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By Eze Duruiheoma
Over the years, Nigerians have been fed with a regular dose of how petroleum products in Nigeria have been subsidized (by who you may ask?) by the Government of Nigeria. Over the same period, we have also been treated to diverse policies by the Government, aimed at either removing the subsidy or scaling down its level.
To this end, we have witnessed such policy thrusts as percentage withdrawals of subsidy. One such measure resulted to the creation of a Petroleum Trust Fund, which was expected to invest, the surplus revenue arising from the phased withdrawal of petroleum subsidy, in the provision of infrastructure, throughout the country. There were other initiatives such as the above.
How far those efforts succeeded is not the subject of this piece. However that is also important in order to appreciate the prevailing sentiment over the issue of “palliatives.” Before then, I am particularly worried about the truth of this subsidy palaver.
By the way, it is not unusual, or unheard of, for governments all over the world, to subsidize products or commodities, which are essential to the well-being and welfare of their populace. Any discerning mind, will readily agree that petroleum products notably PMS, kerosene, cooking gas and diesel are essential to the wellbeing of the people. It is therefore not a crime if a government subsidizes them to enable the citizens have easier access to them.
In our case, the argument against subsidy is that it is a scam, perpetrated by a few persons to the detriment of majority of Nigerian. My understanding of this argument, and I suppose it is also the way numerous other persons understand it, is that in truth, there is no subsidy.
What exists is a contrived fraudulent scheme, with which a few privileged persons helped themselves to the common till. This particular narrative is music to the ears of average Nigerians, who are usually whipped into a frenzy by any allegation of sleaze. That is justifiably so. However, in this case, have the facts on the ground proved a general presence of fraud or scam in the fuel subsidy regime?
That is where I have my doubt. I say this because if it is true that the entire subsidy saga is riddled with scam, it must follow that its removal can only hurt the thieves, or the perpetrators of the scam and their enablers. They will and should not hurt the average Nigerian who today is reeling from the effect of the so-called withdrawal or removal of fuel subsidy. The general hardship in the country today is traceable to this unfortunate saga.
This obviously defeats the argument in favour of the removal of the so-called subsidy, because if there is any truth in the argument, the removal should have had a salutary effect on the economy. The galloping rise in the cost of transportation and most goods would not have been so. The daily rise in the cost of living would not have been so.
Assuming for purposes of argument, that some percentage of the subsidy regime was due to fraud, would that justify a wholesale removal of the subsidy? My answer is no, because to do so, is tantamount to burning down one’s house in order to kill mosquitoes or rats in it. God forbid.
What ought to have been done and, which was not done, was to identify and isolate the aspect of the subsidy tainted with fraud and deal with it, in the same way cancerous cells are isolated and dealt with. No. That was not done.
As I posited earlier, subsidy by governments in targeted areas, is not uncommon. This is in line with the avowed goal of governments to make life easier for the people. In this case, the federal government appears to agree that the withdrawal of fuel subsidy is hurting Nigerians, and that is why it is tinkering with the idea of “palliatives.” This is therefore a case of causing injury and thereafter seeking to cure same.
As in past experiences, the issue of “palliative” to the people, for causing them hardship, is hardly a remedy. In this case, it is to me a “Robin hood” measure. It is a kind of robbing the people to enrich Government, who now doles out what it calls “palliatives” to the impoverished people, whose money has been taken away from them.
Besides, has anybody taken an in depth look at the method of sharing the so-called “palliatives.” For now, only the voice of the organized labour is being heard. Predictably, their mission is to protect the earning power of their members, by asking for an increase in their salaries and wages. One may ask, what is the ratio of the members, of the organized labour to the entire Nigerian population? It is a small one. What of the larger fraction? Are they not suffering from the same after effects of the removal of subsidy?
In addition, there is a talk of sharing money or commodities among certain categories of Nigerians to cushion them against the adverse effects of the withdrawal of subsidy. This is yet another bad policy.
Apart from the fact, that similar measures in the past failed woefully, in this case, it is a particularly bad policy, because the group who would benefit from it, and the earlier working class group, are not the only people suffering from the harsh economic climate, engendered by the subsidy removal.
What is more, will this cash infusion or sharing of commodities last forever? I doubt. In other words none of the policies or measures being considered or implemented by government is an answer to the ugly situation we are in. No person should be deceived into believing that these measures are in the interim. Interim measures in Nigeria have a way of becoming permanent features of our lives.
What then is the way forward? It is true that governments are not known to reverse measures, once introduced. There are however, well-known cases, where governments reversed course, because certain consequences of the measures were, not anticipated, at the time the measures were introduced. In other words, the measures were not well thought out. I think this is the case here.
The initial applause, which greeted the subsidy withdrawal was largely because, the people thought it would not have the ripple effect, which we have seen. Take a look at the way naira value is dropping like dry leaves. Who does not know that, though naira was weak before now, the subsidy issue has piled up pressure on it?
Naira must be saved. If to do so is to tinker with the subsidy withdrawal palaver, please let the government do so. Before I conclude this article, let me acknowledge and address two of the contentions, often canvassed, to urge the so-called subsidy removal.
First, we are told that cheap fuel in Nigeria, enables smugglers. My simple answer to the above is that, it is an indictment on the men and women of Customs, whose job is to prevent all types of smuggling. If they are unable to perform the task or any aspect of it, the hammer should fall on them. Their ineptitude cannot be a justification for mass punishment on Nigerians.
Secondly, we have seen efforts made to compare the price of petroleum in Nigeria, with other countries. The point here is to show that the price of fuel in Nigeria is lower than in other countries.
This argument is self-serving, in that it does not tell us the prices of other goods or services in those other countries. For example what is the cost of transportation in the countries concerned? Do their prices rise erratically as they do here? Without these details, the comparison is meaningless and irrelevant.
A rethinking of the subsidy matter is urgent to restore sanity in the markets. One does not have to be an Economist to know that an unstable market is home to galloping inflation. Inflation itself is the root cause of social unrest. We cannot afford any form of instability now.
• Duruiheoma, SAN, is a former Chairman of the National Population Commission
