Analysts have warned that Nigeria may be hanging by a very thin thread as policy makers tend to align strategic reforms beneficial to the economy with reducing the short term pain of citizens. The result is seen in the rate at which subsidies is messing up economic growth.
Foremost analysts, Bismarck Rewane, Chief Operating Officer (COO) of Financial Derivatives Company (FDC) Limited warns that, petrol consumption alone is growing 16 times faster than the country’s economic growth.
This mostly so, as policy makers fears the backlash of fuel subsidy removal more than its benefits.
Rewane warns that, Premium Motor Spirit (PMS) popularly known as petrol subsidies could consumeN7.1 billion daily or an estimate of N2.59 trillion in a year.
According to the monthly Lagos Business School (LBS) Breakfast publication by FDC, currently, petrol subsidies is N5.5 billion daily and N2.0 trillion on an annual basis.
He explained that, this alone could hurt the economy as the subsidies account for 38.65 per cent of total deficit budget and 14.78 per cent of total budget.
But probably unknown to many, there are other subsidies outside petrol.
There are many subsidies in the Nigerian economic system • Most notable are the ones in electricity , fertilizer, foreign exchange, among others.
These has made the Nigerian economy fragile in the eye of economists. Rewane scribes a fragile economy or financial fragility as the vulnerability of a financial crisis caused by small and routine economic shocks.