The term ‘subsidy’ is undoubtedly in contention for the word of the year 2023. Ever since President Tinubu affirmed that the government of Nigeria will finally slay the subsidy dragon, several analysts and commentators have invoked and repeated it in various conversations. They seek to paint the picture of a Nigeria without subsidy. But what does the term itself mean?
The economic principle of opportunity cost implies that every penny that goes to subsidy payment is a penny away from the construction of roads, schools, hospitals and other amenities with direct and greater impact on the citizen’s standard of living.
President Tinubu captured this succinctly in his inauguration speech when he said, “Subsidy can no longer justify its ever-increasing costs in the wake of drying resources. We shall, instead, re-channel the funds into better investment in public infrastructure, education, health care and jobs that will materially improve the lives of millions.”
He, of course, understood that government resources is limited. This reality mandates that it must be invested in programs and projects that benefit the most number of Nigerians and guarantees the country’s survival, especially in times of global economic uncertainty such as the one we are experiencing.
Oil subsidy clearly fails to meet the bar. It is a suckhole that devoured trillions of naira with very little to show for it. It forms part of the reason the country is faced with an immigration wave that threatens to empty its pool of talent and workforce, as young Nigerians flee abroad in search of greener pastures.
Progress will remain elusive if the government continues to sacrifice other investments to carry this burden. We need to help our youths acquire in-demand skills, continue the upgrade of our infrastructure and security architecture, raise the productivity of our agric sector and expand economic opportunities to accommodate as many that are willing to work and earn.
None of this will be possible if we insist on bearing the heavy weight oil subsidy imposed on our finances, to no meaningful returns. For Nigeria to grow, the oil subsidy must go. It is that simple.
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