EDITORIAL: Subsidy Issue

The crisis in the Middle East is far abating, one contentious issue arising from the sudden economic dislocation centres around whether or not to provide subsidy in order to ameliorate the cost of living crisis which has been induced in countries across the world.

There is of course, nothing new about subsidies. For decades, the European Union (EU) has used one billion US dollar to subsidise food in the EU under the  Common Agricultural Policy. This has preserved living standard protected farmers and help the cause of maintaining social stability.

Unfortunately, subsidy is not linked with the achievement of social stability in Nigeria but it’s correctly associated with fraud, the evidence for criminality in successive subsidy initiatives in Nigeria is damning!

This might be the reason why the coordinating Minister for the Economy, Mr Wale Edun has ruled a return to subsidy, he appears to be more focused on using social intervention programmes instead to ameliorate the effect of the crisis in the Middle East.

Unfortunately, social intervention in Nigeria have also developed a very bad name with allegations of fraud and criminal activities.

Nigeria does not have even rudimentary social safetynets a country operating on a very weak institutional framework. This is a clear recipe for social instability as we can see from the security situation in the country.

Any use of social intervention programmes must now be placed inter the oversized of civil society. Worthy bodies such as SERAP, Budgit, organised labour as well as faith based organisations must be at driven force designing programmes and oversee their implementations.

This is the only way to make them effective and not them into a replication of a previous Gulf War  windfall  fiasco. The void of graft, social intervention programmes can actually be turned into  economically beneficial initiatives.

A very good contemporary example is from Brazil. In Brazil the social intervention programmes such as Bolsa, Familia were turned into programmes which unleashed potentials and increased the productive based of the economy.

For example, the compulsory school feeding programme in Brazil turned the country into a Soya exporting power house  by providing a glass of soya milk per day for approximately 40 million  school children. The economy of scale was achieved to  make a Brazil a cost-effective exporter of semi process and fully processed soya products. Not only did it create hundreds of thousands of new job, it increased revenues  at every level of government and they came a key  earner of foreign excavation revenues, this is the way to go.

We must not underestimate the effect of the cost of living crisis on already hard-pressed Nigerians.

The latest inflation figures from the government own agency reveals this. Transportation, feeding, rent and school fees have already gone up astronomically. There must be social interventions but it  must be done in an effective way devoid of corruption and should move away from the self-defeating opportunism “palliative”.

We must hear again the  nonsense of palliatives, if social intervention programmes are to use as a response it must be used as a mechanism to mitigate an economic disaster and create economic opportunities for an advance from production and job creation in Nigeria.