During the removal of fuel subsidies in Senegal, Nigeria, and Angola, citizens bear the brunt of soaring fuel prices and inflation. The move to eliminate subsidies, once considered politically unthinkable, has become a necessity due to mounting debt, high borrowing costs, and surging fuel prices. With global spending on fossil fuel consumption subsidies reaching a record $1 trillion, African nations are grappling with the need to address their fiscal challenges and stimulate economic recovery.
In Senegal, individuals like Abdoulaye Diallo, a motorbike taxi driver, face significant hardships as fuel costs have risen by over 50 percent since the government started lifting subsidies. Diallo cannot pass on the increased expenses to customers, straining his livelihood and prompting calls for action. Similar situations arise in Nigeria and Angola, where the removal of subsidies affects the affordability of essential services for citizens.
Stanley Achonu, Nigeria Director of the ONE Campaign, emphasises the need for change, stating that the cost of subsidies is too high to sustain. African countries, burdened by rising borrowing costs and mounting debt, are compelled to remove subsidies to alleviate fiscal pressure and attract international investment.
The timing of subsidy removal poses challenges for citizens already grappling with high inflation. However, experts argue that removing subsidies can redirect funds to more productive use, benefitting the broader population. The World Bank and the IMF support subsidy removal and advocate for redirecting the savings to support education, health, social protection, and vulnerable households.
While subsidy removal is crucial for fiscal sustainability, experts stress the importance of implementing policies that protect those most affected by the price hikes. Gradual phasing out of subsidies and targeted measures to support vulnerable groups can help alleviate the immediate impact and ensure a fair transition.
Nigeria, Angola, and Senegal plan to redirect the savings from subsidy removal to support their respective populations. Measures include cash transfers to the poorest citizens, support for agriculture, fishing, public transit, and carefully targeted subsidies. However, concerns remain regarding certain sectors, such as urban taxis, that may face difficulties adapting to changing prices.
As African countries navigate economic challenges and seek to reduce debt burdens, the removal of fossil fuel subsidies presents an opportunity to allocate resources more efficiently and promote sustainable development. The call for responsible governance and measures to protect the most vulnerable highlights the importance of balancing fiscal considerations with social welfare.
