In some way, I pride myself as someone in touch with the trends and slangs on social media. But I was caught napping when I was discussing Brighton & Hove Albion FC in the Premier League (I once schooled in Falmer, Brighton) with a friend. I told her that “we will be playing in the UEFA Champions League in 2024 by God’s grace”. My friend, a staunch Obidient, replied: “This reminds me of a running joke on Twitter.” What is it? “So, when Tinubu was inaugurated, this person came online and wrote: ‘This new government will favour me and my family in Jesus’ name.’ Now, whenever anything (negative) happens, people go to that tweet and quote it.” I laughed. I don’t know how I missed that.
When President Bola Tinubu announced the removal of petrol subsidy in his inauguration speech and the pump price skyrocketed from around N200/litre to over N500/litre, people joked: “This new government will favour me and my family in Jesus’ name.” When the exchange rates went haywire with the attempted bridging of the official and parallel markets, people teased again: “This new government will favour me and my family in Jesus’ name.” And so it goes for hikes in transport fares, food prices and cost of foreign education. When petrol prices went up again last week, an Obidient wrote on her WhatsApp status: “This new government will favour me and my family.” Hilarious!
Times are tough and could even get tougher. For me, what the impact of the subsidy removal has proved once more is that cheap energy had been keeping the cost of living somewhat stable in Nigeria for long. Experts often argue that fuel price hikes only have a one-off effect on inflation, but the leaps in five weeks are so adverse that millions of Nigerians are in severe pains. All our lives — at least from the time we hit oil boom in the 1970s — we had been used to cheap petrol. We had been mostly protected from prices of crude oil — the raw material for petrol, diesel and other fuels — so much that it was always a major event when a policy tampered with the pump prices of products.
In most other countries, including many oil-rich nations, citizens are used to waking up one day to discover that pump prices have changed. By the following week, prices can change again. As crude prices rise, pump prices rise. As crude prices drop, pump prices drop. This is because crude prices determine product prices. Additionally, their governments charge VAT and fuel duty on every litre. It is no news to them when pump prices rise or drop. It is something they are used to. But this is an entirely new experience for us in Nigeria. We usually argued and fought over whether or not pump prices should be adjusted. Political considerations often carried the day. Public peace is precious.
I have been carefully observing reactions to the rising cost of living. Supporters of the Peoples Democratic Party (PDP) and the Labour Party (LP) have come down heavily on the ruling party, the All Progressives Congress (APC). Even some APC supporters are now expressing regrets for supporting President Bola Tinubu. Sarcastic memes are all over social media. Some analysts who had always prescribed the removal of subsidy and the liberalisation of the FX market are having second thoughts because things appear to be spinning out of control — beyond projections. It seems they expected immediate positive impact, such as FX inflow and, consequently, lower rates. They are now fidgety.
I was not surprised that petrol prices went up again. When crude prices hit $80/barrel, worsened by a falling naira, I started panicking. I knew it would reflect on pump prices in a matter of weeks. Actually, high crude prices are not good for the global economy. Only some oil-producing countries and oil companies love high crude prices. My prayer has always been that crude should sell for around $60 in the interest of world peace. As things stand now, anytime crude prices go up, fuel prices will follow sooner than later. If the price of yam goes up, the price or quantity of pounded yam will react. With subsidy gone, Nigerians have lost their age-old protection against high crude prices.
Does it mean that if crude prices hit $120/barrel, we will have to buy petrol at N1,200/litre? That is why some governments intervene. If Nigeria’s oil export is good enough and we earn billions of dollars from the $120/barrel windfall, government can choose to step in. The notion that government should never interfere is an extreme economic ideology. In the UK, for instance, a litre of petrol is £1.45 (about N1,447). This includes a fuel duty of 53p (about N529) and 20 percent VAT (we don’t charge these taxes in Nigeria). What the UK government did recently because of high crude prices was to cut fuel duty to contain the pump prices. The fuel duty cuts will end in March 2024.
I have heard some Nigerians argue that if our refineries were working, we should be buying petrol at N150/litre. That is quite some argument. That was similar to my position 15 years ago. Someone said the N500 billion meant to be distributed to the poorest Nigerians should be spent on building refineries to make petrol cheap. However, this idea raises questions. If crude oil, an internationally traded commodity, is $80 per barrel, at what price would we sell it to local refineries for Nigerians to buy petrol at N150/litre? I don’t know the economics of it but let us say, out of hand, that it would be $15/barrel. That is a whopping discount of $65 per barrel. Well, that is still subsidy and lost income.
While I am enjoying the brickbats between pro- and anti-Tinubu forces on social media, the counterfactual of the situation is: would Alhaji Atiku Abubakar (PDP) or Peter Obi (Labour Party) have retained petrol price at N185/litre and maintained multiple exchange rates? Were either to win the election petition and be inaugurated as president, should we expect petrol to return to N185/litre and “official” FX rate back at N420/$? I am yet to hear from Atiku on this, but Obi has said, concerning petrol subsidy, that he would have put some palliatives in place prior to the removal. This sounds fine. That means he agrees with these difficult policies but prefers a different approach.
Politics apart, the truth is that NIGERIA IS BROKE. There was a time we could afford the subsidy bill. When oil exports were bringing around $5 billion monthly into the federation account, we could afford to burn $200 million on subsidy every month, even if experts often argue that it is a waste and that the money could be better spent. But, at least, we had the war chest. We used to robustly “defend” the naira by meeting all FX demands and keeping the rates around N165/$. What many Nigerians don’t understand is that as at today, we don’t have that kind of money again. We earn virtually nothing from oil exports. We even mortgaged future production as so to sell petrol for N185.
