The fuel subsidy has been a millstone around the neck of Nigeria’s economy for decades. It has distorted the market, led to inefficiency and corruption and has prevented the development of other sectors of the economy.
Only a few elite in Nigeria understand what fuel subsidy means. The market woman just complains bitterly about subsidy removal here and there.
Let me break it down in a simple way.
Subsidy is a grant paid by a government to an Enterprise that benefits the public and in this case it was fuel that was subsidized just to ease the financial burden on the country’s poorest citizens, but over time it has become a massive financial drain on the government.
Hence the removal of fuel subsidies recently. According to Ngozi Okonjo lwela the managing director of World Bank, the removal of fuel subsidies in Nigeria is a necessary but challenging step in the process of reforming the economy.
Truth must be told that the removal of fuel subsidy has caused significant hardship for the ordinary people who are already struggling to make ends meet.
The cost of basic goods and services has skyrocketed while wages remain stagnant. Yes, everything in my country increases on a daily basis and my question is why can’t wages increase too?
The removal of fuel subsidy is not the only cause of hardships on Nigerians, the country faces a lot of challenges ranging from lack of infrastructure, corruption and dependency on oil revenue.
However, the removal of fuel subsidies has complicated this problem by diverting resources away from other critical priorities, in order to truly transform our economy.
We address these challenges head-on while also taking steps to alleviate the short term suffering caused by the removal of fuel subsidy.
Furthermore, we cannot deny the fact that fuel subsidies have a direct impact on the value of Nigeria’s naira relative to the US dollar.
The exchange rate has increased beyond what is affordable in the current precarious economic climate. The naira has depreciated significantly since the removal of subsidies, leading to a rise in the cost of imported goods and services.
This has further led to capital flight as investors have been pulling their money out of the country’s economy.
The Agricultural sector is not left out in the impact of this subsidy removal. Higher transportation costs have reduced the profitability of farming hereby leading some farmers to give up their land or switch to less labor-intensive crops. This has led to a decline in food production which has further increased prices. This has also reduced economic output and tax revenue further weakening the country’s finances.
The rising cost of living also has its negative impact on healthcare and education. Many people can no longer afford to see a doctor or pay their children’s school fees. This has led to a decline in both physical and mental health and has also reduced educational opportunities for young people.
In addition, the lack of access to education and healthcare is creating a vicious cycle in which people are less able to improve their lives and break out of poverty.
The effect of fuel subsidy removal on the health sector has the potential to damage the country’s future for generations to come. Children who miss out on education will be less able to contribute to the economy as adults and will be more likely to remain in poverty and lack access to healthcare, further straining the country’s resources.
The subsidy removal in itself is not a bad idea, according to his Excellency President Bola Tinubu, because, the country spends trillions of naira on subsidy annually and this money, (if the subsidy be removed) will be directed to other sectors of the economy like health, education, agriculture and others.
Therefore, I am soliciting that the Federal Government should build local refineries in order to make the price of fuel a lower and life will be a bit better for the ordinary people of Nigeria.
Building local refineries can be a solution to the current fuel problem. The country imports most of its refined petroleum products, which is expensive and vulnerable to global supply disruptions.
Building local refineries would reduce dependency on imports and could create jobs for many Nigerians and other benefits.
The Federal Government should also increase salaries of workers, not only promising to increase it because it will directly improve the lives of people in Nigeria and could boost consumer demand for goods and services.
– Ameh Martha
Prince Abubakar Audu University, Anyigba, Kogi State.
