The arguments for or against petroleum products subsidy removal have raged over the past few weeks since the President made his intention known, preparatory to the 2012 Budget and Medium Term Expenditure Framework presentations to the National Assembly. The arguments have raged from outright threats of fire and brimstone, to the outright disingenuous! In-between we have the facts, the figures and the options.I think there is a meeting point in all arguments-which is that, we are not convinced that this government knows exactly what savings from subsidy removal would be used for, if at all there would be savings! To me, the government did not do its homework (and this is becoming a terrifying trend) before making public policy statements. With all the Special Advisers at his beck, Mr President should get his facts correct before making public his intentions. Its not enough to come back and tell the public you were misunderstood! The proposed 7-year single term and subsidy removal debates show this glaringly. The government, till date has not come out with a counter-argument with facts and scenario analysis of why subsidy should be removed, and how it intends to apply the benefits to the national economy and that is not good enough. So lets take the facts. N250bn was set aside in the 2011 budget for fuel subsidy, but as at September, over N1tn had been spent, we were told! The first question is who authorised spending above the budget without National Assembly appropriation' Thats actually an impeachable offence. To my mind, political expediency (for electoral benefits) made the government continue the subsidy, even above budget estimates. This calls for caution on the part of government. This is why your advisers should have done their homework, with appropriate information technology you can easily predict the performance of an economy one year ahead, especially in an unplanned economy like Nigeria where the indices are not too many to measure. N1.5tn would be saved from subsidy, government promises, but revenue, especially (import duties, NITD Fund, ETF etc) will be reduced, because these funds rely on imports for their funds. So, is the government actually going to save in the real sense or is the government actually subsidising anything' Nigeria imports over 70 per cent of its fuel consumption needs, even through she is the 6th largest world producer of oil, an astonishing historical anomaly! The big question is, how would the government through the NNPC bridge the expected gap (because fuel queues will surface almost immediately) because there is no newly completed refinery anywhere in Nigeria. Out of the many licences issued by the Obasanjo regime, no single one has started construction on site. A visit to Lokoja, a proposed site for one of the licensed refineries will convince you. So the government will fall back into the hands of the cartel that will now bleed the so-called savings to death, through one scheme or the other.Global economy is slowing down very fast, especially because Europe is tottering on economic recession, and that has implications for Nigeria, whether we like it or not. I remember how Prof Charles Soludo told us that the American banking crisis would not affect Nigeria, only for it to crush our economy, and cripple the banking sector in particular. Thus, it is imperative that the government weighs the likelihood of a European economic recession on our economy before contemplating subsidy removal, because what Lamido Sanusi did in the banking sector is simply subsidy to save the sector, even through, I still dont agree that it saved the sector, because nobody has told us where he got the money he pumped into the rescued banks and how we are going to get our money back and when! (I presume he simply printed Naira', there is no way of getting the money from foreign reserves without National Assembly appropriation, I am therefore not surprised about the inflation trends).If at all subsidy is removed, what is the governments plan to apply whatever savings accrue in the process'This, however, is my humble proposal. The government must move very fast to create a Social Sector Framework which will create a Social Sector Fund. The greatest losers, if subsidy is removed, will be the ordinary man and woman on the streets, students and small scale entrepreneurs. A Social Sector Fund will be an opening to protect such people. How will this work' Nigeria has arrived at a position now that we should take our development in our own hands. Many countries of the world create a platform for their development and their contributions to the development of other nations. For example, the British have the Department for International Development, the Danes have the Danish International Development Agency, the Finns have Finnish International Development Agency, etc. These structures are very important as tools and vehicles to clearly articulate the development goals of each country, both internal and external. Most recently, when Nigeria wanted to give money to the Haiti earthquake victims, it was done through the United Nations. If we had a structure, we should simply have moved into Haiti and make impact on the ground, as well as learn from that experience; by simply giving money, we have not learnt from earthquake disaster management and there will be no physical evidence of Nigerias contribution on the ground in Haiti. We are therefore proposing the establishment of a National Development Fund or Social Sector Fund that will provide funding for two major agencies. National Development Agency : This agency will be responsible for providing a counterpart and or start-up funding for development projects at the grass-roots level in Nigeria through such bodies like NGOs, Community Based Organisations, Community Development Associations, Town Unions etc. The basic principle of this idea is that any community/NGO that wants to execute a development project no matter how small or large must have 30-40 per cent of the cost of the project whilst the agency will meet only 60-70 per cent of the cost. This way we have put development in the hands of the people and the various communities. Thus development will be people-driven and from the bottom up. The fund will also support innovative entrepreneurs with start-up capital without any collateral. The only condition would be that they are a member of a registered NGO/cooperative society, such NGOs will take the pressure of having collateral off their shoulders and also monitor their growth and report back to the Fund, who can appoint independent consultants to carry out periodic assessments. It can also support the establishment of Social Security Funds that are community-based, and not a National Scheme like we have in Europe and USA. I am now a champion of community self-help development, my experience on the field for over 20 years has taught me that if there is no communal ownership of a project, it will not work, neither would there be sustainability! Over 5000 abandoned projects in Nigeria' Haba, if they were given to the community to implement, I am very sure now, that we will not see 100 abandoned projects! I stand to be corrected. Nigerian International Development Agency: This will be our own international development arm and will be charged with the responsibility of harmonising Nigerias international development commitments and also be a physical presence as well as a vehicle for learning about the best practices in other counties, especially in the African and other developing countries. Over the years, Nigeria has made very useful contributions to international development; but we are simply proposing here that that it becomes institutionalised. The Social Sector Fund will convene the Annual Social Sector Congress: A meeting of all NGOS/CSOs with Government and Private Sector, to asses Social Development Issues; present an Annual Social Sector Report: Covering Development Issues, MDG implementation and Social Fund Grantees/Activities. This report will be placed before the National Assembly and the Federal Executive Council.; convene Regional Social Sector Congresses and regional Reports. Each state government should have similar structures.Thus, even if subsidy is removed, majority of Nigerians would have windows (when you consider opportunities in the banking, Micro-finance and Micro-credit sectors) as well as full implementation of the new vision of making agriculture more attractive to young people through value-chain projects.My conclusion therefore is that, we think well and deep before we leap into subsidy removal. All economies especially Europe and America subsidise their economies, especially agriculture. If oil subsidy is removed, lets transfer it to agric, because it employs more Nigerians and has a greater potential of transforming the economy more than oil can ever do, especially in the face of the rent-seeking crowd around the corridors of power. Therefore, without a clearly articulated Social Sector Support Framework, Nigerians should insist on a NO TO SUBSIDY REMOVAL! Olubamise is Executive Director, Development Information Network, Yaba, Lagos. He can be reached at bolubamise@yahoo.com or www.devnetnigeria.org
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