Now that the subsidies are gone….

The subsidies are gone. The subsidies on PMS at least. Cue the expected panic and protests. What exactly should we fight for during these protests? Or what exactly should YOU fight for since I won’t physically be on the streets.

Should we fight for a return to N65 per litre? No. The simple option facing the government is to spend N1.x tn on the fuel subsidies or on infrastructure. The answer is really simple. Spending on infrastructure has a multiplicative effect on the economy. The effect of a new three lane highway between Abuja and Lagos, for example, outweigh any possible benefits of the fuel subsidy. Yes there is a direct immediate effect on income which is felt most by the poor and figuring how to alleviate that is important. A return to N65 won’t achieve that.

What should we fight for? For starters we need to fight to ensure that the saving actually goes to infrastructure and not salaries or some other meaningless government program. The SURE document outlines a couple of these plans but strict timelines need to be stated. Secondly we need to force the government to cut some of its own trivial spending. A certain food budget perhaps. Finally we need to make it clear that if these infrastructure projects do not materialize the current administration will be voted out come 2015.

These are the things that I believe we should fight for. The opportunity is there to change things. We can change for the better or worse. Returning to the status quo should not be an option


2 thoughts on “Now that the subsidies are gone….

  1. The things you say are true. Govt overhead is too large and needs to be reduced. Unfortunately it took 10 – 15 years to spiral to this level and it will probably take just as long to get it back down. Corruption is also a big issue but it takes even longer to successfully fight corruption. We need to work on those things but do we really want to wait 10-16 years before we see any progress? Especially for a govt that has only 3.5 years left?

  2. I do not agree that at this moment nigeria should have removed the subsidy on PMS. Deregulation works well on a competitive market, the downstream sector of the oil industry is far from that and to worsen matters; there is almost no alternative for power on ground. The power system is reeling under pressure, power tariffs keep going up. It will be wrong to look at any government as a capitalist entity because their motives should differ, while a capitalist seeks profit maximization a government should seek welfare optimization of the people. Nigeria as a nation has no safety nets for the poor. The income gap keeps widening & we all know the social effects of that. The bulk of expenditure is not the subsidy but overhead cost of running the government and huge losses to corrupt practices; this to is what the people should fight against the burden of development should not be borne by the poor alone. Its wrong and must be discouraged.

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