Economic realities of subsidy removal

Chineke Mmachizuoke, Department of English and Literary Studies, Delta State University:

The subject of fuel subsidy has been a debated for quite some decades. Successive governments had various policies around it. While some considered it fraudulent, others seemed to have used it for political and financial gains.

Some past governments tried but failed to remove fuel subsidy due to lack of political will, and pressure from citizens’ protests. The generality of Nigerians seem to believe that the subsidy was a scam, yet the past governments could not remove it because of what they stood to benefit or lose.

Ex-President Goodluck Jonathan tried to remove the fuel subsidy in January 2012 but did not succeed. One of the greatest ironies of fuel subsidy was when in 2014 former President Muhammadu Buhari during his campaign, stated that there was nothing like fuel subsidy and that it was a scam, only for him to govern Nigeria for eight years and retained that same subsidy. On the contrary, his successor President Bola Tinubu, in his inaugural speech said, “subsidy is gone.” Since that declaration, there has been palpable panic, surge in prices of commodities, fuel, transport and cost of living generally.

Subsidy removal: Beyond Tinubu, Kyari’s personal interests

The announcement however was met with mixed reactions as experts and laymen propound the merits and demerits of the removal. The gains the experts envisage accruing to Nigerians in short and long runs include the following: humongous amounts of money would be freed for other sectors of the economy such as education, healthcare, infrastructure and other critical sectors. New refineries would be established while the existing, non-functional ones would be repaired.

There would be job opportunities for Nigerians.

It is also envisaged that the removal would stop corruption or at least reduce it. It is also believed that the removal would stop the smuggling of petroleum products to neighbouring countries. It is believed that it would solve the perennial fuel scarcity and its attendant hardship.  However, while the anticipated gains sound so laudable, it is important to note that the economic hardship the fuel subsidy removal had caused is better imagined than experienced.

Setting governance agenda for incoming administration

The rise in price a day after the president’s announcement of subsidy removal has affected the price of commodities and goods. Unfortunately, however, the people’s purchasing power has not increased, inflation is at its peak, and the exchange rate of naira to the dollar has made the cost of importation unfavourable to businesses in Nigeria. The poor and average-income earners bear the greatest brunt of this unplanned political cum economic policy.

Most critics of the policy believe that adequate time for planning and studying the adverse effects of the removal with solutions to cushion and mitigate the effects was necessary. But that was jettisoned at the predicament of the masses. In conclusion, I would recommend that the money saved from the subsidy removal should be used judiciously for the well-being of the masses.

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