The Effect of Subsidy in Nigerian Economy
In: Social Issues
The Effect of Subsidy in Nigerian EconomyNAME: Fatmah Ibrahim
CLASS: SS 3A
Topic: The Effect of subsidy in Nigeria Economy
THE EFFECTS OF SUBSIDY IN NIGERIA ECONOMY.
A subsidy is an assistance paid to a business or economic sector. Most subsidies are made by the government to producers or distributed as subventions in an industry to prevent the decline of that industry (e.g., as a result of continuous unprofitable operations) or an increase in the prices of its products or simply to encourage it to hire more labor (as in the case of a wage subsidy). Examples are subsidies to encourage the sale of exports; subsidies on some foods to keep down the cost of living, especially in urban areas; and subsidies to encourage the expansion of farm production and achieve self-reliance in food production.
EFFECTS OF SUBSIDY REMOVAL
In a country of power instability the removal of fuel subsidy has triggered double in the price of fuel .
1. increased price of fuel and other petroleum product
2. increase in transport fares
3. increased price of food products.
The Lagos Chamber of Commerce and Industry (LCCI) has listed some of the adverse effects of the Federal Government's recent policy to deregulate the nation's downstream oil sector
LCCI, in a statement, said the policy has led to fresh inflationary pressures resulting from sharp increases in transportation cost, high inflationary expectations across all sectors of the economy, and a devastating impact on the psyche of the common people as the new policy poses a serious risk to their survival.
LCCI said the policy would also lead to the sharp increases in operating costs of micro and small enterprises, many of which rely on small electricity generators powered by petrol.
LCCI said, if well implemented however, it is expected that the policy would benefit the economy and the citizens, in the medium to long term leading to an increased private investment in the downstream oil sector with a corresponding impact on the creation...