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Monday, February 26, 2024

Looking Beyond Subsidy



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The removal of subsidy from petrol is inevitable. Was there really a subsidy? I do not know. Was it being paid? Yes. Should it be stopped? Yes. When? Now! Knowing the firestorm it would and has unleashed across the land, the decision to end it is an act of courage born out of what I believe are personal attributes and an urgent need to change the way things are done. I believe this courage under fire displayed by President Jonathan is partly due to the fact that he is not interested in a second term, because no politician interested in one would put his neck on the political chopping block as he has done. It is an act of courage to remove the subsidy and correct a standing malfeasance through which our nation has been bled white by very few people. Such malfeasance called subsidy that President Jonathan inherited cannot be irrevocable however painful the temporary pains of its revocation will be.

Let us look at the current evidence of our own collective experience. Is there anyone who still remember when we bought mobile phone SIM cards for close to N50, 000 each and made calls for which we were charged N50 per minute, and even if network failure terminated the call after only one second, we still paid the N50? And before then shelled out N100, 000 for NITEL and N170, 000 for Multilinks lines?

Today, SIM cards are sold for N200 and for as little as N2, 500, anyone can get a SIM card and handset and make calls for N10 a minute. Some ten, eleven years ago, no one thought this was possible.

Like mobile phone call rates fell from N50 to N10 per minute and Blackberry subscription came down from a princely monthly subscription of N10, 000 to N1, 500 presently, so the price of fuel will fall. How? In an economy like ours, price is the best competitive tool for products that have no significant observable or experiential differences like telephone calls and petrol. Petroleum marketing companies will be forced by the new competitive reality to begin to sell at lower prices very soon. The only way to do that is to eliminate inefficiencies embedded in the cost of business. These will include the unconscionable tendency to leave fuel laden ships on the high seas where mindless demurrage accumulates because the subsidy regime will pay for it. It includes the bloated overhead costs across board, massive corruption at every level including the government officials who approve subsidy payments for different companies, round tripping in which the same cargo of petrol is presented more than once for subsidy payment. Competitive impulses will force these companies to eliminate these embedded inefficiencies and corruption and compete. Yes, prices will not go down to N65 per litre but they will go down eventually to below N100 in the short run, forced down by what will become cutthroat competition where like mobile phone companies, petroleum marketing companies will begin to offer all kinds of promotion, ‘buy five litres for the price of four’. ‘Win N1m for every 25 litres you buy for 20 customers every month!’

At the subsidy era price regime, it was not profitable for businesses to set up refineries in Nigeria. Think about it, this is Africa’s biggest market. If it was remotely profitable, we would have had private refineries before now. Removal of subsidy is a game changer. To enhance or even create their own competitive advantages, some of these petroleum marketing companies will start building refineries here for local and export markets and develop related core competences. The telecoms companies are going into alliances sharing masts to reduce cost. I envisage a time when two or more, less financially muscular petroleum marketing companies will band together to build refineries and massive tank farms to share costs. And just like the mobile telephone companies are moving on beyond basic phone calls and SMS to the provision of internet services and other sophisticated telecoms services and products, these refineries will move beyond petrol to petrol chemicals production in a natural, sensible way.

The building blocks for industrialisation are flat sheets and petrol chemicals. Everything around you, in your home and office, including the clothes you are wearing as you read this piece has petrol chemical content. Yet we import all of them for all the industries in Nigeria. What this means is that the market for petrochemicals as industrial raw materials in Nigeria is very huge and on its own, without adding the huge export potential is enough incentive for the builders of refineries to expand into it. Ultimately, this too, like the local production of fuel will create jobs and save massive amounts of foreign exchange and significantly boost the value of the Naira. It will directly lead to the continuous expansion of our industrial base, whose increasing demand for locally produced petrol chemical raw materials will lead to across the board economies of scale, bringing costs and prices further down.

Local production of petrol chemical raw materials will eliminate the long time it takes the imported ones to arrive, shaving off shipping, marine insurance and other related costs. Eventually, this will translate to lower product prices, ending of dumping of many products because locally produced equivalents can compete in terms of price. The multiplier effect is massive as lower prices will boost demand and increased demand will boost production and increased production will lead to increased employment. Additionally, tax and VAT revenues will increase as success feeds on success.

