I have heard many people call Ngozi okonjo iweala all sorts of names especially being an agent of the IMF to destroy Nigeria. I have also read on the forum where many people clain the fuel subsidy is a calculated effort of the IMF to frustrate Nigeria and profit the western countries

My question is how does the IMF/western countries gain from fuel subsidy removal in Nigeria?

Searching through my archive, i saw this honest contribution from a Venezuelan to the then Information Minister - Dora Akunyili

Please read the honest view of a foreigner to us on November 24th, 2009 and see why we must demand good and accountable government. We must take our destiny in our own hands.

Happy reading:

The Minister of Information and Communications, Dora Akunyili, yesterday got more than she bargained for when ENERIQUE FERNANDO ARRUNDELL, the Venezuelan Ambassador to Nigeria, used the opportunity of his visit to her office to tell Nigerians some hard lessons on how to manage, develop and utilise their God-given natural resources for the benefit and good of all.

The envoy, who was responding to an appeal by Mrs. Akunyili to help woo some of his country’s investors to come in and establish refineries under the federal government’s planned deregulation of the downstream sector of the nation’s petroleum industry, advised Nigeria to rather look inwards and to take full control of the industry.

Though, he acknowledged Venezuela as a prominent member of the Organisation of the Petroleum Exporting Countries (OPEC) like Nigeria, he said his country will be willing to collaborate with the federal government to develop the industry.

The hard truth Mr. Arrundell said, “In Venezuela, since 1999, we’ve never had a raise in fuel price. We only pay $1.02 to fill the tank. What I pay for with N12,000 here (Nigeria), in Venezuela I’ll pay N400. What is happening is simple. Our President (Hugo Chavez) decided one day to control the industry, because it belongs to the Venezuelans. If you don’t control the industry, your development will be in the hands of the foreigners.

You have to have your own country. The oil is your country’s. Sorry I am telling you this. I am giving you the experience of Venezuela.

We have 12 refineries in the United States, 18,000 gas stations in the West Coast. All we are doing is in the hands of the Venezuelans.”

The envoy said, “Before 1999, we had three or four foreign companies working with us. That time they were taking 80 per cent, and giving us 20. Now, we have 90 per cent, and giving them 10.

But now, we have 22 countries working with us in that condition. It is the Venezuelan condition. You know why? It is because 60 per cent of the income goes to social programmes.

That’s why we have 22,000 medical doctors assisting the people in the community. The people don’t go to the hospital; doctors go to their houses. This is because the money is handled by the Venezuelans.

How come Nigeria that has more technical manpower than Venezuela, with 150 million people, and very intellectual people all around, not been able to get it right? The question is: If you are not handling your resources, how are you going to handle the country?

“So, it is important that Nigeria takes control of her resources. We have no illiterate people. We have over 17 new universities totally free.

I graduated from the university without paying one cent, and take three meals every day, because we have the resources. We want the resources of the Nigerian people for the Nigerians. It is enough! It is enough, Minister

The policy will squeeze out more money from us.

This money will be invested as part of the Sovereign Wealth fund helping to save distressed European Banks and economy. The way they did with the so called payment of foreign debt.

Also the ones that our politicians will steal will still end up in their banks while the masses suffers.

Don't forget they will be the one to refine, ship out the crude, ship in the fuel, even do all the insurance involved. Of course the LC (banking terminologies for financing import/export), is controlled solely by their banks. So more businesses for them.

And I bet you, once we can import fuel freely, our refineries will never be fixed. The market forces will make it impossible for refinery to work in our land. Economic slavery

You think it is by coincidence that Ghana, Senegal, Nigeria etc are all towing the same path, the same time. This is another SAP.

Nigerians are the only peeps in d world that act s.tupid but expect smart outcomes at all times. Why they equate fo.olishness with intelligence is something i dont understand!?

This people are real evils

They will lose not gain because refineries WILL finally thrive in Nigeria. You know what that means.

efisher:

They will lose not gain because refineries WILL finally thrive in Nigeria. You know what that means.

You think so?it will cost less to import into Nigeria and it will be attractive to bring low quality from any part.

Godman_n:

The policy will squeeze out more money from us.

This money will be invested as part of the Sovereign Wealth fund helping to save distressed European Banks and economy. The way they did with the so called payment of foreign debt.

[b]Also the ones that our politicians will steal will still end up in their banks while the masses suffers.

Don't forget they will be the one to refine, ship out the crude, ship in the fuel, even do all the insurance involved. Of course the LC (banking terminologies for financing import/export), is controlled solely by their banks. So more businesses for them.

