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Nothing Bad About Subsidies, US, Others Have Them, Says Ex-Minister


(AFRICAN EXAMINER) – A former Minister of Finance Kalu Idika Kalu says government subsidies on essential items are not bad. 

President Bola Tinubu on his inauguration in May 2023 declared fuel subsidy “gone”.

The move pushed the price of the commodity more than thrice the initial higher.  Proponents of the move have argued the subsidy regime was gulping resources and that it benefits only certain groups of persons.

The Federal Government also said it was spending much on subsidising electricity which it noted is not sustainable.

But Kalu who served as a finance minister from 1985 to 1986 and 1993 to 1994 said there is nothing wrong with subsidies as some countries like the US, Russia, and Argentina have them in place to help the people.

“I wrote about this back in the 80s. You see, subsidies were not liable to abuse, overuse, and being non-cost-effective by the sheer quantum of how it impacts the budget and the efficiency of the resource allocation. But as I also said, nothing is inherently negative about the introduction of subsidies. These are still happening in Russia, America, Argentina, France, and so on.”

‘Commensurate Results’

The economist said despite the arguments against subsidies, proper management will ensure that they get to the targeted people.

“Policies have to be taken very seriously,” the ex-minister said

Kalu argued that the management of subsidies and similar policies “goes to the question of economic leadership”.

“So, we should not just say we don’t know where we are going,” Kalu said. According to him, the managers of the nation’s economy should work on the best model that will deliver development to the citizens.

The former minister said the managers of the economy must be flexible to ensure the country is well-positioned to grow.

While many have accused the government of too much spending on administrative work, Kalu said Nigeria must rationalise how it spends.

“If you are spending a lot on farm support and so on, and you are getting commensurate results for the spending, that is what you should put into context,” he added.

 


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