Following
from the reasons for removal of petroleum subsidy discussed above, the
importance of the subsidy removal to the economy of the nation is easily
derivable. These includes but not limited to the followings: investment and
industrialization will bring about employment, gainful employment will put
money into the hands of many Nigeria’s and when there is structural and financial balance in the society, inflation
will reduce and the nations economy will be stable and this will bring about
economic growth.
However,
more importance of petroleum subsidy removal to the nation’s economy will be
discussed under the following headings;
1. UPWARD
GROWTH TO THE FINANCIAL ECONOMY OF THE COUNTRY
Petroleum
subsidy removal will help Nigeria to stop diverting its investment from stock
to treasury bills (Nigerian government
uses treasury bills to pursue loan in the capital market to enable it finance
petroleum subsidy). This will bring positive impact on trade in the stock
exchange market and shares of quoted companies will increase steadily and this
will result to upwards growth of the financial
economy of the nation
2. ENHANCEMENT OF THE SOCIAL ECONOMIC WELL
BEING OF THE PEOPLE
Before
the final removal of the petroleum subsidy on January 1st 2012,
Federal Government of Nigeria promised to provide palliatives to cushion the
effect of the would be increase in the petrol product in the citizens, this
includes the proposed subsidy reinvestment and empowerment programme in the
agriculture, education, health, ICT, petroleum, power, water supply road and rail, as well as public works and
youth empowerment programme, will not only lead to the transformation of public
infrastructure in Nigeria but will also enhance the socio- economic
well being of our people.
3. ECONOMIC
TRANSFORMATION
From
discontinuing subsidy funding, government will save money and if these money so
saved is placed evenly according to the demand of every other sectors of the
economy for example if more money is directed into the power sector, regular
poor supply will encourage more investment and industrialization, qualitative
educational standard will enthrone massive manpower development, adequate fund
and technical know how will bring about mechanized agriculture to increase our
net export products, if more incentives is given to the nations transportation sector, our road, water, rail
and air ways will have a boost, if more fund and attention is given to our security, the nation will be bitter secured and the above put together will bring about
employment and what more, economic
transformation will over take the nation.
4. RELATIVE PEACE AND SECURITY / ENHANCEMENT
OF SUITABLE ECONOMIC GROWTH
Government
has promised to redirect the money from subsidy to tackle significantly, the
problem of youth unemployment by training the youth in vocational skills,
thereby equipping them with the tools for obtaining gainful employment. If this
is done youth restiveness will reduce and this will bring relevant peace and
reduce security threat in the country and the likely by product of relative
peace and security is stable economic growth.
5. SURPLUS FUNDS IN THE BANKING SECTOR
If
government no longer needs to borrow from the stock market, investors will
redirect their fund to buying shares and this will lead to rebound in the stock
exchange and if public continuing to borrow down, there will be surplus funds
in the banking sector and this will drastically bring down the cost of funds.
The private sector will benefit as banks are forced to return to lending to the
real sector.