By Uche Chris
Again the issue of subsidy is in the air with the recommendation by the Nigeria Governors Forum to peg the pump price at N318 per litre, and the House of Representatives call on government o halt the proposed hike in electricity tariff from July. These are very trying times for most Nigerians, and every time the issue of subsidy removal is mentioned there is anger and dissension. This is quite understandably, because the government over time has failed to make good its words on several promises.
However, Nigerians have themselves to blame for this situation and the increasing economic burden that is being imposed on them by listening to demagogues and discredited arm-chair socialists in the labour unions and civil societies, who do not understand the basic underlining principles of the ideologies they profess, and its relevance in an underdeveloped economy, thereby postponing the evil day and prolonging their sufferings.
It is only in Nigeria that everybody is an expert in the economics of fuel subsidy. Since 1985, when the IBB regime adopted a reform programme to rebuild the economy subsidy removal was one of the five critical issues involved; the other issues included exchange rate liberalization, right sizing of public sector, and privatization, which is also part of subsidy removal.
These constitute the four demons of subsidy which Nigerians must confront seriously or risk a complete collapse of the economy. Government knows it cannot sustain the subsidies yet it is unable to face the labour unions, simply because of political capital. Well, government may continue to gain political capital at the expense of economy prosperity, and in the end, it is the people who bear the brunt.
What is going on in Kaduna is an eye opener of how governments at different levels and times have deceived the people by capitulating to the threats of labour to shut down the economy over subsidy removal. All the governments in Nigeria, including the federal, are affected by the Kaduna situation but they are pretentious and cowardly about the situation as long as they continue to feather their nests.
The truth is that subsidy is damaging the economy, no matter how you look at it and unless they are removed our economic problems will only worsen.
This government came to power declaring that fuel subsidy was a fraud; today they are paying more subsidy than the previous government, which they accused of corruption. The NGFs position is not altruistic; they have finally come around the issues because their allocation is now in jeopardy and CBN is insisting on deduction of the budget support debt.
Let us stop focusing only on fuel subsidy because the entire Nigerian economy is built on subsidy including its politics. Removal of fuel subsidy alone can only reduce our foreign exchange troubles because of fuel importation, but it would not solve the problems of productivity and over-bloated recurrent expenditure, investment promotion and infrastructure deficit, because all these are intertwined and reinforcing.
Labours argument that subsidy is a right because it affords workers a decent standard of living which is guaranteed by the constitution is false and self serving; also the position that all governments, including developed countries, have one form of subsidy or the other is disingenuous and misleading.
It is an argument not informed or based on economic and political history of the world.
Subsidy was never part of capitalism until 1932 following the New Deal policy of FDR, which has morphed over time into the Social Security conundrum; and as well as the communist threat. But then, they introduced it in highly productive capitalist economies, with adequate resources to fund it. Even today, America has become the largest debtor country in the world on account of funding the social security policy.
It is only a fool that desires what he cannot afford; he will either steal as many people do here, or borrow as our government has been doing. Supply of cheap fuel is not a right; how many Nigerians depend on fuel for their livelihood? It is better for it to be expensive and available than for government to waste our resources on the basis of subsidy. People manage resources better than government and they should be allowed to manage their fuel consumption based on affordability.
As many people have argued in the past 40 years, subsidy is unsustainable; so why should we continuing doing what we cannot finish; it only sustains the lavish and wasteful lifestyle of the few at the detriment of the majority. Let nobody vilify Governor El Rufai about the situation in Kaduna; Labour does not fight for anybody but themselves. He is trying to protect the people against resource monopolization by labour.
Our governments have generally proved incapable of running an efficient and productive system because of politics and lack of patriotism; so it is hypocritical for labour to insist on operating the refineries as a remedy. It has never worked and will not work now that Dangote refinery is coming. Those mismanaging the refineries are members of labour Nupeng and Pengasson.
Fuel subsidy is only one of the economic headaches we have; there is forex subsidy where the CBN is spending scarce resources to fight devaluation. Between 2016 and 2018, it spent $34 billion defending the naira; imagine that amount ploughed into the economy? There is subsidy on employment with government spending 83 percent of its resources on recurrent expenditure; and there is subsidy on governance where government bureaucracy and appointees cart away all the resources.
This must stop. Otherwise, the future is bleak. Let us suffer for once to rebuild the economy and give ourselves a hope for the future. Incremental changes and half measures are useless now; Nigeria must restructure both politically and economically to survive. And constitutional amendment is part of it.