By Abdulrauf Aliyu
There’s a saying that goes, “Common sense is not so common.” As I look at the economic decisions being made in Nigeria, this saying rings truer than ever. Our nation, with its unique blend of cultures, challenges, and complexities, is being steered by policymakers who seem more in love with their textbooks than with the realities on the ground. The decision to promote the total removal of the petrol subsidy is a prime example of this disconnect between theory and practice, between what should be done in a perfect world and what makes sense in the real world.
Nigeria is not just another economy; it is a complex system with its own unique characteristics. To treat it as a simple, straightforward entity that can be fixed by applying textbook solutions is to misunderstand the very nature of our country. Yet, this is exactly what has happened with the push to remove the petrol subsidy completely.
The logic behind the removal of the subsidy is clear if you view it from a purely theoretical standpoint. In a perfect economy, one could argue that subsidies distort the market, leading to inefficiencies. Removing them, therefore, would allow market forces to operate freely, leading to more efficient outcomes. That’s what the textbooks say. But Nigeria is far from a perfect economy. In fact, it’s anything but.
To begin with, our economy is dynamic and ever-changing, not some static entity that can be controlled with a single policy move. In the real world, our economy is like a living organism, constantly adapting, evolving, and responding to various pressures. It does not remain still, waiting for policymakers to catch up. Yet, the idea of removing the subsidy assumes that the economy will smoothly transition from one state to another without any significant disruptions. This is wishful thinking at best.
Moreover, the Nigerian economy is filled with agents—people, businesses, and institutions—who are far from having perfect information. We do not live in a world where everyone knows everything and can make the best possible decision every single time. Far from it. In reality, people make decisions based on limited information, often under significant pressure, and with high costs associated with gathering more data. This means that the real-world economy is much messier and more unpredictable than the tidy models found in economic theory.
In this messy reality, people develop coping mechanisms—shortcuts, if you will—to navigate the complexity of life. These are not perfect solutions, but they work well enough for people to get by. When you suddenly remove a pillar like the petrol subsidy, you disrupt these coping mechanisms, throwing people into confusion and uncertainty. This is especially dangerous in a country where many already struggle to make ends meet.
Another key point that policymakers seem to forget is that in our interconnected world, decisions made in one part of the economy affect others in ways that are not always immediately obvious. Nigeria’s economy is not a collection of isolated individuals acting independently; it is a network of relationships, interactions, and dependencies. When you remove a subsidy, the ripple effects spread far and wide, often in unpredictable ways. This interconnectedness makes it difficult, if not impossible, to predict all the consequences of a major policy shift like the removal of the petrol subsidy.
One of the most overlooked aspects of the Nigerian economy is the emergence of new patterns and behaviors that result from these interactions. When you tamper with a system as complex as our economy, you don’t just change a single aspect—you change the entire landscape. The new patterns that emerge can be beneficial or harmful, but they are rarely what anyone expects. In a country like Nigeria, where many live on the edge of survival, these unintended consequences can be devastating.
Lastly, our economy is not static—it evolves. Just as living organisms evolve over time, adapting to their environment, so too does our economy. The decisions we make today will shape the economy of tomorrow, often in ways we cannot foresee. The removal of the subsidy is not just a single event; it is a decision that will set off a chain reaction, influencing the future in ways that are beyond our current understanding.
In light of all this, it becomes clear that the decision to remove the petrol subsidy is not just about economics—it’s about common sense. It’s about understanding that our economy is more than just numbers on a spreadsheet or lines on a graph. It’s about recognizing that the lives of millions of Nigerians are at stake and that the consequences of this decision will be felt far beyond the balance sheets.
As we navigate these complex challenges, it would serve us well to remember the words of the great economist John Maynard Keynes: “Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” The point here is that we must not allow rigid theories and outdated models to dictate our policies. Instead, we need to apply sound, practical judgment—common sense, if you will—to ensure that our economic policies truly serve the people of Nigeria.
