In my article for this publication few weeks ago, titled “fuel subsidy: who will bell the cat?”, I succinctly clamoured for the removal of fuel subsidy in order to free up funds for more developmental projects instead of eating up the future of next generations in placating the current generations. According to Federal government, the government needs over a trillion naira to settle subsidy bills over the course of the year which government said will be sourced by borrowing which triggered my biases towards subsidy removal.
However, what I failed to add at the time of writing the article is, can we handle what is to come? The simple answer is NO. When subsidies on electricity, diesel, education, and petrol have all been removed, the result will be catastrophic. Food and basic amenities will be beyond reach of the common man .
I do not kid myself in expectation that a removal of subsidy will suddenly bring the Eldorado we seek. That it will provide government more funding as it logically should or that everything will pan out as planned. I will rather work with the conservative view that it may or may not. Current price of Diesel is testament to how the subsidy removal can have adverse effect on the common man.
If the FG removes fuel subsidy, is there any guarantee that the “savings” would be used for development projects for the people? The answer is No. Technically the “savings” will reflect in a lower budget deficit from N6 – N4 Trillion. Those projects must already be in the budget.
It is important for Nigerians to know that the pathway to any sustainable development for the people must go through appropriation and the budget process. This fiscal reality also means we must be prepared for other “realities” (like debt servicing) to take precedence over State Development Goals (SDGs). We have been weaned on the wrong assumptions of the Nation’s Wealth, and assured prosperity without much exertions. Who is going to wake us up, without us raising tantrums loud enough to destabilize the nation.
We should try to manage our expectations and maybe we will not be too disappointed. One thing is sure, to cushion the effects of any subsidy removal, the things that affect people the most, must already be in place. Good & affordable mass transport, food, good healthcare and availability of power.
The question now is – How do we achieve this without first spending the money we don’t have?
The answer in itself is very complicated – is it by taking loans (higher budget deficit), by increasing non-oil revenue (Higher tax collection: raising taxes or expanding tax net), Selling Assets, Cutting size of government or all of the above
The next administration should have its work cut out. The first task must be to manage people’s expectations by explaining to Nigerians the true challenges and the road to overcoming it, rather than lies wrapped in the cloak of political speech or campaign. We would always find faults about the whole scenario due to past experiences.
A lot of communications and orientations needs to be carried out to educate people at all levels as this would bridge the true issues.
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