Convincing the public

The subsidy is inefficient. We know.

The subsidy may bankrupt the government. We know.

We could better allocate the gains from removing the subsidy to finance critical infrastructure. Again, we know.

The economics of removing the subsidy makes a lot of sense. Unfortunately we also know that we do not have a very serious government. There are no guarantees that this government will do any of the things it says it will do after the subsidy has been removed. The success of the plan depends a lot on the public believing that the government will do what they say they will. Things like this; Jonathan, Sambo To Spend N1b On Food In 2012, and this; KPMG Report On The Monumental Fraud And Corruption At The NNPC do not help the cause at all.

The government needs to realize that although this policy is a good one it can fail. Lots of countries have tried to remove subsidies and some have had governments collapse as a result or have been forced to back pedal. The government needs to show that it is ready to bite the same pill it is asking the public to.


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