Subsidies: A Threat To National Development – Peter Yakobe


“There is nothing like free lunch.” Yes this is a statement which most of the developed countries use. That is why the citizens of these countries spend most of their time working; producing goods and services of all kinds.  They always know that nothing will come for free and they have to work to get anything they want in life.

Subsidies are almost everywhere in Africa. It is a situation in which a government pays a huge part of the money for products while the citizen pays the small remaining part. Of course, subsidy of agricultural products creates the appearance of food security, while in real sense it doesn’t create food security. In many African countries, the government has subsidized fuel, electricity and agricultural inputs. The problem I have with it is that the government spends a lot of money buying basic commodity products for their people, things which the people themselves can manage if given a conducive environment to do so. The government uses large sums of money for subsidies instead of improving our deteriorated health and transport sectors whose improvements benefit everyone in the country. This makes the people lazy and it also removes their creativity because they always know that every year the government will provide subsidies for them, hence encouraging the dependency syndrome.

The other problem with subsidy is that it normally benefits the people who are not supposed to receive the subsidy, because it is mostly given to the wrong people. Most of the people who receive the subsidies are rich people who can manage to do their activities without subsidy. The poor who are supposed to be the beneficiaries of subsidy get little or even none at all. This is widening the gap between the rich and the poor in which the rich continue to grow richer while the poor continue to grow poorer.


Much as we know that in Africa we have the poorest people on earth, we have to take away the spirit of dependency from our people if we are to move forward. Our governments should empower the people to depend on their own. Subsidies have contributed to the poor state of the poor in Africa. To deal with this problem, I think our governments should first remove the subsidies. From my experience as an African, removing the subsidies at once may bring chaos, it might bring endless demonstrations and violence. To avoid this, the governments might start by targeting subsidies to the poorest. Although they will be targeted to the poor, the governments should be clear that within one or two years there would be no more subsidies. After that small period of providing subsidy, the people will not be poor again because they will work hard to support themselves. This will empower people to work hard because they will know there will be no more free lunch. This will encourage creativity as I believe that many businesses will develop from the unemployed. When subsidies are removed, people will be creative enough and start their own businesses, this will reduce unemployment and will increase productivity.

Finally the government will use the money which was intended for subsidies to develop energy and transport sectors which will fuel the growth of investments, and Africa will never be poor again or at least not as poor as we have it today.

I believe this is one of the things we must do if we are to move forward. Developed countries developed out of hard work. If we are to escape from poverty, we have to take out the spirit of dependency, then we will prosper and Africa will be the best place to be. We don’t need to pass on poverty to the next coming generations after 50 years of independence. Time has come for Africa to move forward, no turning back. Turning away from subsidies is the necessary evil we will need for our beloved continent to rise from the vicious circle of poverty to prosperity. After a period of time, people will start taking their own responsibility on their shoulders, and that will be a reverse from poverty to prosperity.

Peter Yakobe is a Director with Students For Liberty Malawi

[photo: ONE]

Aid has helped to sustain a culture of subsidies and economic under-development in Africa