Friday, January 6, 2012

"I started the war against subsidies."

Head of the Central Bank, Sanusi, explaining in more detail why he is against the fuel subsidies in Nigeria. There is a pretty thorough description of how the subsidy really supports corruption and some of the evidence of it. Interesting throughout.
So for two years I have been convinced that this thing is a scam and that it cannot be stopped because the entire controls have been compromised. ... So yes, I am willing to take all the criticism and labels and be unpopular but this has to stop and govt can find other ways of alleviating pain.

Removing it has costs in terms of nigerians paying more for PMS-which by the way is not the fuel for genrators, power plants, production facilities, heavy duty goods transportation trucks and even luxury buses. It is fuel used by the middle class and car owners to drove around town and from city to city not to employ workers and produce goods and services. Diesel which is critical to manufacturing and employment creation is not subsidized

1. I am a strong advocate for subsidies if they are for production and not consumption, and if they benefit the poor and not middle men and rent seekers. The US government subsidizes cotton and wheat farmers and nigeria spends its reserves importing wheat from america and keeping american farmers employed....

Finally: removing subsidy is not a silver bullet that solves our economic problems. And there is a huge trust deficit that government has to address. Government needs to investigate subsidy payments and punish any violations of extant guidelines. It needs to cut on unnecessary and waste ful expenditure. It needs to fight corruption and show seriousness in that. It needs to deliver on capital projects, power and infrastructure including irrigation, farm-level storage and agri-processing. These are all valid issues that are to be taken IN ADDITION to and not in place of subsidy removal.

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