A hike in petroleum price will reverberate throughout the economy because virtually everybody is now forced to use PMS or AGO: the barber at the road side; the pepper grinder in the market; the panel beater who mends vehicles that are battered on the every busy Nigerian roads (or even the 15 year-old junk/vehicles that can now be imported; ironically this policy came into being when government was also concessioning the assembly plants!); the machine fabricator who now helps the micro-entrepreneur to access an equipment that he could no longer afford to import because of the soaring exchange rate; etc.The inflationary consequence of this subsidy removal is also better imagined than experienced; and who knows how the CBN, with its inflation-targeting policy focus, will react' I think this government, under my beloved President, should be careful not to listen to only the music of those calling for subsidy removal. Some music usually sounds sonorous, but the wise dancer would always try to listen to the lyrics to avoid a sudden grief. Virtually all those rooting for the removal of the subsidy are pursuing private/financial gains rather than social/economic goals.If indeed the subsidy on fuel has been exaggerated by a few cabal in Nigeria (as has been alluded to by many Nigerians), who are bent on not allowing the domestic refineries to work, the government knows them (by virtue of its privileged position) and should halt their enterprise (by virtue of its power). Some of them are close to the corridors of power. They are involved in the oil sector; and have borrowed huge sums from the banks which AMCON is now buying over. Should they continue to eat their cake and have it at the same time'At the twilight of apartheid in South Africa, a popular musician from that country, Yvonne Chaka Chaka, visited Nigeria for the first time. After sighting some of our poor people in the slums, she remarked (I cant quote her verbatim now) that what they lacked in her country was political freedom; that her people (i.e. the blacks) were never that economically deprived. I can never forget that statement. The population of the deprived is increasing in Nigeria, and most of the current ameliorative initiatives of the government are merely scratching the problem on the surface. Fuel subsidy appears to be the best widespread benefit Nigerians are deriving from the government at the moment, and if there are greedy parasites along the distribution chain, they should be identified and flushed out.Lets make the refineries work. Lets conserve employment by processing our crude locally, limiting exports to excess beyond our domestic capacity. Who says we cannot export refined products' I have been reliably told by friends in the petroleum industry that other things being equal, the pump price of a litre of domestically produced PMS could actually be far less than the current N65. So why cant we do everything possible to harness this advantage' Why do we earn less foreign exchange by exporting raw crude and turn round to spend more foreign exchange to import refined products' Because we have externalised what could be significantly internalised, we have become victims of a spurious subsidy abracadabra! I hope we all know that even if the international price of PMS remains unchanged, the so-called fuel subsidy in Nigeria would continue to rise if the Naira exchange rate depreciates. Why should we continue to be in this mess'Perhaps I should close by drawing another analogy between my President and the biblical Jonathan: the latter remained committed to his goal of preserving his friend, David, even when this was at variance with his fathers goal. I believe my President can take a cue from his name-sake. He should be bold enough to pursue goals that will benefit the majority of Nigerians who voted for him in this years elections, not minding even if a few economic theorists will be disenchanted. Nigerians voted for him, not his political party, and one good turn deserves another. He should remember that economists (and I am proud to be one too) always have two hands.They would say on one hand if we keep the subsidy, the economy would collapse and priority projects that could be implemented with the subsidy would be forgone. That is the message the President appears to have echoed. He should note that on the other hand, if the subsidy is retained and it is more efficiently administered with all the handful of parasites who are distorting the expected impact cut out, Nigerians would have at least one reason to continue to give the government the benefit of the doubt. We have had many times in the past that savings from subsidy removal would be used to pursue poverty alleviation schemes. This is neither here nor there. Government should also note that the recent hike in the minimum wage is no justification for liberalisation of fuel price because the beneficiaries are only a tiny fraction of the population, and this minimum wage is still not a living wage in a country, where food alone is more than 60 per cent of household budget, not to talk about accommodation and transport.Concluded.Adebiyi is Managing Partner, R&S Consulting Limited, Lagos. He can be reached on samuel.adebiyi@yahoo.com
Click here to read full news..
