My social media handles are classrooms, and I like to engage as the questions come. Question: Why do you want the Nigerian government to subsidize or keep subsidizing postal service, petrol and education?
My Response: Let me begin by drawing cases from the United States (I can use any developed economy). I have lived in a red state (Alabama), blue states (MD and MA) and swing state (PA), and I have seen how cities advance. In the ranking of the top 20 American best universities, more than 80% are in blue democratic cities. Also, the largest American cities are also majorly blue cities. More so, in per capita income ranking, blue states will pick the top five while the red ones will pick the bottomn five. So, there is a statistical validation that blue states outperform economically.
So, what do blue American cities and states do? They build economic platforms faster, larger and better than their red counterparts. They have the best school systems, best transport networks, etc. With those infrastructural platforms, communities and opportunities emerge.
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Education: there will not be a generation of knowledge workers if Nigeria does not subsidize education. For all the attacks on California, with its world-class university ecosystem, innovation happens therein and everyone comes there to build the next phase of technology. Nigeria’s most important infrastructure is education. More than 70% of people reading this will not have gone to universities in Nigeria without that subsidy. In FUTO, I won multiple university scholar awards and I experienced the beauty of an amazing Nigeria, helping my education through broad subsidies and scholarships. For me, Nigeria worked for me. Education subsidy is a catalytic infrastructure for a nation; do not remove it.
Postal service: Nigeria needs to link the urban and rural areas so that commerce can happen at scale. The postal system has a role. In the US, for the last 20 years, the US postal service has recorded losses and they’re fine with it. If Nigeria fixes corruption, we can build a functioning NIPOST that will lose $100 million but can power a new market of $50 billion which we can tax to make $1 billion.
Fuel: I have already explained my point here. You can add that as Europe subsidies renewable energy, and EV cars, they’re using subsidies to rebuild their economies. Nigeria’s problem is not subsidies but CORRUPTION in our subsidy execution. We must kill corruption to advance as a nation.
My Conclusion: Nigeria needs to do strategic subsidies, effectively and efficiently. We cannot be the “red states” of Africa in a time when Rwanda and South Africa are building modern platforms for their futures. America created one a few decades ago when it decided to subsidize ecommerce. Yes, when US senators voted to not burden online stores with collecting sales taxes, etc, it knew many Americans would move online, leaving physical stores which must continue to collect taxes, to fade.
That dishwasher is $1,000 and sales tax is 7%. If you buy on Amazon, you pay only $1,000 while if you go to a physical store, you pay $1,070. With free shipping, most moved online. Then, when the US government felt that those online stores had matured, they removed those subsidies, and now all stores collect the taxes! If Amazon had been left to battle the free market, it would not have succeeded! It got a lot of help along with many online stores because the US wanted to create a new sector!
Nigeria needs to create new sectors, and subsidies are vehicles which nations use to make such happen. Ford, Tesla, GM, etc are getting huge funds as the US races to build modern infrastructure for the electric vehicle future. Intel, AMD, ADI, etc are getting massive funds from the government to rebuild their semiconductor competitiveness.
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You cannot kill corruption in an environment replete with poverty and greed. How many people have conquered poverty in Nigeria? Having billions in your account or investments does not mean that you have conquered poverty, because it is a thing of the mind. What we have largely are people who are so afraid to go back to poverty, so they maximize every opportunity to steal or loot more, because they don’t know if the ones they have already stolen or looted would be enough.
We cannot manage subsidies efficiently and effectively because of these two factors: poverty and greed. They numb your capabilities and undermine good intentions. Those in the civil and public services are so scared of retirement, because their old age is not assured, so they are grabbing everything on their way, perpetuating themselves where possible.
We have not been able to do a deep dive into the complexity of problems we are attempting to solve, the psyches are totally messed up, the institutional capability is virtually nonexistent, the moral soundness is lacking, yet we sort of believe that by writing papers and talking all the time our people will magically transform from scavengers and extortionists to patriots and builders.
We are still far off.
The issues you have raised about subsidies are quite germaine. We can not but subsidise critical sectors where we desire growth. As rightly mentioned education is one of them.
However, we can do without fuel subsidy.
Apart from the fact that fuel subsidy is fraught with sleaze, it is actually a subsidy of government’s incompetence and failure to effectively secure our boders. The truth is that it is more sensible to subsidise the local production of solar panel and renewable energy technology than sustain the humongous waste we call fuel subsidy. I believethis will reduce our carborn footprint and reduce pressure on national grid.