And I bet you, once we can import fuel freely, our refineries will never be fixed. The market forces will make it impossible for refinery to work in our land. Economic slavery[/b]You think it is by coincidence that Ghana, Senegal, Nigeria etc are all towing the same path, the same time. This is another SAP.

This is what is obtainable under the current subsidy regime.

efisher:

They will lose not gain because refineries WILL finally thrive in Nigeria. You know what that means.

If Refinery will finally thrive in Nigeria as you said, Why hasn't you been able to do anything in Nigeria. Even to process your rice, or to produce cement out of the so many available raw material.

You think it is by mouth, that refinery will thrive in Nigeria? Will Refinery thrive when you government will definitely not sell crude cheaper to local refinery? Will it thrive when they will still keep the licences to themselves and their cronies?

Will local refined products be cheaper than imported ones given the lack of electricity and other infrastructure in our country?

All factors of production favours companies outside Nigeria, and unless this is reversed; no refinery will thrive in Nigeria even after deregulation. Local refined products will never be cheaper than foreign products because the factors that drive down the cost of production are lacking in our land.

For instance, Power, Road, cheap funding (our cost of funds is just too high), law and order, etc. Tell me how local refined products will be cheaper in Nigeria?

Keep day dreaming or deceiving people. The only solution is to reform our government.

Corruption but be checked. Our politicians but earn reasonable salaries as in other climes.

65% of the UK's exports to Nigeria are refined petroleum products. Thats just one example of what would be lost by the West through the removal of subsidies.
Those who talk about the West gaining from the policy are quite daft.

Beaf:

65% of the UK's exports to Nigeria are refined petroleum products. Thats just one example of what would be lost by the West through the removal of subsidies.
Those who talk about the West gaining from the policy are quite daft.

Nonsense ! It won't be lost because importation is bound to continue until the refineries are working. In fact there is much to gain since it's possible that some of these private investors would be British.

The long term effects of subsidy is the starvation of those in high demand of the product. A lot of laws which fix prices of commodities in 3rd world countries is part of the reason for the economic recess in the West. The same goes with hunger in Africa. If the developed world was not subsidizing Agriculture, Africa would have been able to feed itself. The subsidy makes agriculture unattractive and unprofitable in Africa.

The IMF should ask the West to remove subsidy on Agriculture.

Can we compare in real dollar terms the value of fuel imports from UK to Nigeria, with the amount UK spends on oil for its citizens? In simple economic illustrations, the western world needs to cut down costs to fight its economic woes. Cost of Energy is a major cost. By wooing sub-sahara Africa to remove subsidies, we here will use less of refined oil products, reducing aggregate demand for crude oil globally leading to crash in global crude oil prices. For those that have time to read to get properly informed, please read The Economic Hit Man.

Uyi Iredia:

Nonsense ! It won't be lost because importation is bound to continue until the refineries are working. In fact there is much to gain since it's possible that some of these private investors would be British.

Thanks my bro, Beaf thinks that he is talking to kids here, he is so dumb. the government stopping to pay subsidy and getting the people to pay for it does not mean that we are still not importing from the UK.
His Oga would have face the main problem by going to the root of the problem and finding out all the bogus figures made up to collect money from the government in the name of subsidy.

@Beaf,

65% of the UK's exports to Nigeria are refined petroleum products. Thats just one example of what would be lost by the West through the removal of subsidies.
Those who talk about the West gaining from the policy are quite daft.

I curse the day you were born, Bastard.

They don't gain or lose anything, do they?

Whether the fuel subsidy exists or not, Nigeria will continue to import refined petroleum products.

Even if Nigeria builds its own refineries, they don't really lose. After all, there is always a market for what they are selling. . .

ekt_bear:

They don't gain or lose anything, do they?

Whether the fuel subsidy exists or not, Nigeria will continue to import refined petroleum products.

Even if Nigeria builds its own refineries, they don't really lose. After all, there is always a market for what they are selling. . .

+100

People just join bandwagon, imf this, imf that, ngozi this sanusi that. None of them here have been able to say this is what imf gain frm subsidy removal.
The only effect is felt by Nigerians simple ant not imf.

Beaf:

65% of the UK's exports to Nigeria are refined petroleum products. Thats just one example of what would be lost by the West through the removal of subsidies.
Those who talk about the West gaining from the policy are quite daft.

so,what you are saying is that once the subsidy is removed, we will immediately stop importing refined petroleum products from the UK, right? so where will the refined petroleum products we need come from. our near commatose refineries.

you gaffed on this one bro, we're not kids here. we have analytical brains as well.

how can you tell us that the west would lose when we don't even have a proper timeline that projects when our refineries will return to full working capacity? those much touted "foreign investors" will come from where, Togo or Benin republic? won't they be westerners? and you are telling me they have no benefits to expect from the subsidy removal.

