It makes me sad to see or hear of suffering. That's exactly what this fuel subsidy will result in: SUFFERING!
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| Nigerians protest the fuel subsidy in Ibadan. Image source: nairaland.com |
I have been following this issue in Nigeria for a while and I believe Goodluck Jonathan's intentions are good. I really do. However, this was implemented too soon and very nonchalantly.
From an economic point of view, the World Bank recommends the use of subsidies to aid economic growth in developing countries. However, from a welfare point of view, subsidies will make the poor poorer and could possibly lead to political turmoil as evidenced by Ghana in 2005. removing subsidies seems like the right thing to do.
Countries should not follow the World Bank blindly. As a matter of fact, there are no concrete research findings that support the removal of a subsidy. Having said this, I do not fully understand why the Nigerian government chose Jan 1 to implement the fuel subsidy. Could there be a worse Happy 2012 present? It's the Fed. Govt, so I guess time will tell.
The fact that a fiscal policy looks good in theory does not necessarily mean it would be effective in Nigeria. That's quite obvious, but maybe not to the Nigerian Government. I also ask myself if there are not more pressing issues in the country such as the power problem.
I do not think GEJ can logically explain a 120% increase in prices overnight. I also have no trust in the Government of Nigeria and do not believe the Government will implement this subsidy wisely, so Nigeria reaps the proposed benefits. I am highly disappointed that Nigerians were led to believe that this subsidy will possibly be implemented in April, only to wake up to this news on January 1.
My take on the fuel subsidy: Too much, too soon. And hence, I tag President Goodluck Jonathan's fuel subsidy a #fail
Time will tell...
