As a teenager I was once confronted with the reality that the only way I would be free of the discomfort I felt was to press through another threshold of pain. I had woken up on a particular morning with a throbbing toothache which didn’t respond to any analgesic or gel I threw at it. The only way out was to extract the errant molar.
I lay back in absolute terror as the dentist bore down on my gum with a gigantic syringe that held a close resemblance to the giant claw in Captain Hook’s left hand. The pain as he pulled out the infernal tooth was blinding, excruciating. But once it was done, I began to experience peace and normalcy in my body that I hadn’t known for days.
For several weeks in Nigeria all the talk has been about the hardship that has accompanied the removal of fuel subsidy by President Bola Tinubu at his inauguration on May 29, 2023. In short order petrol prices crashed through the N500 per litre barrier. Food, transportation costs and prices of everything that had value spiked and all hell was let loose.
With exchange rate reforms that encouraged a convergence between official and parallel markets, we soon had a perfect storm. We’ve seen the naira fall to unprecedented lows against major world currencies, the upshot being that the price of all imports also went through the roof.
Chief of these imports is petrol and the removal of subsidy meant we all woke up to start paying real world rates. In any clime no one wants to pay more for anything. My personal weekly petrol bill has quadrupled and it isn’t amusing. So whether you are a supporter of the president or a bitter adversary, no one is exempt from today’s frightening economic realities.
Wherever there is pain people cry out instinctively. The muted outcry that greeted the initial increases early in June, exploded into raw anger in many quarters following a second hike last week which Nigerian National Petroleum Company Limited (NNPCL) CEO, Mele Kyari, blamed on market forces. His explanation that prices would fluctuate depending on exchange rate and demand and supply factors left many cold.
A couple of newspapers and columnists have written OP-EDs querying the new policies and even demanding a reversal. Others who couldn’t be bothered with logic, simply went to town proclaiming Armageddon was upon us.
On Monday, former President Olusegun Obasanjo, was at his preachy best accusing government of driving millions into poverty through poor implementation of ordinarily noble policies. Given his penchant for opportunistic interventions in the past, it isn’t a stretch to hazard in what direction this barb was aimed.
It would be dishonest to pretend that in a country without proper mass transit, the most vulnerable segment of the population has not been negatively impacted. Last November, the National Bureau of Statistics (NBS) estimated the number of Nigerians living in poverty to be over 133 million. That’s a lot. But that scandalous stat wasn’t created overnight: it’s the result of decades of mismanagement by successive governments.
Much of the recent criticism of Tinubu’s moves is about the management of the process. He’s been blamed for announcing the removal on day one. But such dramatic action isn’t unheard of. In September last year, newly-elected Kenyan President William Ruto, a day after he was sworn in, scrapped his country’s ‘costly’ petrol subsidy, arguing it was unsustainable.
Critics say certain things should have been put in place before removing subsidy. So, let’s start with what we can all agree on. The rollout could have been better, so also the messaging.
Nearly everyone, even labour unions, admit the subsidy is not sustainable. President Tinubu and his rivals – the People Democratic Party’s (PDP) Atiku Abubakar and Peter Obi of Labour Party (LP) – all committed themselves to scrapping it. Obi, with rhetorical flourish, denounced it as ‘organised crime.’
Also, with the passage of the Petroleum Industry Act (PIA) the subsidy was supposed to end in February 2022. That suggests by continuing the payments since that time government was actually engaging in illegality.
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In Africa more countries are coming to the realisation that they cannot continue to carry the burden without grave economic consequences. As mentioned earlier, Kenya acted decisively in September 2022. In March, Ghana bit the bullet and junked the subsidy. A few days after Tinubu acted, Angola took the plunge. In all these cases the removal has been greeted with anger and protests.
If like Tinubu, Atiku or Obi would have removed subsidy what is the argument about? Let’s take them for their word and say the LP candidate wouldn’t have continued this ‘organised crime’ a day longer. The PDP flagbearer who would like to be seen as a reformer and pro-business would also not have encouraged the financial haemorrhage for much longer.
Their supporters claim, however, that the two men would have handled things differently – whatever that means.
I have heard all manner of ‘experts’ hold forth with prescriptions about what should have been done differently. Truth be told, no one has been where we are today; no one had terminated subsidy in this manner before. Everyone is just playing guessing games with scenarios. If we had done this maybe that would not have happened.
Sometimes it is better to act and let men criticise your actions. Waiting for the perfect conditions to do what you should have done yesterday is called procrastination.
The usual suggestions have been things like fix the refineries, establish effective mass transit nationwide and so on. But a government that is less than 60 days in office cannot be held responsible for the inability of the administrations that held forth in the last 20 years to fix refineries. Waiting to repair refineries means taking another 24 months at the earliest to act.
I have even heard it said that perhaps we should have waited for the Dangote Refinery to come on stream. The owner promised the end of July but many sceptical voices had suggested at the time he made that statement, that the earliest the facility would start producing was later this year or well into 2024. It doesn’t make sense tying government policy to such uncertain take-off plans.
The new administration can’t also be blamed for the failure of its predecessors to put in place some sort of welfare system that enables the poorest of poor absorb the sort of economic shocks we are witnessing.
So what’s the alternative? Do we because of the pain which the reforms have produced return to the old order of multiple exchange rates which created room for arbitrage that benefitted just a few? Do we return to the opaque regime of subsidies that made billionaires out of cross-border smugglers and was virtually bleeding the nation to death?
NNPCL estimates that the country was losing N4.8 trillion yearly to the subsidies. In the 2023 budget the last administration budgeted N3.5 trillion to fund cheap fuel till the end of June. At that rate continuing the practice for another six months could have seen the pay-outs reach N7 trillion.
This is money that can be used for infrastructure, healthcare and education. It would be interesting to know how much Nigeria spent on fuel subsidy over the last 30 years to get a sense of how wasteful we’ve been as nation.
In the absence of metro lines and similar facilities in major cities, the closest thing to mass transport would be fleet of buses like the Bus Rapid Transit (BRT) in Lagos. This is something that can done in the short to medium term. But in the current environment of near hysteria I wager that even if this had been in place before announcing the removal it wouldn’t have stopped protests because of impact that’s beyond commuting.
Other things like an upward review of wages, cash transfers and sundry palliatives are on the table at federal and state levels. The good thing is that the outcry about hardship is putting office holders at all levels under pressure and forcing them into action. We must all add our voices to calling on federal, state and local governments to do all they can to ameliorate the suffering.
Our national discussion can’t just be an unending singsong about our troubles. We should balance the inconveniences with celebration of good news. At the recent Federation Account Allocation Committee (FAAC) meeting, the three tiers of government had N1.959 trillion as revenue to share in July 2023. (Only N907 billion of the amount was eventually distributed; the rest was saved). It is was a record.
It was nearly triple the N786.161 billion shared in June and more than thrice the N655.93 billion distributed in May. It would be interesting to see if this upward trajectory in maintained in August.
With more cash from savings, governments at all levels should be able to do more by investing in the things that are critical to peoples’ wellbeing.
If this pain isn’t an end in itself, then those on the receiving end need better explanation as to why they are experiencing tough times and what awaits at the other side of the tunnel. Messaging must be improved to outwit those who are only interested in exploiting current challenges for political ends.