The whole issue of fuel subsidy has come to be perceived as one huge scam the government is not coming clean on. The skewed policy moved the country to near fiscal collapse between 2011 and 2012. Between 2008 and 2010, the federal government paid a total sum of N1.2trillion, an equivalent of $8billion on subsidy at the 2011 exchange rate. The fact of the matter is that subsidy creates soft money for some smart persons and the privileged in the society. The result is the creation of billionaires that have negligible impact on the economy, because they do not have the capacity to create jobs or employment or add value to production. While they make humongous wealth from subsidy, the rest of society suffers from infrastructural and institutional decay, especially in the social sectors. Subsidy withdrawal is a far-reaching economic restructuring strategy that requires tough political will and an even greater measure of toughness to ensure that the savings from its removal are judiciously utilised to meet the needs of the people. It is not enough to announce its removal, government must engage in a communication strategy that can convince all stakeholders.
The need to do away with subsidy must be obvious to all by now; presently the cost varies with location, going as high as N140 per litre in the southeast and far north. Though there are challenges associated with it, its greatest handicap lies in the lack of trust for the government by the people. So long as government insists on running a closed shop on the issue, so long will there be perpetual suspicion of its policies, no matter how well intended. The supposed subsidy on fuel is a rip-off. Given the state of our poverty-ridden economy where more than half of the population lives below the poverty line, 38 per cent of the women have no education and less than 10 per cent attended school beyond secondary level, it is important to muster the political will necessary to pronounce and execute such delicate policy thrust.
We tout the fact that Nigeria is the largest economy in Africa now. It is also the 10th largest oil producer, even though much of it is lost to oil theft and bunkering, which is to say that this giant has not done well for itself. We have lived with economic recklessness and excesses for too long; there is the need for a rethink of the nation’s economic situation. This is the task before the outgoing and incoming ministers of finance and other economic advisers. The reality of our economic situation is far from rosy and this must be properly communicated and addressed. This fuel subsidy only benefits a negligible percentage of the populace while impoverishing the majority. This is the predicament we are faced with and which the incoming administration must address head on.