I sense this is a ploy by the western allies to further impoverish African nations.And in my lay man's economic reasoning,i don not think that it would be cheaper to refine oil in Nigeria until the basics(light,good road network,tax waivers on raw materials) are put in place, in other words,we will continue to rely on the imported commodity.With a benefit of hindsight,western allies have never and will never have the love of African nations at heart.I dont even beleive the situation is going to be a win-win one (Nigeria-west) as we are going to be on the losing side with the present arrangement. Fact is that our follow-follow economic West's economic model  have been besetting Nigeria.Our government and its apologists do not take much time to study the nitty gritty  of this model to see how it affects us as a nation.We have our own peculiar problems which only peculiar answers could solve.The Asian Tigers as we have today searched within to solve their problems when the march to start building their nation started.They never had to always rely on the west's economic blue print to forge ahead. Please anyone in doubt should read about Singapore and South Korea's development from the 60s through 90s. I am not saying there was not a time when these Asian countries tightened their belts for national growth,but there was zero tolerance for corruption and the sacrifices were borne by all and sundry unlike in our own situation now where it is still business (extravagant lifestyle) as usual.Our leaders need to think deeply to assess our problems and address it by ourselves. I think lateral thinking is still missing in the heads of our present leaders and infact it is an aberration.

Removal of state subsidies and price controls (e.g. Fuel subsidy removal) is one of the many evil conditions required by the Bretton Woods institutions (IMF & World Bank) from developing countries to access new loans from them (their member countries i.e The West).

The Bretton Woods institution will claim that subsidy removal (which is part of their Structural Adjustment Programme) helps to reduce poverty but it has only resulted in more poverty for nations that have signed up to it. We all know what happened from '86 when we implemented SAP. Is the country better for it now? I think not.

The west gains in the following but not limited ways

1. Developing nations pay the West nine times more in debt repayment than they receive in aid. These conditions ensures that debts to the IMF & World Bank are repayed as the government has funds it has taken away from the masses by the removal of subsidies.

2.Countries must open up their economies to foreign business, usually multinationals from Western countries and remove restrictions on foreign investments. they must allow corporations (BP, SHELL e.t.c.) access to the natural resources of the country at bargain basement prices. The vast majority of the profits made by the multinationals is taken out of the country to the West. All in all, the IMF and World Bank turn countries into loan repayment machines, generating easy profits for the world's richest corporations and banks.

sholatech:

Can we compare in real dollar terms the value of fuel imports from UK to Nigeria, with the amount UK spends on oil for its citizens? In simple economic illustrations, the western world needs to cut down costs to fight its economic woes. Cost of Energy is a major cost. By wooing sub-sahara Africa to remove subsidies, we here will use less of refined oil products, reducing aggregate demand for crude oil globally leading to crash in global crude oil prices. For those that have time to read to get properly informed, please read The Economic Hit Man.

brilliantly captured! i owe you one man

norrisman:

Removal of state subsidies and price controls (e.g. Fuel subsidy removal) is one of the many evil conditions required by the Bretton Woods institutions (IMF & World Bank) from developing countries to access new loans from them (their member countries i.e The West).

The Bretton Woods institution will claim that subsidy removal (which is part of their Structural Adjustment Programme) helps to reduce poverty but it has only resulted in more poverty for nations that have signed up to it. We all know what happened from '86 when we implemented SAP. Is the country better for it now? I think not.

The west gains in the following but not limited ways

1. Developing nations pay the West nine times more in debt repayment than they receive in aid. These conditions ensures that debts to the IMF & World Bank are repayed as the government has funds it has taken away from the masses by the removal of subsidies.

2.Countries must open up their economies to foreign business, usually multinationals from Western countries and remove restrictions on foreign investments. they must allow corporations (BP, SHELL e.t.c.) access to the natural resources of the country at bargain basement prices. The vast majority of the profits made by the multinationals is taken out of the country to the West. All in all, the IMF and World Bank turn countries into loan repayment machines, generating easy profits for the world's richest corporations and banks.

you, my bruv, have a good head on your shoulders.

If you don't know what a Shylock is, and don't understand know that we are continually held by our balls using various phantom debts, which the debtors want to be paid by squeezing out our blood, you are not worthy of being referred to as an adult. Either that or you are just one of their agents who will sell even his mother for "promotion" or financial gain.

