#YourTurn: Who will pay for the subsidy?

By Ferdy Adimefe

“…the huge cost of subsidy is only a symptom of an entrenched disease called corruption.”

2012 seemed to have ushered in various controversial policies all at the same time. Much of last year, the Federal Government complained that the huge budget deficit might cripple an already wobbling economy if subsidy was not taken. But, the eventual removal has created despondency in the air, which leads me to worry if the manner of removal was done rightly and timely.

I am a layman who has never been in government but I understand that policy changes such as the fuel subsidy removal has had a shocking effect on many people. The government claimed that the existence of fuel subsidy, which over the years gulped an estimated N 1.5 trillion was a corruption hole, but now even with its removal, people still nurse genuine fears that a deregulated market could spiral an inflation that would hit the masses the hardest. So both situations bite at both ends and the only way the condition can become any better is if the federal government mitigates this short-term unpleasantness by ensuring that it puts in place a credible pricing model to checkmate inflation and other excesses that can come from deregulation? 

There has to be a strategy to change how this policy will be implemented and it might be based on how these questions are answered; can we get our refineries to perform at optimal level? What modalities can we use to review the licensing framework for private refineries? Should the government buy equity in the private refineries with the Excess Crude Account or Sovereign Wealth Fund? Or should the government give sovereign wealth guarantee to those who are willing to set up private refineries? What are the changes that can be made to ensure that the regulatory environment does not pose threat to the viability of the private refineries, with the NNPC as a competitor? The problem as the FG pointed out is the corruption of the subsidy regime, the huge cost of subsidy is only a symptom of an entrenched disease called corruption.

 A persistent fear is that the funds will become largesse for our rapacious politicians; a legitimate concern given our infamous history. No doubt, corruption is our unholy pastime and it is killing not just subsidy regime but our nation.  However, the FG should understand that removing fuel subsidy in one swoop without tangible plans to effectively annihilate the monster called corruption, is only an exercise that will give a futile result.

The hydra headed monster – after the numbing taste of subsidy removal will rear its ugly head in another area. And the vicious vortex –our famed corruption that has held Nigeria and Nigerians in its wicked embrace will continue apace with us. The question one might ask is: “can the government strengthen our anti-corruption institutions and other regulatory agencies that have been put in place to tackle corruption?”  If we strengthen our institution and salvage much of what is lost to corruption, there might be no need to remove subsidy.

The price of change must first come from the top and trickle down to the bottom. I believe those who preach the message of change should lead the change charge. I believe the government should lead the austerity measures by first subsidising the hugely expensive cabinet, through pay cuts and salary review for our elected officers and their serving counterparts sitting allowance.

Nigerians cannot continue to throw money away in the name of subsidy; neither can they continue to sponsor government excesses in a ‘business-as-usual’ ruinous splurge so the government should not expect the suffering masses to, solely, shoulder the price of change.




Comments (7)

  1. simply as i said on facebook, leaders should not expect followers to go somewhere they have not gone.

    it is not fair to even think that Nigerians dont want the subsidy to go…

    no one trusts this government and even though they bring Clinton to run the so-called economic team, they cant still be trusted.

    they should go to great lengths to work on creating a bond of trust first…

    see what oby ezekwesili said yesterday on twitter "In 1946, philanthropist Joseph N. Pew Jr. said, "Tell the truth and trust the people."


    "Social Accountability now the core of Good Governance means that engaging with Citizens as EQUAL PARTNERS is their RIGHT and not a PRIVILEGE"

  2. Well said, Ferdie. A lot of the questions raised need to be addressed and I believe the FG needs to meet the people half-way by curbing the excesses indulged by our politicans.

    Instead of a committee to manage funds generated from the subsidy, FG should set up a blue-print with KPIs to guide the removal of the subsidy(if indeed it is inevitable for the survival of the economy)

  3. This is a great piece. Its amazing how our "so-called" government could be so insensitive to issues. This is just a political game. A plot to remove subsidy with one hand and again receive it with another. A government that cannot feel the heartbeat of the people is a failed government. Implementing the removal of fuel subsidy at this point in time where we have security issues to tackle and indeed the beginning of a new year and the end of the holidays depicts a total lack of upward strategy for the "supposed development". Its as well alarming how difficult it was to implement the minimum wage of N18000 but so easy to broadcast the yearly expenditures of government in excessive amounts. Ferdy, I agree with you that if change must be made it must start from the top (The government). They must practise the positive change they preach! However, the way forward here is that the government should put in place structures that can check mate the policies made as regards this issue of fuel subsidy. Keeping a straight face or quiet stance on the issue the populace refuse to embrace isn't going to help matters too. The French revolution was caused by the lack of bread, but Nigeria is quite too blessed to have her revolution sparked-off by food, this fuel subsidy could be just a stone throw to her revolution. It is well with this nation!

  4. Extremely brilliant piece. I really wonder why this guy feels his dictatorship will succeed in a country of elite like Nigeria. I wish him the best though.

  5. To prove government's commitment and to help build trust with the people, can the government while trying to save the N1.3 trillion for servicing inefficiency which is being called subsidy let it go hand in hand, treating it with the same urgency, save another N1.3 trillion from the annual government spending through the Executive calling an immediate emergency meeting with the National Assembly to slash salaries and allowances of government officials so that we can have N2.6 trillion for the planned government projects and then we can monitor implementation together? I'm sure more funds available to government will assist faster to achieve the targets for the planned projects and that way we will be sure that we're in this together.

  6. Ferdy right on point! I think the salaries of our senators, house of reps etc should be reduced by 80%, the excess monies recovered should be used to put ouur refineries in shape. We can't keep sppending 70% of our budget on recurrent expenditure (govt salaries). Every other country has initiated tough austerity measures while only in Nigeria has our public spending increased in a steep upward direction.

  7. ….Beautiful piece and very well said.

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