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By Eze Onyekpere
The concept and idea of reforms is one freely used by leaders and political office holders in Nigeria and across the world to justify new policy, legal and administrative positions. It appears the word has been deliberately abused in terms of context, procedures and results. This discourse reviews the idea and context of reforms, especially fuel subsidy reforms, and seeks to facilitate a proper understanding of when a claim for reforms can be successfully made.
Dictionaries and internet search present reforms as intentional alterations designed to improve institutions, laws or practices by correcting abuses, injustices or inefficiency. In the economic context, reform, inter alia, may increase productivity, stimulate growth, increase exports, reduce poverty, improve transparency and accountability, mainstream value for money, reduce or eliminate waste and redirect resources to the areas of greatest need. Economic reforms may also increase revenues accruing to government through taxation, make taxation more progressive, attract more foreign investment and reduce barriers to trade.
Ideally, reforms should be contextualized as syllogisms which in logical parlance leads to inexorable conclusions and outcomes that will improve society as a whole or a section of society. For reforms to create impact, they must be founded on solid factual situation analysis – the premises of the reform. For context, let us use the purported fuel subsidy reforms. The first premise is grounded on the fact that Nigeria was deploying N6trillion to N7trillion yearly on fuel subsidy and there was a reasonably wide societal agreement that Nigeria cannot afford to continue in that trajectory due to paucity of resources. At some point, we were literally borrowing to pay fuel subsidy. Indeed, our public debts were growing in geometrical proportions and the subsidy was reported as contributing in no small measure to our unsustainable debt position.
The second set of factsforming the middle term was a wide agreement that the resources deployed in subsidy could be better used to improve sectors like education, health, housing, roads, power, poverty reduction, etc. Under this premise, there was a wide understanding that subsidy removal will hurt the poor and there is the need for interventions to mitigate the hardship that will be evident after the removal of the subsidy. The argument that only the rich benefitted from the subsidy were known by its authors as a lie and have been so proven by empirical evidence since its inflationary spiral alone punished the poor more than the rich.Therefore, the conclusion became that subsidy removal was inevitable to free up resources for the improvement of the general welfare.
In this analysis, pronouncing and enforcing the removal of fuel subsidy is just one step and does not constitute up to 50% of the reforms. It should not even be the first step in the reforms. The reform matrix demands the articulation of a set of steps, activities, feedback and course correction mechanisms which will show whether the reform is on course or failing. Having pronounced that subsidy was gone on the first day of the administration, three years down the line, has the administration improved spending on education, health, housing, roads, power, poverty reduction? Is there a fund dedicated to the utilisation of fuel subsidy removal proceeds to mitigate the hardship caused by the removal? Have we reduced the rate at which we have been borrowing?
The answers to the above posers are clear for all to see. Since 2023, no federal budget has been implemented to the letter. Carrying over capital budgets from year to year has been the norm. In real terms, funding for the sectors identified above has shrunk. Total public debts have galloped from N87trillion to over N153trillion while deficit financing of federal budgets is at an all-time high. Therefore, the second premise or middle term of the reform indicating that resources should be freed up for better management and investments in the economy has not materialised. Resources have been freed-up while the government is not accounting for the use of the freed-up resources. The expected investments have not materialised. There is no pretence by the administration on what it sets out to do- grab resources and spend at its whims. Previous administrations who removed a few pennies from the subsidy regime set up mechanisms to manage the freed- up resources. At least, they pretended to be doing something.
Essentially, what happened is a situation where the government tapped into a subsidy debate and challenge, removed the subsidy to ensure the availability of more resources for its use but refuses to deploy the resources as agreed. All we see is an increasing bureaucracy that is not touching lives or mainstreaming the constitutional aphorism that the security and welfare of the people is the primary purpose of governance. Removing the subsidy and mismanaging the proceeds is like obtaining money under false pretences about the use to which the money will be deployed. The removal of the subsidy with its attendant hardship was premised on the gains and benefits accruing from the removal. The citizens are enduring the hardship but cannot see the gains.
In conclusion, if a fuel subsidy reform has been attempted, it has failed or at best, it is inchoate unless the interpretation of the reform is left at just the mechanical pronouncement and enforcement of subsidy removal and does not include the deployment of the freed-up resources.
