Nigeria's Fuel Subsidy Removal: Why Change Management is as Important as Change Itself

Nigeria has been grappling with the issue of fuel subsidies for years, with the government implementing policies aimed at reducing the cost of fuel for consumers. However, these subsidies have proven to be a significant drain on the country's finances, prompting concerns about their sustainability and the need for reform.

3 days ago, President Elect Bola Ahmed Tinubu announced that the 2023 budget would not include provisions for fuel subsidies, effectively signaling the end of the subsidy regime. While the rationale behind this move is well understood by many, it has also raised concerns about its potential impact on consumers and the economy at large.

The elimination of fuel subsidies can have various effects on the fuel situation in Nigeria. On one hand, it will result in higher fuel prices for consumers, which would lead to increased costs of transportation, goods, and services, etc. On the other hand, it could incentivize the development of alternative energy sources and encourage more efficient use of fuel while also giving the government the opportunity to invest these funds in other development projects.

However, while driving change to improve systems is important, what is equally important is the way in which this change is managed. Effective change management is crucial for achieving organizational goals while also managing the process in a way that caters to the needs of employees, citizens or other groups.

In the case of Nigeria's fuel subsidy removal, there are several key considerations that need to be taken into account. First, communication is key. The sudden announcement of the removal of fuel subsidies without an expected implementation date came as a shock to many Nigerians. After the announcement, fuel prices suddenly spiked, destabilising individuals and businesses in an economy which is largely dependent on the use of fossil fuel. If the change was to apply immediately, then it would not allow citizens prepare and plan accordingly, an opportunity which could be provided if the price increase is to be staggered over time or structured to follow a gradual implementation process. A publication released yesterday has informed Nigerians that the subsidy removal will no longer be immediate, and this is a very commendable move. I can’t help but take a lesson from what has transpired in the last 3 days on how communication can help stabilize the process of change or vice versa, depending on how it is employed.

Second, it is essential to consider the impact of the change on vulnerable groups. Taking minimum wage in Nigeria into account and the population of people in jobs that barely pay minimum wage, it is important that this group and other vulnerable groups are considered. Also, a total removal of fuel subsidy will account for somewhere around 150% increase or more in the purchase price of fuel. I believe that majority of Nigerians including low-income households and small businesses will require adequate notice to maintain stability once fuel subsidy is completely removed – it could take some months to years realistically. Therefore, measures need to be put in place to mitigate the impacts of this change, such as targeted subsidies, or support programs among others.

Third, there needs to be a focus on building trust and engagement with stakeholders. This includes engaging with citizens, civil society organizations, and other stakeholders to ensure that their voices are heard, and their concerns addressed. It is always important to build trust between the government or leadership of an organization with its citizens or employees. Our people should always be able to trust its government, leadership and processes in order to feel a sense of belonging and security.

Finally, whether as a nation or organization, managing change is essential in ensuring stability throughout the process of any change. Where surprises can be avoided, it is better to communicate transparently as much as possible with the stakeholders involved. While the removal of fuel subsidies in Nigeria may be necessary for the country's long-term financial sustainability, it is essential to manage this change effectively. By doing so, Nigeria can achieve its goals while also ensuring that the needs of its citizens are met.

What are your thoughts about the removal of fuel subsidy in Nigeria?

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