Fix people’s pockets before fixing prices!

It’s important to understand that economics isn’t a science. Even though experts may talk as if they know what they are saying, the truth is that it simply isn’t possible to predict the outcome of any economic policy. Macroeconomics relies very much upon predicting the manner in which people will react to events, which is […]

It’s important to understand that economics isn’t a science. Even though experts may talk as if they know what they are saying, the truth is that it simply isn’t possible to predict the outcome of any economic policy. Macroeconomics relies very much upon predicting the manner in which people will react to events, which is of course subjective and consequently unpredictable. While in many countries current economic policy involves handing out palliatives and bailouts to citizens and the production and service sectors respectively to cushion the effects of the COVID-19 pandemic shutdown, the Federal Government of Nigeria is proposing to inflict increased hardship upon citizens by the removal of the phantom “petroleum subsidy”. There is evidently no point in reminding President Buhari that in 2015 he said “Whoever says he is subsidising fuel is a fraud”. There is no need to even bother asking how come six years later his administration pays the highest subsidy amount ever which simply cannot be reconciled with national petroleum consumption? Kaduna State Governor El-Rufai alleges that the main beneficiaries of fuel subsidy are smugglers, neighbouring countries and a few rich Nigerians. This simply points to the government’s failure to implement policy effectively for which they decide to punish citizens. It doesn’t require expert knowledge of the petroleum industry to figure out that the best way to keep fuel prices low is to refine fuel, yet among members of the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria is the only one not refining fuel. This is another failure of governance. In 2015 President Buhari promised to build new refineries and fix existing ones, but this has proved to be yet another empty campaign promise which counts for nothing. The truth is that government’s failure to live up to promises created this deplorable economic situation, and while political office holders appropriate more money for their perks, allowances and salaries, citizens are expected to bear the financial burden. The idea that the average Nigerian will reap long-term benefits from subsidy removal is fallacious. Previous increases in petroleum prices have never positively impacted the lives of average Nigerians, who indeed have become poorer. Government consistently has higher allocations, but there has been no commensurate improvement in education, healthcare, social services, infrastructure or the environment. Nigerians have always been promised that their suffering will lead to a better tomorrow, yet it has invariably been the opposite. As the late NADECO Chieftan Alfred Rewane once said; “yesterday we longed for a better tomorrow, today we mourn a better yesterday”.

Quite inexplicably this administration consistently refuses to put its house in order and declines to look inwards to save money. Thousands of Nigerians languish in IDP camps, and millions live below the international poverty line. Even as those who have somehow managed to keep their heads above water are being asked to brace up for more hardship, this administration shows no intention of trying to save money by cutting executive salaries, abolishing unconscionable security votes, ending repugnant allowances of legislators, streamlining government agencies, curtailing executive travelling, banqueting, and maintenance of a fleet of aircraft in the presidency fleet or indeed doing anything that implies making sacrifices for the nation. The World Bank has sounded alarm bells that the nation’s finances have been so badly mismanaged that the federal government will be unable to pay salaries in 2022. Unable to deliver the change they promised their monotonous refrain has been to somehow blame previous governments for the appalling retrogression of the nation since 2015. Leadership isn’t about loads of excuses it’s about showing the capacity to fix the problem.

It doesn’t require much sense to understand that if fuel pump prices double in an economy where basic services depend on the operation of petrol generators it will have a serious, sustained, and debilitating effect on the livelihoods of citizens. Pity the next President who will have the task of cleaning up the monumental mess which this administration is preparing to leave behind. It’s a pipe dream to ever think that expected savings will be used for anything other than repaying debts, settling obligations, and failing to account for the balance in the name of providing unverifiable palliatives to unidentifiable “low income” Nigerians.

Questions are rightly being asked over the quite absurd proposal to pay N5,000 monthly to between 20-40 million “poor” Nigerians. Skeptics like former Kaduna State Senator Shehu Sanni say last time they shared N10,000 “Market Money” before elections, this time they want to share N5,000! Truly there is no rationale behind thinking that N166 per day can solve any meaningful problem for so called “poor Nigerians”. Beggars earn more than this. Furthermore, Nigeria hasn’t conducted a census for over a decade and the Minister of Finance says they are yet to determine the number of Nigerians poor enough to qualify for the pittance.

The transport grant concept is illogical, baseless and superficial. It should be dead on arrival because the National Assembly has made it clear that is already provision for fuel subsidy in the 2022 budget, but no provision for such “transport grant”. This reveals tardiness and haphazard approach to issues in governance exemplified by the COVID-19 palliative saga when relief materials were hoarded, and quite intentionally no records were kept or means of truly verifying those who government claimed to have disbursed billions to in cash handouts established. What about the school feeding fiasco where billions were supposedly “spent” when schools were closed and children remained at home? Nigerians have every right to be skeptical about further unverifiable palliative disbursements. The logical and compassionate manner in which to proceed at this critical time is to wait until the refineries are back on-stream, and the economy is fixed. Government should stop increasing tariffs without increasing the capacity of the people to afford them. The problem isn’t the price of fuel, electricity or cooking gas, it’s the buying power of citizen’s earnings. Before fixing prices government should first fix people’s pockets.