Independence: High diesel, petrol, electricity costs depleting household income —Rhodes Vivour

Former governorship candidate of the Labour Party in Lagos State, Gbadebo Rhodes Vivour, has said the policies of the President Bola Tinubu-led administration have wiped out household income in the state and the entire country, saying the government should target policies that increase productivity.

He also lamented that the cost of petrol is eating away at small businesses’ profits, urging the government to accelerate its CNG programme.

Rhodes Vivour, who said this in a statement made available to Vanguard, noted that current policies, marked by high diesel, petrol, and electricity costs, are negatively impacting the economy of Lagos.
His words: “Lagos used to be the city that never sleeps. In the last 14 months, however, Nigeria’s economic powerhouse has quickly become a shadow of itself, with economic activities operating at its slowest pace since the stagflation of the 1980s.

“Sadly, Lagos’ economic vitality has been severely undermined by the misguided policies of the Tinubu-led administration, which are rooted in reckless market fundamentalism. The streets and bars, supermarkets, and shopping malls are empty. Many have abandoned their cars for poor public transportation, families ration meals, and young people sleep on their desks or in office car parks to manage expenses.

“It is not enough that the president’s poorly thought-out policies have decimated household incomes, stifled consumption, and ultimately slowed the city’s economic growth; politicians and their cronies continue to brazenly flaunt their unexplained wealth, mostly funded by our commonwealth amidst so much poverty and hunger. To paraphrase Mr. Peter Obi, they have forced a fast on the people while they feast without empathy or compassion. These draconian policies masked as market fundamentalism are harming the economic well-being of citizens and are now threatening the survival of the business communities in Lagos.

“When household incomes fall and consumption declines, it creates a domino effect. The consumption–growth nexus has been a strategic pillar of Lagos’s economic success, and it’s shocking decline is deeply troubling. According to the Manufacturers Association of Nigeria, over N400 billion of unsold goods exist directly due to citizens’ weak purchasing power. Additionally, the association claims that thousands of manufacturing businesses have folded up, just as many more small businesses have been forced out of business. Struggling companies have had to let go of reliable hands while many young people are unemployed. If this current trend persists, Lagos will experience a severe standard of living crisis that could trigger the rise of crime and even social unrest.

“As falling demand forces businesses to lay off workers and reduce investment, our economy is heading for a fatal crash if we do not change course.”

“Firstly, the government must subsidize the cost of public transportation and public health services, especially since it now enjoys higher revenue from the federal account. The fact that the Lagos state governor suspended a meagre 25% of BRT buses for several months is unhelpful and demonstrates a lack of policy consistency. Furthermore, it is critical to institutionalize robust unemployment benefits and social welfare programs to help many Lagosians cope with the financial downturn and to keep consumption going.

“Secondly, and more significantly, the cost of petrol is eating away at small businesses’ profits and wiping out most households’ discretionary income. Therefore, the government must accelerate its CNG program by incentivizing the private sector to invest in critical infrastructure (pipelines and daughter stations) and distribution. It can also extend energy subsidies targeting food transportation nationwide to reduce food inflation. Equally, we must subsidize production.

“The current policies, marked by high diesel, petrol, and electricity costs, negatively impact Lagos’s economy. Hence, a targeted subsidy program is critical to increase productivity, improve commercial activities, and support local production.

“Reducing income and consumption taxes should further incentivize businesses that retain their current workforce. Reducing taxes leaves more money for companies and workers, increasing discretionary income, raising spending, driving consumption, and growing the economy. The Lagos state government should also consider returning the Lagos Trust Fund initiative that set aside N50 billion to directly fund the expansion of small businesses with grants and low-interest loans. Such initiatives help manage the currently high operational costs and provide the necessary capital required for businesses to navigate the current difficulty.

“In the mid to long term, the government of Lagos state should deliberately pursue policies that promote local manufacturing and strengthen its legal institutions to attract capital and investments into the private sector. It must also diversify the economy to include other productive sectors like tourism, the digital economy, and the creative economy.

“In conclusion, recognizing the crucial role of consumption in driving economic growth and implementing policies that support household incomes and local businesses are imperative for the Lagos economy. Lagos can lead an economic renaissance, but the federal government must stop standing in its way.”