Nigeria Should Ignore IMF Which Is Calling for FULL Removal of Subsidies on Fuel and Electricity

With all respect, the IMF is wrong, for asking the Nigerian government to remove ALL subsidies on fuel and electricity: “The International Monetary Fund (IMF) has urged the federal government to fully eliminate subsidies for fuel and electricity, highlighting that these financial supports are not only expensive but also ineffective in benefiting the populations most in need of assistance.”

We acknowledge that the government has modulated its fuel subsidies, shifting from full to partial, since prices have not tracked exchange rate, if full fuel subsidies have been in place. Simply, the government is taking care of the exchange rate variance on the import and distribution of petrol in Nigeria. The IMF wants it to go full and cut-off all subsidies. Nigeria should ignore the IMF on this.

For nations to FULLY remove fuel subsidies, they are required to provide a decent mode of transportation (private or public).  Today in Nigeria, we do not have buses, trains, etc which are provided by the government to help citizens move around, in an efficient way. So, a 100% fuel subsidy removal in Nigeria is a bad policy even though it could make sense in Switzerland (Zurich), Canada (Toronto) and USA ( New York).

I travel to meet clients in Zurich.  Once I get out of the central station in Zurich, I would enter a FREE bus and my clients will also take the same FREE buses. Through those buses, the government has subsidized transportation, and even if it does not remove subsidies on petrol for few car owners and drivers, it does not matter because it has offered “free” or “affordable” transportation. You can make the same case for New York, and some major global cities, which are usually used to support these calls.

In the United States, while you do not expect petrol subsidies in New York City (great public transportation), you will expect subsidies in many parts of America where public transportation is limited. If you do not offer that, you will lose elections badly. That is the context I want our leaders to look at this.

Also, on the electricity subsidies, I support the IMF call there, but I do think Nigeria needs to keep subsidies for industrial customers while commercial and residential customers  should see their subsidies go. Yes, subsidize electricity and fossil fuels for productive industrial customers while having reflective tariffs for commercial and residential customers!

With all respect, the IMF is wrong, for asking the Nigerian government to remove ALL subsidies on fuel and electricity: “The International Monetary Fund (IMF) has urged the federal government to fully eliminate subsidies for fuel and electricity, highlighting that these financial… pic.twitter.com/UDCHr2C5cT

— Ndubuisi Ekekwe (@ndekekwe) February 13, 2024

Summary: Professor Ndubuisi EKEKWE argues against the IMF’s recommendation for Nigeria to remove all fuel and electricity subsidies, citing the lack of adequate public transportation infrastructure in the country compared to places like Zurich and New York, where such subsidies are less critical due to robust public transportation systems.

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