Editorial
Economic emergency without palliative measures
This week, the two labour centres, Nigeria Labour Congress and Trade Union Congress, will begin nation wide protests against government handling of subsidy removal policy without palliatives, which has worsened hardship in the country.
In one fell swoop, President Bola Tinubu, who promised Nigerians “Renewed Hope” descended on Nigerians with two undigested and devastating policies, knocking them into more penury. He stopped the so-called subsidy on Premium Motor Spirit (PMS) on the day of his swearing-in and, then, floated the Naira exchange rate to market forces.
PMS now sells for between N617 and N700 per litre across the country, up from N165, while the Naira exchanges with one United States Dollar for almost N900, up from N460. The aftermath of these economic measures has been unprecedented rise in transportation fares and in prices of food and other essential items, resulting in untold hardship for the people. This type of callous bravado is unknown to democratic governance anywhere in the world. We, at Business Hallmark, totally condemn the flippant manner the policies were introduced and the impact of Nigerians.
Even General Sani Abacha (a soldier, perhaps, without formal training in economics) realized that transportation is a fundamental need of all and sundry and that tampering with the pump price of fuel would, automatically, translate to higher price levels of goods and services that would create hardship for the people.
Though the Naira exchange rate, interest rate and other macro-economic fundamentals were stable and the manufacturing sector relatively thrived, yet, before he could take that step in 1994, he dialogued with the people all around the country and created the Petroleum Trust Fund into which was paid the differential revenues from the price hike which was used in funding concrete projects in public transportation, primary health care, basic education and rural roads and infrastructure and so on, to cushion the deleterious effects.
Dr. Goodluck Jonathan followed a similar suit of preparation in 2012, yet was not allowed to proceed with fuel subsidy withdrawal by the malicious campaign of the camp of the same man, who has, now, taken the people to the cleaners by removing the same subsidy entirely and precipitately, when the economic and social conditions of the people are much worse than they were in 2012.
PMS pump price has jumped by about 300 percent and transport fares, in most cases, likewise. We totally condemn this volte face. No country can live in denial and deception and still survive.
To add insult to injury, months after the measures had been taken, nothing has been done to ameliorate the anguish of the people. There have only been proposals and expressions on intent. The offer of a paltry palliative of N8,000 per household, per month, for six months by cash transfer to 12 million households, which is laughable, was withdrawn for review following public outcry. By 2022, 133 million Nigerians were multi-dimensionally poor. There would be many more, today and you are bidding for only 12 million households!
Moreover, from experience, the cash transfers would end up dissipated in opacity, in the selection of beneficiaries and disbursement of funds. Expectedly, it was stridently opposed by the people.
There are more productive areas to focus in providing palliatives. They include public transportation; food security; security of life and property and tax reduction and social services, including primary healthcare and basic education.
A palliatives program should be measured by multiplier effect. Direct cash transfers of N8,000 per month to 12 million households in a country of 200 million, majority of who are multi-dimensionally poor, is a drop of water in a pond. The multiplier effect is limited, whereas, access to cheap public transport (which would also convey food from rural areas to cities), affordable primary healthcare and free basic education will impact most people.
Provision of adequate security would motivate farmers to return to farms, while rural roads and transport would reduce post-harvest losses. Local vehicle manufacturers could be empowered to produce vehicles, which would create local capacity and jobs in the transport sector.
Expanding health services will encourage drug makers, foster job creation for nurses, doctors and other healthcare personnel and improve the health and well-being of the people. Reduction in corporate and personal tax and services would put more money in the pockets of people, too.
Government should always think of measures, which could, directly or indirectly, impact positively on employment, incomes, savings and investment, to the largest possible number of people, without which there cannot be macro-economic stability and without which there cannot be economic growth nor abatement in insecurity.
It is worrisome that this generation of leaders fail to think out of the box and continue behaving in the old way while expecting a different result. In particular, they have failed to adapt textbook and World Bank prescriptions to Nigeria’s peculiarities. As it was yesterday, so it is, today, in the walk to perdition.
There is no country without one form of subsidy or the other, depending on where the shoe pinches. It is transparency that makes the difference. For example, in an unproductive economy, with inelastic demand for foreign currencies, such as Nigeria, you dare not float the currency because there is nothing to wedge the fall. Like fuel subsidy, dual exchange rate is not the problem but its abuse.
All the travails of Nigeria point to moral and financial corruption, for which leaders are to blame, more than the led. In connection with fuel subsidy, the failure of Nigerian governments, over the years, to maintain refineries for self-sufficiency in petroleum products, is the hallmark of this corruption. Without moral rearmament, there is no measure that can take Nigeria away from the seld destructive road. You cannot place the cart before the horse and hope to blaze to your destination.
Unfortunately, President Tinubu seems to believe otherwise. There is nothing in his style or that of other principal officers of his administration to demonstrate a tendency towards a new culture of prudence and transparency. They are not curbing wastes and leakages in public finance. They are not cutting the cost of governance. Instead, aggrandizement and rascality seem to be getting worse.
