Fuel Subsidy Removal and Pro -poor growth in Nigeria

 

Issues arrising from the fuel subsidy withdrawal protest  rallies and media debate since  January 2, bother on what has been variously described as declining trust between the governed and governing in Nigeria;the question of timing for implementation of this policy ,and the wasteful  or rather costly running of government in Nigeria at this time. To this end, the strike rallies have expanded their demands beyond return of the 65-naira pump price to include political demands such as the resignation of the President; some want his impeachment while others want the country split. Still other demands are religious – strikers in Benin, Edo state were said to have burnt down a mosque targetting muslims living here as retarliation for the burning of churches by Boko Haram in the North. From Ghana there was a rally calling for greater efficiency in governance while from New York, the rally obviously focused less on Subsidy removal but more on need for political change.

 

From government perspective, removal of subsidy was a strategy to induce pro poor growth in Nigeria. With increasing poverty and dismal human development index, Life expectancy is down to as low as 45 years for male. Nigeria is under pressure to tackle alarming unemployment of youths in one fell swoop. Faced with indices indicating the that growing insecurity is correlated directly with the economic stagnation which does not encourage growth of productive sectors,government was determined to remove this distortion well known for over 2 decades but taboo to previous governments. Now put yourself in the shoes of a President facing imminent collapse of the economy resulting from astronomical jumps in recurrent expenditure to about 25% and likely to hit 50% in the coming fiscal year if no counter action comes through.Now be the President. As you negotiated with the stakeholders to arrive at a proper timing for subsidy removal,some unscruplous people with interest in killing the idea of deregulation are busy sponsoring Boko Haram. You discover that there is already a grand plot to stop the process by stimulating a mass unrest, with infilterators of government leaking the plans and process, you decide to bring forward the policy implementation as the only option left if it was to succeed.

 

Now consider that you had run your election under the promise to transform Nigeria in only 4 years. You convinced violent revolution proponents to pipe low and support your peaceful restructuring strategy. Meanwhile, they are becoming increasingly impatient with your “go slow” Biut you were patriently planning the best approach to bringing solution without the use of too much power. You planned to introduce a well reasearched policy that would make Nigeria join the global economic system that you hope will also tackle pervasive waste and corruption.The idea would boost our weak institutions when suddenly supported by strong global institution and laws. Legal and constitutional regimes would receive a rebirth forced on it by economic imperatives of competition and productivity leading to higher job creation and foreign direct investment boom. Your calculation is strnghtened by the success of the derregulated sectors of Nigeria including the telecom, banking and aviation. If these not too important revenue earners could become pillars of this economy, then the sector that provides over 70% of the country’s revenue would be a big influence unprecedented in the history of Nigeria.

 

As it stands now Nigeria is the fifth largest oil exporter to the Uniteds States of America, perhaps the 8th largest OPEC producer yet her citizens live below 2 dollars a day poverty line drawn by the United Nations. Despite touching billions of Dollars from official calculation of oil revenue, it cannot seem to maibntain basic infrastructure at home. Railway lines are obsolate andf the roads have potholes in them. So where is the money going? Meanwhile neighbouring Africasn countries are smiling and developing fast around us maintaining steady electricity supplied ironically by Nigeria! So what went wrong? We kept asking for help and our sons and daughters in the World Bank kept saying that our wealth was settling somewhere else because we did not have an enabling investmentv environment to keep it. Our ecionomy had K- leg which miust be corrected via suggery if our money is to stay here and create value for us. So this time around, the President went out to seek the help of these experts, and sought the assistance of the global super power the United States of America through the Bi- national agreement he signed as acting President of Nigeria.

 

Now after your election you go one more step to convince experienced technocrats to join your government preparatory to this surgery. You remained patient until the courts had finally declared you winner of the presidential elecions after your challenger lost out. Meanwhile, you made it clear that you would not go for a second term in office as President. As a transformational leader, your aim would be the interest of the voiceless majority and you kept in touch with them in a Facebook page to the chagrin of those who would have prefered to hold you hostage to their own whims: as traditionally was the case. You had earlier warned skeptics that you would step on toes for the best interest of Nigeria and that was what you did when you removed subsidies from petroleum products on January 2. You aim to force back to benefit Nigeria those years that the locust had eaten. With our fuel money now likely to remain here, Nigeria automatically becomes the giant of Africa once again. Now Africa will come here to invest instead of Nigerians going to African countries to invest. Thnis is because the subsidy removal equalises the pricing of goods across board and renders the condusive economic environment for efficiency and profit for investment in infrastructure, manufacturing and commerce.In one small move President Jonathan has destroyed the so despicably feared “Nigerian factor”. With it go corruption, waste and unproductivity.