Competitive pressures amongst the petroleum marketing companies will be all encompassing. I will explain. Right now a lot of people are stuck with their mobile phone networks in spite of lousy services only because all their friends and customers already know those numbers. The same will not apply to buying fuel. If news spreads that a particular petrol marketer is fraudulently adjusting their pumps or that they are importing substandard fuel that is damaging engines, customers will not need a consumer protection agency meeting before voting with their wallets! Competition will ensure quality products, fair pricing, accurate pumps and other value adding products and services. I expect there will be mergers and acquisitions and the entrance of major new players, foreign and domestic seeking a foothold in Africa’s biggest market. It is possible that with fierce competition, falling cost of doing business in Nigeria, market enhanced positive foreign exchange rate for the Naira, that petrol will eventually sell below N65 per litre.

Competition is beautiful. The price of internet modems are steadily falling and one of the competitors has introduced data rollover, something new that prior to this time was not allowed by others. The argument for government to build more refineries is like saying government should build more NITELs, more NEPA, etc, rather than open up every sector to competition. The truth is governments all over the world are notoriously inefficient running itself, talk less of running business outfits. The Soviet Union collapsed under the impossible weight of trying to produce everything which they subsidised to create the false impression of a people’s paradise. Margaret Thatcher knew better and privatised many government owned businesses in the United Kingdom and withdrew state subsidy from others when she was the Prime Minister.

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What we should concern ourselves with now is how to hold government accountable for the use of the savings from subsidy removal. Every government before this one lied and deceived us and we have come to expect there will always be a huge difference between the promises of government and what citizens get. Based on this, we must hold this government accountable on how and what the savings will be used for. Government has to tell us in clear terms what they plan to use the savings for and get feedback from us on what counts for us citizens and adjust accordingly. The confidence building measures must start now. Here are a few pointers.

The educational sector is almost dead, killed by evil negligence, a pointer to what kind of future to expect if we do nothing to correct the decay. I would like the government to tell us what portion of the savings will go into education and set up an education committee (not an unwieldy one) with Archbishop Anthony Okogie and fearless, fair minded people like him on it to use the fund to rebuild educational infrastructure, design and carry out teachers retraining, and fashion out a 21st century syllabus, drawing from Archbishop Okogie’s rich hands on experience in turning around the returned Catholic schools in the Lagos Archdiocese. A man like him will insist only on the right things being done.

Albert Winsemius, a Dutch, was a co-designer of the policies that created the economic miracle in Singapore in one generation. We have our own Dr Ngozi Okonjo Iweala doing the same for us. Committees similar to the one on education should be set up to superintend projects in critical sectors of the economy under her watch. These committees will ensure that policies are followed through with the money made available and agreed upon global standards adhered to and carried out to the letter. These committees will not be made up of recycled politicians or civil servants who have completely lost the confidence of the people. They have to be men and women of clean character, such as Professor Wole Soyinka, Olisa Agbakoba, Femi Falana, Colonel Abubakar Umar, Atedo Peterside and so on. Make the people feel joint ownership of the projects. If it is a road project, the people want to know who got the contract, how much it is worth, timeline for completion, thickness of the road, etc. Do not be surprised if citizens show up with rulers to measure and verify thickness is as published. Then give weekly updates on progress, for instance on how many kilometres was tarred that week, the scope of work for the coming week, etc. If the construction companies are falling behind, we want to know why immediately, not after one year of project abandonment. And if it is because of lack of funds, we will know the government broke the moral tripartite agreement between them, the people and the construction companies and hold them responsible. Then all Nigerians will hit the streets to demonstrate against them for reneging on a road contract wherever it is located. If you refuse to take part in the demonstration because the road in question is in a part of the country different from yours, when the contract in your own part is similarly affected, no one will demonstrate with you!