When some Nigerians argue that the country is rich and can afford to pay for this and that, they are probably unaware that we are spending almost all our revenue on servicing debts. If we are paying salaries and contractors regularly today, it is because we are taking loans upon loans. How can you be spending 95 percent of your salary on paying debts and then borrow to buy food and pay your maiguard and still claim to be rich? Something has to give if you want to continue to be a living thing. In this same country in the 1980s, we queued to buy essential commodities, such as milk and rice, because there was no forex to import in abundance. We were heading towards that quagmire again.
Delayed adjustments can be very painful. Whereunto shall I liken Nigeria’s case? It is like unto a man whom the doctor has assessed and advised to watch his cholesterol. The doctor recommends dietary and lifestyle changes to keep it under control, but the man ignores it since he cannot see or feel any problem. His cholesterol goes higher and higher. The doctor then prescribes daily cholesterol-lowering medication. The man only uses it when he likes. Years later, he starts having excruciating chest pains owing to repeated heart attacks. He now needs a painful, very costly but life-saving surgery on the coronary artery to mitigate his coronary heart disease after ignoring doctor’s advice.
Or shall I liken the Nigerian economy unto a man diagnosed with borderline hypertension and advised to make necessary adjustments? The man says he cannot eat meals that are not rich in salt and he cannot imagine himself snubbing a chilled bottle of beer. He eventually gets diagnosed with hypertension and is advised by his doctor to take his anti-hypertensive medication daily but he chooses to do as his spirit directs, sometimes skipping weeks. The kidneys, which have been bearing the brunt of high blood pressure for years, then pack up. He now requires dialysis every other day or a kidney transplant to stay alive. Both are very expensive, disheartening and painful processes.
Having said all of this, though, I believe Tinubu could have implemented and communicated his economic reforms better. As Obi said, the way and manner the subsidy was removed was akin to extracting a tooth without anaesthesia. While I agree that subsidy removal will always come with pains no matter the timing and the strategy, a lot of prior groundwork should have been done to lessen the pains. At the heart of economic activities in Nigeria are fuel prices and exchange rates. I may be wrong, but I sense that Tinubu did not have a timetable. It is good that he is now trying to cushion the effects but it looks to me like an afterthought. He clearly put the cart before the horse.
Although “this new government will favour me” has become a joke because of the harsher economic times brought upon us by these reforms, I am ready to bear the pains insomuch as I am assured that I would not suffer in vain. I am ready to sacrifice in the hope that my leaders will sacrifice too. That is why I am proposing here today that we should channel our pains into positive energy in order to engage in constructive civic engagement with our leaders at all levels — not just Abuja, as is our wont. All tiers of government will share from the benefits of these twin policies. The adjustment pains must motivate us to have a change of attitude towards the campaign for public accountability.
Where do I fit in? Where do you fit in? For a start, we need to be rigorously dissecting the budgets at federal, state and local levels. What is the justification for every budgetary item? How is the revenue being spent? Was the road in the budget built? Was the health centre revamped? Were the teachers recruited? Why are we building an airport when people are drinking from the stream and dying of cholera? As a journalist, I hereby re-commit myself to asking the hard questions. More Nigerians must come on board. If the pains of these reforms do not push us into demanding good governance, then we will, of all nations, be most miserable — and our latter end will be worse than the former.
AND FOUR OTHER THINGS…
SUBSIDY SACRIFICE
I was happy to hear that the three tiers of government have agreed to save N1 trillion from the record N1.9 trillion that accrued to the federation account in June 2023. We need to stop “eating with ten fingers”. And to avoid the benefits of the economic reforms going into frivolous and wasteful expenses, an infrastructure support fund (ISF) will be set up with specific mandate to intervene in transportation, agriculture, health, basic education, power and water resources. Otherwise, everything could go into overheads and building palaces for our governors (as usual). Nigerians now have to closely monitor implementation to make sure this will not be a mass scam. Accountability.
TRIBUNAL TROUBLES
All eyes are now on the presidential tribunal to deliver judgment on the petitions filed by the PDP and the Labour Party challenging the declaration of Bola Tinubu (APC) as the winner of the 2023 presidential poll. From an unproven allegation that the chief justice disguised on a wheelchair to meet with Tinubu in London to fictitious reports that a member of the panel had resigned because he was put under “political pressure”, this must count as the most dramatic petition in this democratic dispensation. My astonishment is the way parties before the tribunal are making highly sub judicial statements in the media. I honestly have never seen anything like this before. Amazing.
OIL AND JAZZ
Did you read that a private security outfit intercepted a vessel with crude oil stolen from Ondo state a couple of weeks ago? The outfit, reportedly owned by a former Niger Delta militant, said it burnt the 800,000-litre vessel and its contents to sound a “note of warning” to other oil thieves. NNPC said the vessel had been operating “undetected” for 12 years. I have some questions. One, why destroy 800,000 litres rather than reclaim the contents? Two, how can a vessel operate for 12 years (NNPC was so exact) without detection? Above all, where was the navy in all this? There is something they are not telling us, and it is more saddening that Nigerians are not asking these questions. Vigilance.
AND FINALLY…
After the Igbo/Yoruba online war over the Mmesoma Ejimeke/UMTE result forgery saga — during which many Nigerians gleefully displayed their barely disguised ethnic chauvinism — I noticed some calm last week. It may well be the peace of the graveyard but at least we had some breathing space. Long may it last! But don’t bet on it: all it takes to start another ethnic baiting and cyber combat is for a Yoruba or Igbo driver to beat the red light. We would then start hearing “bigot” and “no man’s land” again, complete with Civil War tales and counter-tales. I do not expect this bitter war to end this year or next, but we need to enjoy this peace — or is it armistice — while it lasts. Amusing.
Source: Top Stories