn in unpaid electricity bills was indicative of how burdensome the cost of electricity had become.

Ajayi-Kadir stated, “Already, we have power constituting between 28 and 40 per cent in the cost structure of manufacturing industries.

“You can imagine the impact on manufacturing industries that are energy-intensive such as metal processing, heavy machinery and chemicals’ manufacturing.

“A spike in the electricity tariff will erode the profit margin of the manufacturers and reduce their ability to expand operations and create new jobs.

“Manufacturers will ultimately pass on the additional cost to the consumers of their products and this will increase the cost of the products in the market and complicate the rising inflation rate in the country.

“Also, the sector’s competitiveness will definitely worsen as the high cost of the products will make locally produced items less competitive when compared with imported alternatives.”

He advised the Federal Government and NERC to instead ensure improved electricity generation, transmission and distribution to meet the revenue needs of the electricity supply industry stakeholders.