To Subsidise Or Not To Subsidise?

That is the question
How come is it that the daughters of the Niger wash their hands with sputum, and the sons of the Iroko build their houses with bark?   By what providence do the citizens of this great country find themselves begging bread in the midst of a great abundance of natural and human resources.  In an oil-producing country such as ours, citizens should be able to take the availability of petrol/diesel for granted.  That though, is not the case with Nigeria.  Fuel shortages are a perennial problem that we all have to contend with.  In Ilorin, where the son of a Nigerian is commonly to be found, it is not unusual to find petrol queues snaking on for about two miles.  Taxi drivers and the common man are the main fare of this problem, as most “able” citizens have friends behind the petrol pumps and in the offices that they can see about conjuring up a keg or two of the stuff.  These queues take time, courage, and some measure of luck or Grace (depending on your perspective) to navigate.  It is not uncommon to hear of people spending two or three days inching their way along to the front of the queue; only to discover that the station had now run out of petrol.  Now, if that were all, it would not be so bad, one being quit for loss of time only.  However, folk are on occasion forced to leave their vehicles on the queue overnight, and men of the underworld, not being the type to miss an opportunity for illicit gain, take advantage of absent car owners, and spoil the vehicles for parts.  In medicine, iatrogenic is analogous of a person who comes in suffering from a broken arm, and leaves with Cholera.  I guess, in a way, one could describe the loss of car parts while queuing for petrol under the same label – if only this were a hospital, and not the roadside.
One is forced to wonder, that, Is it really worth one’s while to spend half a day queuing for petrol, simply because it is subsidised?  Is it correct to suggest that the value of subsidy on a tank of petrol is more valuable than four/five hours of the average Nigerian’s day?  Surely that should not be right!  For even if it was right, it is not proper, and should therefore be wrong.  Of strength, courage-in-adversity, faith, and entrepreneurial spirit, this nation is second to none.  Surely the day of the average Nigerian is worth many times the value of subsidy on a tank of petrol, and the safety and security of car-owner and car, including parts, cannot be bartered, at least not in the same market as petrol.
The question that begs asking, is “how come?  How is it that a country that produces x million barrels of oil per day cannot cater for the needs of its own local population, while at the same time indulging the world?”.  This column is man enough to ask the question, but will we find a person to answer?

… continuation

Whether tis better to subsidise …
and so please powerful foes, even at the cost of further undermining the economy. There are not many Nigerians who will question the veracity of the statement that a sizeable proportion of our subsidised petrol/diesel ends up across the border.  But many of us still believe in the subsidy; afterall, this is an oil producing country.   A point that we miss though, is that the goodwill of subsidy is being abused up and down the country by, racketeers, bunkerers and black-marketeers; and that rather than aid economic recovery, the constrained access to subsidised petrol actually slows the pace of business activity.  All this has not dampened the enthusiasm of the pro-subsidy camp.
A popular argument in favour of the subsidy takes the line that the money raked in from the removal of subsidies would end up in the pockets of our treacherous leaders.  I must pause here to say that I felt challenged in my spirit using the words “treacherous” and “leaders” in the context of Nigeria because not all our leaders are bad, but since neither you nor I have a hand in these traitorous acts, the finger is left pointing at the seat of power, however reluctantly.  The other argument for the justification of subsidy is that Nigerians are too poor to afford the cost of unsubsidised petroleum products.
I very strongly disagree with these two arguments.  In the first instance; because a cabal of looters sit on top of the revenue from petroleum mining does not in itself form an argument for subsidisation.  The issue here is one of accountability, and that is what we should be taking up.  The second argument is premised on the poverty of Nigerians today; a counter-reality super-imposed on an erstwhile hard-working people with boundless reserves of energy and enthusiasm for honest work and entrepreneurism.  The poverty we see today is a mask; and once government removes the obstacles of infrastructure and security, the true identity of Nigerians will be revealed in an explosion of productive activity that may not be witnessed again in the time-line of humanity in this dimension.
Here again, the issue that must be pushed is not how to make Nigerians comfortable in the current state of poverty, rather, it should be how to get us out of the state of affairs, and into an activity mode that can afford unsubsidised petroleum products.  Paradoxically, the very removal of subsidy is likely to create the impetus for improved, increased, or higher priced output required to cope with the removal of subsidy. >”What about inflation!?”<

