REMOVE SUBSIDY, FUND SOCIAL SECURITY

Because a significant chunk of the N522 billion Supplementary Budget recently submitted by President Muhammadu Buhari (PMB) and passed by the Senate is about paying for fuel subsidy, we are in a real mess! It is scary enough that the Senate added N108 billion ‘to pay for fuel subsidy for October, November and December 2015’. […]

Because a significant chunk of the N522 billion Supplementary Budget recently submitted by President Muhammadu Buhari (PMB) and passed by the Senate is about paying for fuel subsidy, we are in a real mess! It is scary enough that the Senate added N108 billion ‘to pay for fuel subsidy for October, November and December 2015’. In layman’s terms, this is about N36 billion per month!
Forking out N36b every month is not palatable at all! And not sustainable considering the dire straits the nation’s economy is in. Even though we can be sure that the monies so budgeted will really go to pay for the subsidy and not into some underhand pockets or bottomless caps, the amount is clearly unaffordable.
Reason why I went into the website of the National Bureau of Statistics (NBS) to find out how much is this subsidy, and the transport sector itself, worth in our economy. In its ‘Nigerian Gross Domestic Product Report of Quarter Four 2014’, the NBS says, among other things, that: “Transport and Storage contains five activities: Road transport, Rail transport and Pipelines, Water Transport, Air Transport, Transport Services, and Post and Courier Services….The contribution of Transportation and Storage to GDP in real terms was 1.12 percent in Fourth Quarter of 2014, compared with 1.21percent in the Fourth Quarter of 2013. (Emphasis added).
It could well be a herculean task for a non-statistician to now try to isolate what actual percentage petrol-driven road transport – for which these large sums are budgeted – contributes to the national economy. Suffice it to say one word – MINISCULE! I agree economists (those confused and confusing flock of ‘on the one hand THIS and on the other hand THAT’) would say “It’s not as simple as that!” Okay, not as simple, but let us now compare this miniscule contribution of Transport with other sectors of the economy from the same NBS Report:
“Agriculture contributed 22.07 percent to nominal GDP in the Fourth Quarter of 2014.” “The contribution of Trade to Nominal GDP stood at 17.73 percent in the Fourth quarter 2014.” “The contribution of Information and Communication to Nominal GDP stood at 10.01 percent in the Fourth Quarter of 2014.” “The Real Estate Services Sector contributed 8.37 percent in real terms to the total GDP in the Fourth Quarter of 2014.” See? Enough said!
In the past, when a few bits and pieces of this same subsidy regime were shorn off the bulky fatty juicy sum, good things happened – Petroleum Trust Fund, PTF, in the 1990s and Sure-P in the 2010s. These interventions really helped in the very real sectors of the economy, and it was evident. For example, for more than ten years after the scrapping of PTF, many hospitals still relied on PTF-supplied materials, and rehabilitated roads still bore PTF signboards long after, until they were ordered removed.
Therefore, this Column proposes that the Petrol Subsidy, as is now composed, should be removed COMPLETELY.
So, what do we do with the monies, if the subsidy is removed? It is hereby suggested that these monies be TRANSFERRED DIRECTLY to the poor, for whom this very subsidy regime is intended, but who generally never or rarely benefit from it. A real social security system should be evolved so that the poor masses of this country will benefit.
Every country subsidises something. Developed countries directly give the money to their poor (old aged, pensioners, unemployed youths, mothers with dependent children). Closer home, South Africa massively subsidises housing, Egypt subsidises flour (and hence bread) and cooking oil and rice. Sudan subsidises sugar and flour. And so on.
But this Column does NOT support doling Five Thousand Naira (Five-Kay or 5K) to unemployed youths because of one basic reason – IT IS JUST TOO SMALL as far as our spoilt-brat youths are concerned. Many of them would have ‘graduated’ from N18,000 NYSC so 5K will be a real chickenfeed. In fact, knowing our youths with their ways, they will tell PMB one day that his Five-Kay is not enough for recharge card!
I remember, for example, a story I was told about a Niger Delta youth whose political godfather got a job for at one of the ‘lucrative’ Presidency agencies during the last Administration. The young man was said to have asked Chief on phone, to the hearing of many: “How much is the salary?” When told it was about Seventy-Kay for starting officers such as himself, the young man was reported to have told Chief: “No, I can’t take it! I rather continue vandalising pipelines; Shell shells out more than that!”
Or the Northern boy who, when told PMB plans to give them Five-Kay a month for their up-keep, and troubles, retorted: “Is that enough for a week’s supply of weed?!!”
SubhanalLah for both!
 No poverty can be reduced if there is underlying hunger. All empowerment programmes fail in Nigeria because the policy implementers refuse to understand one thing: if there is hunger, there can never be a successful poverty-reduction regime, let alone start a successful business. For example, a hungry family may be given a noodle machine to start a trade. But because present hunger is more apparent and glaring than any future hope of sustainability, the poor family will sell the machine and buy noodles to cook for tonight and tomorrow night. So unless government ensures that that family has the food that can tide them over before the noodle machine starts generating income, they will sell that machine.
Therefore, as this Column always advocated, starting from 2009, it is time to borrow from others who have significantly successfully reduced poverty in their countries. Brazil’s Bolsa Familia Programme (BFP) should be it.
The Brazilian programme provides financial aid to poor and indigent Brazilian families on condition that the children must attend school and be vaccinated  (akin, in Nigeria, to say keep your Almajiri and Area Boy and Girl-Child Hawker at home and at school). The programme reduces short-term poverty  by direct cash transfers  and fights long-term poverty by increasing human capital  among the poor  through conditional cash transfers. And then the clincher: This money is given preferentially to the mother!
A significant benefit of this programme in Brazil has been the increase in school attendance (which is a condition for benefiting from the programme), as well as a significant reduction in the number of children involved in child labour , as most children would be in school, and the need to earn a living at that early age is eliminated by the income. Significantly also, literacy level is on the increase, as more and more children enroll and stay in school.
Another collateral benefit is in the health sector. As one of the conditions for benefiting from the programme is to take children for regular medical check-ups, the fight against child killer diseases is being gradually won. Coupled with the fact that children now eat better, infant mortality is being significantly reduced. Also, as pregnant women benefiting from the programme must attend ante-natal clinics, maternal mortality is also seeing a significant reduction.
One positive effect of the programme which is not immediately apparent is that it makes a significant impact on the ability of the poorest families to eat. Children in public school receive one free meal a day — two in the poorest areas — and so less of their family’s limited income is needed to pay for food. The results of Bolsa Família show that it is possible to deal with poverty and income inequality in a sustained manner.
Success has sparked adaptations in almost 20 countries-including Chile, Mexico, Indonesia, South Africa, Turkey, and Morocco. Even New York City announced its “Opportunity NYC”, a conditional transfer of income programme modelled on Brazil’s Bolsa Familia. This is an example of a developed country adopting and learning from the experiences in the so-called developing world. Only Nigeria remains!
The Column has it!