The lack of trust of the people for government is so thick you could cut it with a knife. The promise to provide 1,600 buses is seen as a knee jerk response typical of government. It is citizen cynicism on full display.  Nobody believes those buses will be bought and if bought that the prices will not be outrageously padded. President Jonathan announced not long ago that government procurements will hence forth be directly from manufacturers. This, he said is to stop sharp practices, have concrete maintenance contracts and so on. Everybody remembers that Siemens of Germany was both the manufacturer and contractor and Halliburton of United States was a direct contractor who still padded contracts to accommodate massive bribes given to named high Nigerian government officials. Nigerians are all watching and the only thing government can do now is to enhance confidence building measures by publishing all contract sums, the names of contractors, scope of work, duration and invite citizens to check and compare them with the value of similar projects elsewhere. Citizens are sick and tired of learning after contracts have been executed that the money spent could have funded two or three similar projects elsewhere or that the technology dumped on us is ancient and not state of the art. Ajaokuta Steel Mill is a permanent testament on this.

In 2010, it was said by political contestants that the nation would be made ungovernable if zoning is jettisoned but I do not believe those who made those statements then are the ones behind the current violence rocking the nation. I believe that there are elements who have decided to borrow those comments and fulfil them as a prophecy foretold. These forces have their plans worked out to engulf the whole nation with violence. How long will it take before their primary and most visible targets, Igbos and Christians resist retaliation in Igboland and the Niger Delta? If the retaliation begins, the vast majority of uninvolved Northern Muslims will see the retaliatory attacks in the South as a direct attack on fellow Muslims and react with a general attack on all Southerners and Christians with Jihadists from all corners of the world crossing the porous borders to join. Every attack will lead to more retaliatory attacks and escalation across the nation. What will follow will be the fulfilment of the so called ‘order’ of Boko Haram for Southerners and Christians to leave the North and for Northerners and Muslims to leave the South. Then what? Disintegration? Nigeria is not the former Czechoslovakia that split into two neat nations without firing a catapult. How many pieces will Nigeria break into? Some will say Oduduwa Republic that will include Kwara state, Biafra comprising the South East states, Niger Delta Republic made up of all the states of the Niger Delta. With the current realities, it is obvious Benue, Plateau, Kogi and Taraba states, being predominantly Christians will not want to be part of the predominantly Muslim North. Will they form a new nation? Or become separate nations? Will this stop the crisis in Plateau Republic? And what makes us think the core North made up of the Hausas, Fulanis, Gwaris, Kanuris and many other tribes will be a haven of peace as Arewa Republic? ? If Akwa Ibom and Cross River states decide to become Cross River Republic, they have Cameroon on their border with an eye on the crude oil in their territory. Perhaps, apart from Biafra and Oduduwa Republics that will be reasonably homogenous, the other surrounding republics will be so fractious their instability will cross borders. The refugee crisis that will arise is better imagined than experienced.

The truth is we are better off as one nation in a proper federation where nationalities can grow at their own pace, a fact that will spur healthy competition as was so evident during the first republic. What should we do to give ourselves the gift of a nation designed to be the best that it can be? First the call for President Jonathan to resign is unjustifiable because if he does resign because some elements want to fulfil political statements made during elections, then a dangerous precedent would have been set and the Niger Delta will again go up in flames worst than the last one with no end in sight.

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There is no doubt that there are many who want President Jonathan to leave and it is simply because they view him as the most dangerous politician in the land. What precisely makes Jonathan dangerous to these men? He is not looking for a second term and consequently is not afraid to step on toes to irrevocably dismantle all the structures erected to continually bleed this nation. He proved it when through his direct intervention fuel started selling across the nation at N65 when he became Acting President. What did he do that previous leaders could not have done? He has shocked them again by removing subsidy that is killing us. The question on the lips of those fanning the Jonathan must go crusade is, ‘where, what, which of their entrenched interests will he hit next?’ They are scared that in his four year tenure President Jonathan would completely dismantle their negative interests that have spread nothing but misery to all Nigerians. President Jonathan is not the kind of leader we want to be chased out of office. It is a classic doctrine of warfare, military, political, economic or social not to let your ‘enemy’ settle down enough to take the initiative. This is achieved by hitting the enemy consistently from unexpected directions such that he can only react to the attacks. Jonathan’s government is under attack from every corner from within and without, to make it impossible for him to settle down and effect positive permanent change. Because of these multiple crisis, people say he is slow to respond and is indecisive.

