I love my country, I no go lie, na inside am I go live and die... goes the lyrics of a popular song by a Nigerian artiste. Let me turn this round to express my mind: I love my President, I no go lie... Why' Not because of what he has done, but what I think he is capable of doing. I know he is a Jonathan. The Jonathan of the Bible that I know was a passionate lover. He loved David like his own soul. I think our President also loves Nigeria. His body chemistry suggests this. The Jonathan of the Bible spoke less but acted more, and as they say, action speaks louder than words. This is where my worries start to develop.Our President has made many statements that make one shudder. Once when he had to react to the spate of bombings and killings by the Boko Haram, he said even he could be bombed. Then lately, Jonathan said the failure to remove fuel subsidy would lead to the collapse of the Nigerian economy! I dont know his basis for making this statement, but I do know the possible cause(s) of an economic collapse in a country like ours is (are) definitely not the removal of fuel subsidy. It is the failure of the government to get its priorities right. And I will explain.What is subsidy' Simply speaking, it is a benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy is usually given to remove some types of burden and is often considered to be in the interest of the public. Virtually all governments in the world, including the United States which is the lead driver of the market economy, gives subsidy in one form or the other to its citizenry, and it is usually to cushion against the effect of market failures. That is why social security is paid to the unemployed, cash transfers are made to the poorest of the poor, council flats are provided for the disadvantaged, etc. The only plausible argument against subsidy has always been its abuse, and human-focused governments across the world do not stop or terminate subsidy scheme for this reason; rather they institute means to check the abuse. Often, the abuse doesnt get completely wiped out, but they are minimised. So our first point is that it is no crime to give subsidy. Schumacher alluded to this in his famous book, Small is Beautiful, Economics as if People Matter. That is also the major import of Lord Keynes economic theories.Now looking at the so-called fuel subsidy in Nigeria, how did it arise or how is it measured' In simple economic terms, it arose as the difference between the import plus handling costs and what motorists pay per litre at the pump. The principal raw material for producing premium motor spirit and Automotive Gas Oil or diesel is the crude, which from the information at my disposal is produced in Nigeria at a tiny fraction of the current international price. Instead of refining this at home and translating this actual cost advantage (plus the employment opportunities at the refineries) to Nigerians, the crude is transported at a cost for processing abroad after paying all the export handling charges; then we pay another transport cost (or freight) to import it, pay import charges and other miscellaneous costs and then deliver it to final users. Under normal circumstances, the subsidy on fuel (if at all there will be any) would have been the difference between the ex-local refinery (plus other minor handing charges) cost and what final consumer/users pay and not the difference between import cost and pump price. Definitely the latter is an exaggeration of the former, and this need not be so. Please permit me to ask: do we have any other major oil producing country like Nigeria with a large domestic market for refined products but rely almost exclusively on imports'Conceptually also, subsidy is given by governments to enable its subjects to have access to essential products that are inevitable for living, but which ordinarily would be far-fetched because of low disposable income. For no fault of Nigerians, they have had to make most of their trips and move most of their goods by road, which implies fuel consumption and at costs that seriously erode their meagre incomes. Instead of compensating Nigerians for bearing with it by using roads when they would have used rail or other means which are taking for granted in other climes, the government now wants to transfer the full burden of its failure to the citizens.Why should Nigerians pay for governments failure to provide basic infrastructure and make them work' Before the Big Bang in Britain, virtually all the infrastructure were public goods. So there was a strong platform (in the form of functional goods/services) to transfer to the private sector, which fetched the government good income. In paying our taxes, what we are implicitly saying to government is that we have our pooled resources to do the same: produce common goods that individually we would have found difficult to provide, not to assemble a handful of people to take a huge chunk of this money and then share the balance thinly over a wide surface, producing no noticeable effect.I have been to a number of African countries, and it is a delight to see mass movement by rail, whether as Trams or through the generic rail system. This is what our government is just waking up to. Shouldnt this and similar alternatives be developed before thinking of removing fuel subsidy' I submit very strongly that the so-called subsidy is grossly exaggerated by the inefficiency in the petroleum sector, and Nigerians should not be made to pay for this inefficiency. Furthermore, if indeed there is any subsidy, it should be based on the actual Nigerias production cost of crude plus domestic processing and distribution costs, rather than the opportunity costs that are being invoked now.The collapse of an economy will not happen because there is not enough money for the privileged few to share; it will happen when the basic human resource is impoverished or taken for granted. The trigger for the mass revolt in the Arab world was not because some leaders have stayed for too long (I have heard some people saying it cannot happen here because we are a democracy). It was because a young man burned himself up in Tunisia due to social deprivation. Nigeria is fast approaching the same level of deprivation, and the speed can be accelerated if government goes ahead to remove the so-called subsidy, which in truth is actually economic rent in the pockets of a handful of Nigerians.- Adebiyi is Managing Partner, R&S Consulting Limited, 2, Aina Eleko Street, Maryland. Lagos. He can be reached on samuel.adebiyi@yahoo.com
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