Comment: Sir, why do you call this food distribution subsidization by the Nigerian government a “good policy” considering that a more sustainable thing would have been to give the resources to farmers to produce food?
My Response: For me, it is a good policy because in the short term and today, people need to eat. Anything that can help people will have food is a positive. More so, we funded farming at the highest in the history of Nigeria (by amount of money given to farmers), yet, we ended up with mass hunger in the communities of farmers. Simply, there is no evidence that billions of Naira which Nigeria put in “briefcase” farmers added any value to Nigeria’s food security.
Today, people are hungry. Subsidizing food (they’re not giving it free) is a good policy because we have been making points that Nigeria must find something to subsidize. Recall that in June last year, the government made a point that subsidies would be removed in our economy. I have argued that no nation runs that way, as you must find something to subsidize.
Nigeria decided to remove the forex (Naira/USD) subsidy. Nigeria went and removed fuel subsidies. Nigeria also decided to remove electricity subsidies. My position was that if you remove those subsidies, you would destroy the economy and cause massive hunger in the land. Why? These things are related and no nation, I repeat, runs a 100% market-driven economy.
But over months, the nation did not shift even though we knew that fuel subsidy was modulated (the price was not correlating with forex movement). Nothelessless, subsidies were removed across the sectors. With those subsidies gone, the economy froze: more than 3,00 companies collapsed and Nigeria lost N1.7 trillion revenue from them in 2023. Then, with whatever they were making gone, inflation hit, as demand remained high in the economy.
But yesterday, Nigeria brought back fuel subsidies, but instead of the old traditional subsidies at the pump, it decided to subsidize crude oil for local refineries as it would cover whatever deviation the Naira payment on US dollar would have been with its joint venture partners.
And today, it brought food subsidies. While the amount of food is nothing, the key is this change in policy, and acknowledging that pragmatism must drive policy, over political purity and orthodoxy. So, it is a good policy; 10 trucks per state mean nothing, I expect Nigeria to be flooded with food because Nigeria must subsidize food.
Yes, if those trucks are not enough, people will ask for more. Get me right: every country subsidizes things and Nigeria cannot be an exception. But where it has decided to pick food, it needs to flood Nigeria with food.
My preference would have been energy and fuel: subsidize for manufacturers so that they can reopen their companies and improve supplies in the market. But today, I am fine with food.