Bill Clinton, one of the greatest Presidents of the United States had a horrible first year but he is not judged today by that. Harry Truman as Vice President succeeded President Franklin Roosevelt upon his death. Prior to this succession, Truman was rarely consulted by the president. He was not told the United States was building atomic bombs. He was invisible, regarded as dour, colourless and expected to muddle through and conclude the remaining years of FD Roosevelt’s presidency. Truman proved everyone wrong. He concluded FDR’s presidency and won the following presidential election on his own steam. Even though he left office with a low approval rating, dispassionate analysis of his presidency showed remarkable achievements which included the much talked about Marshall Plan that rebuilt war ravaged Western Europe, supported the creation of the United Nations, took incalculable political risk by ending racial discrimination in the United States Armed Forces, championed the creation of the North Atlantic Treaty Organisation that stood toe to toe against the Soviet Union, authorised the Berlin Airlift to defeat Soviet blockade of the city, prosecuted the Korean War without which there will be no South Korea today. Let us give our president a break and commit him to prayer and I believe like Clinton and Truman, his achievements will be celebrated. A less courageous leader would surrender to these negative interests, muddle through and hand over in 2015 with all the problems grown worse.

Secondly, I would want General Muhammadu Buhari to lead other leaders of the North across political lines to douse the tension up there and to let them know that remaining a part of Nigeria will serve all of us better. General Buhari is one man whose stature has not diminished anywhere in Nigeria as fearless and incorruptible. And his remarks after the Supreme Court’s verdict on the presidential election resonated with many especially his charge to reduce tension in the land and calmly without emotion redesign Nigeria. If he agrees to help Nigeria in her hour of need, he will end up as one of the true fathers of modern Nigeria, an appellation sycophants have bestowed on other less deserving men. In this task he will need to work with General Ibrahim Babangida, Abubakar Atiku and the so many other northerners who still believe Nigeria is worth saving. It will be a shame if the United States National Intelligence Estimate that Nigeria will break up around 2015 becomes a prophecy fulfilled because we failed to take action to halt what is a steady trot to the brink.

Credible leaders across the North and the South should begin to sensitise their people on the ultimate game plan of anarchists in our midst and urge them not to retaliate even under extreme provocation and to remind one and all that saving Nigeria is a collective project that requires our committed involvement.

I am a Christian and will remain one. I started reading the Koran in December 2011, currently on page 370. It has exposed to me the lie that the anarchists in our midst represent Islam. They cannot by any stretch of the imagination be killing senselessly for the Allah the Koran described as the Eternally Merciful, the Especially Merciful, the Continually Merciful. By these words, I understand Allah is not a God of partial or occasional mercifulness but of permanent mercifulness. These killers by their actions have denied the Allah they claim to be killing for. I intend to finish it, and then read the Hadith – The Garden of the Righteous and Fiqh-us Sunna because I want to better understand what governs the lives of half of our population. Before I opened the Koran, I did not know the prophets of the Bible and Jesus were mentioned not in passing but in copious veneration and that Christians are called people of the Scripture or people of the Book.  Through other studies I discovered that the word fatwa means religious judgements, rulings or opinions that are made in millions of places all over the world everyday concerning everyday issues. I found out too through a dear Muslim friend who also suggested the title of the Hadith to read, that jihad does not necessarily mean holy war against someone or people but also means a personal war directed at oneself to overcome personal habits. I recommend this jihad to the anarchists in our midst to wage personal jihad against their hatred for Southerners and Christians. Our common enemies are not each other but poverty, disease and hunger.

We have spent years looking for and emphasising our differences and magnifying them. Each time I go to the online news portals, I practically dodge bullets and bombs people haul at each other across religious and ethnic lines. That is what happens when tempers reach breaking point as occasionally happens to all of us. When we succeed in seeing how all that unite us are greater than what divides us, it will become easier to sit down and redesign Nigeria without negative emotions.

Okechukwu Peter Nwobu


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