In a country with no electricity, petrol is king
At hand was Hiroshima, a city that was theoretically and practically razed to the ground by thermo-nuclear devices in 1945, but one visiting the city as it stands now would be forgiven to think history was mistaken. Hiroshima is a glimmer of a city with all swaths of society living with functioning and sustainable infrastructure […]
At hand was Hiroshima, a city that was theoretically and practically razed to the ground by thermo-nuclear devices in 1945, but one visiting the city as it stands now would be forgiven to think history was mistaken. Hiroshima is a glimmer of a city with all swaths of society living with functioning and sustainable infrastructure as the government of Japan has not relented ever since it decided to rebuild the city in 1949 to a cosmopolitan haven. In contrast, we have the successive governments of Nigeria seemingly bent on seeing who can go farthest in degenerating the country’s equitable growth and any chance of it meeting any of the several “Visions” set for it over the years.
According to several sources, Nigeria is a country with a population of about 150 million people making it the most populous country in Africa, with a GDP second only to South Africa’s. With several years of civilian and military rule and poor economic management, Nigeria experienced a prolonged period of rising poverty levels and the decline of its public institutions, making the country’s human development indicators comparable to that of other least developed countries. The lack of public investments in previous decades, and some would argue even today, have created severe infrastructural bottlenecks that continue to hinder private sector activities. In particular, the poor condition of the power sector is a prime example of the severity of Nigeria’s infrastructure deficit. Despite hundreds of “public projects” and billions of dollars spent, most of the country still has no evidence which alludes to any sort of development.
In such a country, the federally mandated fuel subsidy was one concrete indiscriminate safety net program that the whole country could rely on through its prolonged hardships while a few elites got richer and official GDP increased. So, it came as a shock to many in the country when they wokeup to news on 1 January, 2012 that the subsidy on petroleum products had been revoked and henceforth, they would all have to pay double the price for all petroleum products, contrary to an earlier promise that such steps would not be taken until there had been consultations with various national stakeholders. The champions of the removal of the subsidy have enviable qualifications and global financial credibility. However, it can be suggested that they have been sitting in their air-conditioned offices in Abuja and Washington D.C. too long to realize the effect of the malevolent demon they have just set free. The effect of their life changing action has led to protests in the country that have halted national economic activities.
The summary of the government’s arguments go thus: The petrol subsidy removal was to safeguard the future of “Nigeria and her children”. This will happen by using the funds currently used for subsidy to address public spending for mass transit, public works, including training in artisanship for unskilled youth and social services to reduce high maternal and infant mortality rates – very rudimentary explanations. According to the Finance Minister, if Nigeria did not take the measures, the country would be forced to experience such hardship “that would frustrate the future of our children and we will be like some countries like Greece which kept on borrowing until they got to the crisis situation that they have found themselves.” It is difficult to be the judge of a statement comparing Nigeria with Greece but one can only wish that Nigeria’s government would wait until the baseline of the country’s development has reached half of Greece’s before trying not to be like Greece.
Back to the subject at hand. While the intents for the subsidy removal sound lofty and appealing to local ears, there is a catch which the Nigerian Finance Minister and other government officials know but are hiding; Nigeria’s ability to raise funds for projects like public works and mass transit is not the issue; it is the country’s fiscal discipline to actually spend on necessary development projects that is the clincher. Nigeria’s track record at raising funds and spending it wisely has not been encouraging at all and one can see why no reasonable person believes the government when it says it will do it right this time.
The people in the current government are the same people who were in the past governments when similar reforms and social spending were touted. Nigerians were asked to trust them also. If collective memory is to serve us well, there were the Petroleum Trust Funds – under General Abacha’s regime run by eminent Nigerians headed by General Buhari and the Gross Excess Crude Savings Fund – under General Obasanjo’s civilian regime managed by eminent Nigerians headed by the current Finance Minister, Dr Okonjo-Iweala. The more current Gross Excess Crude Savings Fund increased by more than fivefolds, from $7.5 billion at the end of 2003 to about $38 billion in July 2006. The Fund contained more than $20 billion when late President Umaru Yar’Adua came to power in 2007, but by the end of 2010, held less than $1 billion. The Finance Minister said recently that it now holds $6 billion. However, what she did not tell us is what was done with the $37 billion that got wiped out by the end of 2010 under the current president’s regime. One is left wondering what it was that they could not do with $37 billion in four years that they hope to accomplish with the approximately $7.4 billion that accrues annually from the fuel subsidy removal?
The minister might defend herself that she was not at the helm when the spending occurred but she should at least be able to account for it as she is now the current Finance Minister again. Can she assure Nigerians she will stay long enough this time to keep the promise she made that the savings from fuel subsidy removal will be wisely spent, unlike the last time? One thing Nigerians are learning is that the elites and eminent people keep rotating positions in government and are always coming back with the same recycled promises that they did not keep before. Blame not Nigerians for preferring to stick with a subsidy that they can feel and count on during good and bad times. Fool me once, shame on you; fool me twice, probably shame on me; but three times … .
Let’s be clear on one point; no sane mind is arguing for these fuel subsidies to remain indefinitely. However, the government cannot wake up overnight and remove them without consulting the people, implementing political and governmental reforms that will ensure past waste and corruption are not repeated no matter who is sitting at the head of the table and designing an appropriate and credible compensatory programme for the genuinely vulnerable class who have been suffering and are still suffering in Nigeria. None of this has even been discussed or designed, talk-less of being set as policy before the subsidy was removed. If this government does not have the will or balls to stand up to the wasteful and corrupt elites – their families, friends and colleagues – who are really the ones siphoning the country into poverty, why should the people believe it has the guts to actually implement any real reform from the subsidy removal funds? This goes to show that this government is not prepared for any real reform in any sector.
Bukola Afolayan, a freelance design and innovation consultant with previous extensive international development, policy and legal experiences in Africa and the Balkans