In the realm of governance, timing plays a crucial role in the successful implementation of policies. Yesterday, President Bola Ahmed Tinubu’s inaugural speech promised the removal of subsidy on petrol. While the merits of such a policy can be debated, it is evident that the President missed a significant opportunity to learn from past experiences and adhere to basic principles of economic decision-making. As scarcity and an immediate increase in pump prices manifest, it becomes clear that the timing of this policy statement was ill-advised.
One can argue that the removal of petrol subsidy holds certain merits. The intention behind such a move is to create a more efficient and market-driven economy, fostering competition and reducing government expenditure. However, the implementation of such a policy requires meticulous planning, deliberation, and consultation with stakeholders. It demands the establishment of a comprehensive mechanism that safeguards against the adverse effects that may arise from abrupt changes.
President Tinubu should have heeded the lessons imparted by Robert Schiller’s book, “Narrative Economics.” Schiller emphasizes the importance of understanding the narrative surrounding economic decisions, as it significantly influences market dynamics. The President’s untimely announcement created an immediate narrative of uncertainty and confusion, leading to panic in the market. The subsequent scarcity and price hikes were inevitable consequences of this ill-timed policy statement.
Additionally, the basic principles of replacement cost, which petrol marketers are endeavouring to protect, should not be overlooked. These principles emphasize the importance of considering the cost of replacing a good or service when making economic decisions. While subsidy removal may seem beneficial in the long run, the sudden removal without adequate preparations leads to an abrupt increase in prices, putting a burden on the common citizen. By neglecting this fundamental principle, the government failed to mitigate the impact on the populace.
It is imperative for policymakers to understand that the successful implementation of significant economic policies hinges not only on their merits but also on the strategic timing of their announcements. Such decisions require a well-thought-out plan, allowing for the smooth transition of systems and providing stakeholders with ample time to adapt. This ensures minimal disruption and protects the welfare of the citizens.
In hindsight, the President’s eagerness to deliver his inaugural speech with promises of subsidy removal may have been driven by the desire to convey a strong commitment to change and economic reform. However, such fervor should be tempered by prudence and an appreciation for the intricate dynamics of the market. It is essential for leaders to recognize that hasty decisions can have severe repercussions, and in this case, the consequences are evident.
To rectify the situation, President Tinubu must now address the immediate challenges arising from the abrupt policy announcement. His administration must swiftly establish the necessary mechanisms to mitigate the scarcity and price increases. Additionally, it is crucial to engage with stakeholders, particularly petrol marketers, to understand their concerns and develop a comprehensive plan that ensures a fair and equitable transition to a subsidy-free regime.
On a final note, while the removal of petrol subsidy may hold long-term benefits for the economy, President Tinubu’s untimely policy statement has had immediate negative consequences. It is regrettable that the lessons imparted by Robert Schiller’s “Narrative Economics” and the basic principles of replacement cost were overlooked. Moving forward, it is imperative that our leaders recognize the significance of timing in policy implementation, ensuring that decisions are well-informed, considerate of market dynamics, and executed with the welfare of the citizens at the forefront.