Tinubu, Nigeria and the fuel subsidy albatross

Subsidy removal

The removal of fuel subsidy and the convergence of the foreign exchange markets, the two major policy objectives President Bola Tinubu has committed himself to since assuming office, inevitably came with economic cost to the people who have had to bear the pains of higher cost of living. The jump in pump price of fuel and devaluation of naira in a bid to close the gap between the bank and parallel market rates meant higher transportation cost, higher food price and higher cost of doing business for small business owners.

There is no doubt that the people, most especially the poor, are hard pressed and seeking succour from a President who promised them a better life during his electioneering campaign. The pain, albeit uncomfortable, is only temporary; but necessary. From the President’s most recent national broadcast, one thing stands out, our beloved country, Nigeria, is simply in a catch-22 situation. The President must find the most pragmatic way to deal with the two ugly elephants in the room that have distorted our economy for decades, promoted humongous corruption via rent seeking and has kept the poor, even poorer.

For over seven years, Nigeria has consistently held the appalling title of the poverty capital of the world, according to the World Bank, overtaking India with a population of about 1.5 billion people. Nigeria’s population is only a little over 200 million. Nigeria has, in the last 40 years, progressively wasted trillions of naira that would have been better spent on social services, human capital development and critical economic infrastructure that should support productivity and growth to give citizens cheap fuel. The culmination of these has, no doubt, stunted the growth of the nation