Or to refrain from subsidy …
And thereby to irk powerful foes and not-so-patriotic allies, or so to say, “take Arms against a Sea of troubles”.  It is clear that there is a real and present danger in confronting vested interests, especially those with a lot to loose when cesspits of filthy lucre are filled in.  There is no doubt that the president has a lot at stake in taking on those power houses that have an interest in subsidisation, especially those folk who have been plying our neighbour countries with not-so-subsidised petroleum, in exchange for Forex.  These are the real losers, not the average Nigerian who has to queue for several hours to gain access to this subsidised petrol.  The president also has to contend against the trade unions, who it seems, jump on the bandwagon of any populist idea, no matter how extra-ordinary.  One only needs to refer to their position on a minimum wage, to see how unrealistic they can be.  Trade Union leaders were content to argue for a higher minimum wage, in a country where the largest employer is still the government, and that same government struggles to keep up with salaries, even before the hike in wages!  It is high time that Union leaders start thinking, first of the interests of Nigeria as a whole, before that of their members; for those who would consider that a contradiction-nigh-on-schizophrenia, I would retort that so also is the situation of the country today.  Desperate ills evoke desperate pills; we are all in this ship together, it may not be sinking, but neither is it sailing; does it really matter who is sitting on the bow, stern, or mast?  Following on from deregulation, we now have a situation where petrol goes for an average of =N=45 per litre, and much higher in certain parts of the north of the country.  This is considerably higher than the =N=40 post-subsidy price advanced by the president.  Would it not have been better to remove the subsidy at source and then peg the retail price?  As things stand, the very subsidy that was being clamoured for has effectively disappeared into the pockets of those in the petroleum products supply chain.  And yet, the Trade Union leaders are still breathing threats!

Between a rock and a hard place
Caught between the Trade Unions and a contracting economy, who would offer to be in the president’s shoes today.  For many, the issue of subsidies is just another excuse for a lack of improvement in the economy of Nigeria, even after four years of PDP/Obasanjo rule.   Why cut subsidies, they ask, when everywhere else, the citizen is confronted with untold hardships, and forced into paying bribes to the police, judiciary, government officials, and civil servants.  And now the last bastion of solace is threatened by this government.   Anyone who has lived in Nigeria will not argue with these accusations.  However, to imagine that the mismanagement of over two decades can be corrected within four years is naive.   Change will take a bit more time, and finger pointing is not going to change that reality; ask the British under Tony Blair’s Labour government, the South Africans, and even the Ghanaians. The problem I believe is that inputs that are a sine qua non for maximising productive output are missing, or are still in an early state of development.  Despite the best efforts of this government, ploughing upwards of =N=32 billion into the National Electric Power Authority (N.E.P.A.), the grapevine has it that less than a quarter of that money actually hit the ground; behemoths with huge throats, and an even broader appetite for looting filtered, or should we say frittered, away the majority of the money.  For all that, it is still clear that even with 25% of actual input, the electricity situation is now considerably better than it once was.  Similar focus and investment will be needed for telecommunications, roads, water, and public transport.  However, a crucial lesson needs to be learnt from the NEPA exercise, to wit, before you start spending money, make sure you have the right people on the ground.  Due diligence must be exercised to ensure that extant Leviathan are forced into extinction. The hard truth is that the fall, and fall, of the Naira today are down to one activity alone – consumption.  We have no substantial productive output to counter the inflationary pressures on the Naira.  The only output we can leverage right now is crude oil, and it is doubly imperative that we employ it wisely, firstly to develop our economy by investing in ourselves, and secondly to wean ourselves of any overt dependence on what we are better off selling.  Just as the president encourages Nigerians to eat less cassava, so that we can export it, we should likewise prioritise the sale of petroleum products (locally or internationally) over its consumption, since the sale brings in much needed revenue that the economy needs.  We need to choose between the short-term agonies of an immediate removal of subsidy, or the long-term risks of failing to diversify while petrodollars were still readily available.

Choosing what is best for Nigeria
Never mind whose ox is gored;  We all must be willing to consider all options for getting this country moving again.  While it is clear that the record of the present government is not without blemish, it is also clear that the man at the helm is neither a robber nor a leper.   For once in a long time, we have a disposition which is amenable to the survival of progressives, even if it does not actively support them to thrive.  Casting an eye on the cabinet of the president, there are elements therein who would not have considered taking the same job under any other past president – I refrain from naming names.  This says something about the habitat of government as it exists today.  We have, I believe, genuine goodwill in certain quarters of government, and proposals for change, however unpalatable in the short term should be given the benefit of objective analysis.  This country has an estimated population of 120 million people, of which only a fraction are enjoy the subsidy, the goal of government must be to increase the proportion of Nigerians who have access to petroleum products, and by extension, any such subsidies.  Is it conceivable that we will be able to afford subsidisation of petroleum for much longer?  And who decides when we draw the line.  It is my firm belief that the argument against subsidy is strong and well founded, and that among governments in Nigeria till date, this government above the others has the credibility to advance that argument.  Nigerians must give this issue, the serious attention and rational debate that it evokes, never minding who has what to lose or gain.  This will not be the last of such issues to be raised, and we must now start getting used to making difficult, even unpopular decisions, in the interest of the nation.