Nigeria has approved the immediate resumption of cash transfers to 12 million vulnerable households, Finance Minister Wale Edun said on Monday, amid a cost-of-living crisis and calls by labour unions to cushion hardship caused by reforms.
President Bola Tinubu scrapped a popular but costly fuel subsidy last May and twice devalued the currency in less than a year, leading to soaring prices. Africa’s biggest economy now grapples with a cost-of-living crisis fueled by the highest inflation rate in nearly three decades.
Edun told reporters after a cabinet meeting that restarting the direct cash transfer was crucial to tackling rising prices, especially elevated food prices, and to the government’s ability to provide purchasing power to at least 60 million people who are less well-off.
To address concerns about past irregularities, Edun emphasized the introduction of strict measures to identify beneficiaries. Payments will be made directly into bank accounts or mobile money wallets linked to a national identity number and bank verification number, ensuring transparency and traceability.
“Each person receives 25,000 naira for a total of three months,” Edun said, highlighting the program’s immediate impact.
“It will be clear who it went to and when it went to them.”
The government has also pledged additional support, including plans for a social security program for unemployed youth and graduates, alongside a consumer credit scheme to boost affordability and economic recovery, Edun said.
The latest measures to cushion the impact of ongoing reforms follow a two-week ultimatum by Nigeria’s main labour unions to the government to meet demands ranging from wage hikes to improved access to public utilities.
The unions accused the government of failing to uphold pledges to soften the impact of reforms. They plan a two-day protest from Tuesday to raise their voices over the hardship.
A Bold Move or a Desperate Measure?
Some analysts have welcomed the government’s decision to resume cash transfers, saying it could help ease the pressure on the poor and stimulate consumer spending.
“This is a bold move by the government to address the social and economic challenges facing the country,” said Cheta Nwanze, a senior partner at SBM Intelligence, a Lagos-based consultancy.
“It shows that they are listening to the people and trying to respond to their needs.”
Nwanze added that the cash transfers could also have a positive effect on the security situation, which has deteriorated in recent months due to rising poverty, unemployment and crime.
However, others have questioned the sustainability and effectiveness of the cash transfers, arguing that they are a short-term solution that does not address the root causes of the economic crisis.
“The cash transfers are a desperate measure by the government to appease the masses and avoid a social uprising,” said Bismarck Rewane, the CEO of Financial Derivatives, a Lagos-based research firm.
Rewane warned that the cash transfers could also fuel inflation and widen the fiscal deficit, putting more pressure on the already strained public finances and foreign exchange reserves.
He urged the government to focus on improving the business environment, diversifying the economy, and creating more jobs.
Source: Reuters