I don't even want to believe any exposed person will ask such a silly question.

China is enslaving Africa than the west currently is so I don't understand what this brouhaha is all about.

Why should China continue to enslave Africans.

If they have nothing to gain then why are they installing pain on us
What brought fat as* lagarde two weeks ago to Nigeria

Beaf:

65% of the UK's exports to Nigeria are refined petroleum products. Thats just one example of what would be lost by the West through the removal of subsidies.
Those who talk about the West gaining from the policy are quite daft.

are you thinking at all? you must be real confused.

as a matter of fact, this move will completely annihilate local production & Nigeria may have to depend solely on importation. 30% capacityty of our refineries may be reduced to 0%. the only advantage will be that since importation will be liberalised, market forces 'may' eventually (on the long run) reduce the pump price (tho insigniificantly -if they dont form a union or peg a price).

I'v been following this argument for sometime now. but I must confess that in as much as removing subsidy is not a bad idea, it is not at the moment a logical strategy in the Nigerian economy considering the paltry minimum wage. secondly, the endemic corruption within the system will only make things worse because funds generated will be grossly mis-managed. our leaders bask in ostentation, splurge money as they deem fit and I believe they will squander the funds as they have always done in the past. they are all cursed with extravagance. subsidy withdrawal will only generate more funds that will serve as water to the seed of corruption. you all sit back, watch, enjoy the ride and watch corruption soar as people will loot massively the proceeds from subsidy. contracts will be inflated, abandoned projects everywhere, many more contracts will not even be embarked on after more than half of the funds for such contracts have been allocated. favoritism, nepotism and god-fatherism will be the frame-work for the award of contracts. eventually, things will get tougher for Nigerians- as this projects will either not be executed or shoddily and shabbily done . only a disciplined and visionary government will utilize such proceeds judiciously. Nigeria has always been unlucky with rational leaders right from 1960. the deficiency continues till date with Badluck Jona (Gooluck Jona sorry) taking the cake.

He is here to extend his confusion like a contagious plague to the others. our government is VERY GOOD with projects and propositions appearing very sweet on paper, empty promises but when the time comes to deliver, you see them stuttering. dont be surprised when the proceeds from fuel subsidy is used to order for 3 private jets for each senator and double security votes for governors, e.t.c

Can anyone mention any country in the world were SAP/IMF/World bank policy work? Anywhere they go they leave the country impoverish and in hugh debt. A couple of years ago Argentina`s economy was bankrupt due to world bank policy. They have consistently tried to blackmail Malaysia to accept IMF policy by sponsoring former vice president Ahmed Ibrahim not until Malaysian Government under mahatir resisted them. Now ten years after Malaysian currency have been stable against the doller in ten years. 1 : 4.
If Malaysia have accepted their proposal their economy will have crumble by now.
Bottom line we must look inward and develop our economy base on our peculiarities not any world bank theorem. What IMF policy did china used? I believe in free market economy,but model from our own peculiarities. NO AMOUNT OF SUBSIDY OR DEREGULATION WILL SUCCEED IN NIGERIA IF WE DO NOT TACKLE CORRUPTION AND CUT ON GOVERNMENT EXCESSES.

obowunmi:

China is enslaving Africa than the west currently is so I don't understand what this brouhaha is all about.

Why should China continue to enslave Africans.

As how?

arewatech:

As how?

abeg help me ask him again.

did they tie your hands from closing your boarders from importation and developing locally made products? see envy oooo!

Nigeria is not indebted to the IMF but is a shareholder of the IMF and is therefore a net creditor in its relationship with the IMF. As part of the IMF's role in ensuring global financial sustainability, it provides policy advice to all countries. See below advice provided to the US to cut spending.

"Directors [on the IMF board] highlighted the urgency of raising the federal debt ceiling and agreeing on the specifics of a comprehensive medium-term consolidation programme," the IMF said as part of its review of the US economy.

Clinton says she is sure Congress "will do the right thing"

It went on to call for specific actions to reduce spending - an area of intense debate between the Republicans and Democrats over how to cut the deficit.

http://www.bbc.co.uk/news/business-14282351

Same applies to Western countries. They have nothing to gain from subsidy removal. To the extent that deregulation will allow for market prices, we are more likely to have private investment in refineries which will cut our import bill. That's not going to be anytime soon until private investors are confident there will not be a reversal of the subsidy removal. No point in plonking close to a billion dollars building refineries only to be told you cannot recoup your investment as the price of your output will be fixed by Govt fiat.

Anything the west praises so triumphantly, there must be something very fishy about it. They are very skilled at deception.