Debunking subsidy removal myths in concise broadcast style.”

By Damilola Adeleke

“On January 1, 2012, the Nigerian government, led by President Goodluck Jonathan, made a significant decision to remove the petroleum subsidy. The ruling party at that time, now in government, had vehemently opposed the move during the Arab Spring, fearing its potential consequences. Today, however, they find themselves implementing the measure, citing its unsustainability.

During a recent broadcast on July 31, 2023, Asiwaju Bola Ahmed Tinubu referred to the subsidy as a “once beneficial measure” before highlighting its tremendous cost, amounting to trillions of Naira annually. He argued that redirecting these funds to public transportation, healthcare, education, housing, and national security would be more beneficial.

The conversation surrounding the subsidy’s removal has been clouded by myths and misconceptions. Myth 1 claims that the subsidy itself is the problem, but in reality, it is the corruption and lack of accountability in its administration that needs addressing.

Myth 2 suggests that there will be substantial savings from removing the subsidy, but evidence contradicts this claim. The costs of government overheads, variations in capital project costs, and increased public sector expenses counter any presumed savings.

Myth 3 proposes that subsidy removal will stimulate economic growth. However, a study by the Federal Ministry of Finance, Budget, and National Planning shows that it could have adverse effects on the economy, raising prices of goods and services and decreasing household incomes.

In summary, the focus should shift towards accountability and reducing the size and cost of governance, rather than burdening the poor while the elite remains unscathed by the subsidy removal.”