Saturday, May 21, 2016

Unintended Consequences and Unnecessary Pain

Unintended Consequences

Reading Punch Nigeria today, and one wonders if this subsidy removal policy is not beginning to have unexpected consequences. Punch had a story on consumers taking to public transport and abandoning their fuel guzzlers

Who said public policy cannot be used to shape private behavior? Let the season of waste in the midst of poverty end. Let us build a solid foundation for true economic progress. Our air will even be cleaner and cities more orderly. This fuel subsidy removal policy may have an environmental upside.Citizens now should also demand re-engaging our public transportation needs. They will pay more attention to infrastructure and force politicians to rebuild them. Instead of using fuel-guzzling SUVs fueled by wasteful subsidy to conquer bad roads, it is now cheaper to demand that roads be rebuilt by your politicians so you can use a small car and comfortable public transport.

Unnecessary Pain

The NBS figures didn't have to be this bad. Lots of inaction and bad action. We to entirely blame the previous administration is not exactly truthful. Many things could have been done to keep the nation away from recession given that the signs were clear and the economy was actually quite resilient. The government could have been assembled earlier, budget assembled quickly, quick action on subsidy taken, central bank policy path could have been different to take away the unproductive profiteering and flight of FDI & remittance due to the huge gap in exchange rage or ensure it doesn't even exist in the first place because of knee jerk reaction and monkey business pronouncements and lastly serious public sector reforms undertaken which by itself can be used to inject life to the economy by paying gratuities and pensions for those getting "packages"

To the right are growth rates depicted by quarter, up until end of last year the economy was resilient, so to blame the previous administration is actually not smart. APC came into office without a stimulus plan when a recession as coming. Obama passed his stimulus plan and package of reforms and spent the entire good will from getting newly elected on that. It paid off. Our own president spent it listening to sai Baba rankadede, and getting deceived by evil servants even to the point of thinking refineries were miraculously revived. This was the problem.

Never too late to fix it..start with changing direction on monetary policy as they've done on subsidy regime.


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