In principle, subsidy is not bad as some have been made to believe. It’s a requisite for economic growth and development. Why ours seems like an enigma is the ‘other hand’ we don’t want to talk about because most are either engaged in it, while others are waiting for their turn to do so. The cancerous hand of corruption! Although it was not in their campaign promise, let us be aware that much may not be achieved until the fingers of that hand are cut off.
Since 2011, several arguments have been pushed for the removal of energy subsidies. The neo-classical proponents have pushed the narrative so hard that all our problems will vaporise once subsidies are eliminated. The debate about corruption has been pushed to the margins. Government has forgotten that it is its responsibility to combat grand corruption in the oil and gas sector, control the borders and ensure efficiency in governance.
Based on that singular action, the existing incomes of about 10.1 million Nigerians will remain the same but with reduced purchasing power, as food inflation, which accounts for the bulk within Nigeria’s inflation basket, climbed further to 24.45%, owing to increases in the prices of oil and fats, bread and cereals, potatoes, yam, etc.
The World Bank thinks an $800 million loan will bring ‘relief’ to 10 million households. They want to rely on the same social registers that other billions have previously filtered away through. Assuming the registers are true reflections of the information on qualified Nigerians, the relief will come down to about N7,000 per person! We have been down this path a number of times with no meaningful impact.
On yet another ‘hand’, salaries will be increased to douse conflict with the labour unions. Aggregate demand will increase, and this is another inflationary pressure. Labour will usually demand what the government can never afford. So what happens? I think the days of abusing the ‘Ways and Means’ grants are over, but salaries will increase with reduced purchasing power. The naira will further weaken, as more of it will chase fewer goods.
In terms of the spending patterns, what has been the improvement in our education and health sectors in the past decade? Have those two sectors delivered value for the trillions spent so far? Since the government has not provided the data that things have improved in the last ten years, why do we assume that pumping more money into the sectors will automatically improve our education and...
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