 

Already the effects have begun to show. Just 3 days into the fuel subsidy strike, Neighbouring countries are feeling acute scarcity of petroleum products. Does it tell you anything? After just two days of the withdrawal, the naira rose steadily against all global currencies although the strikes brought it down again. Nigeria is receiving kudos from world bodies for taking the bold step and consequently Nigerians are now gaining global respect. The unworkable federalism became operational shortly as different States utilise novel ways of dealing with increases in transportation and inflation. Rivers State offered palliatives, which included limited subsidy for transport owners. State governors like Gov. Babangida Aliu of Niger State went on air tio support subsidy removal although he inured the wrath of protesters who went on rampage damaging government and party properties leading to imposition of curfew.b In Eboyi State the State governor addressed a  pro Subsidy removal rally. In Lagos State Anti Subsidy removal rallies blosomed into a musical carnival often with vandalisation of government properties for which the State government had tried to discourage. Other states are seerking aslternatives to minimise the huge revenue lost daily to the strikes, which paralysed some parts of the country.

 

 The beginning paragraph of this article exrayed  an approximate picture of the shifting goal posts,which the labour led strike has engendered.We have always made efforts to plan properly the Nigerian revolution which I adviced two years ago should be peaceful.  I had warned against a violent approach with shifting goasl posts, which is capable of reducing the harvest of goals” for Nigeria.  Just like Egypt, the Nigerian revolution should have only one goal so that we all can all aim together and win it. It is not just to “occupy Nigeria for the Military or Boko Haram. I remember vividly my disagreement with our colleagues who wanted a violent change as distinct from my proposal for a peaceful revolution. I had proposed that for Nigeria to avoid the negative effects of many years of suppression and polarisation during military and pseudo-military civil regimes, violent revolution would lead to balkanisation of the country with dire consequences for all. Having passed through decades of institutionalised ignorance and suppression of education and information needed to grow a successful military dictatorship, such countries as Nigeria, Egypt and Pakistan, could not really embrace traditional democratic proceedures without much ado. Democracy remain skewed in these countries and must be delayed until strong institutions emerge because the people are vulnerable and can hardly help themselves without an external guidiance.Instead, a planned peaceful revolution with simple goal should be conciously pursued by both governing and the government alike. In this case, it is the use of economic imperatives to drive the economy preparatory to strenghtening institutions for true democracy. I was reluctant to support the governmernt of President Goodluck Jonathan because I felt that not enough groundwork preceeded the process in terms of constitutional changes to ensure the unfetered arrival of the new Nigeria. My colleagues were at the forefront of just installing a new president as if that was the end of the revolutionary process. Ironically, the same people are striking against the same President Jonathan unashamably. Today they show how narrow was their vision!

 

 When President Goodluck Jonathan came up with his transformation agenda, we saw the light at the end of the tunnel at least as a transitional government. Transformation provided a viable peaceful means of attaining far-reaching change in a legal environment. We did not want Nigeria balkanised for her strenght lies in the potential yet unreleased. We wanted to leasd her to a more productive structuring in the natural order of things by removing the constraints to growth imposed by the military and copied by the indolent civil regimes that utilised coecion to cover up their inadequacies in governance. Therefore, the idea was to remove structural imbalance slowly one policy after the other so that we could begin on the path of pro –poor growth by encouraging productivity and foreign direct investment. Some people are worried that wevplan to hand over this country to the IMF/world bank the same worries that feasled out with the crash of Berlin wall and communist demise but then the global economy driven by the new media cannot be wished away. For you to grow and create jobs, you must key into the structured global economy and obey its laws. Fuel subsidy encouraged unproductive sectors of the economy to thrive. The action of President Goodluck Jonathan to remove subsidy on Petroleum prducts and therefore the economic distortion that kep us down for decades was in the interest of the voiceless majority and deserves to be commended by well meaning Nigerians.

 

*Mr Nworisara, a policy analyst, aspired to be President of Nigeria in 1992.

 

 

 

 

 

 

 

 

 

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