Regrettably, the vast majority of those who oppose the oil subsidy removal are doing so for several reasons that are not shared equally across their ranks:
a) some oppose the oil subsidy for political reasons–they will oppose any proposal from the current government– even one in which the government could have suggested that the sun will rise tomorrow morning and set in the evening.
b) some oppose the removal of the oil subsidy simply based on gut instincts and on their basic distrust of government and not on any economic basis or possession of any knowledge about what goes on in the downstream oil sector in Nigeria.
They believe, and I must admit that I also share a bit of their skepticism that most of the money saved from the subsidy would only end up in the pockets of the corrupt politicians and senior bureaucrats and their cronies in the private sector. To this category of non-believers we need to ask whether the continuation of the subsidy program would not lead to a continuation of the same corrupt practices which currently permeate the oil subsidy program.
c) some other opponents of the government decision to remove the subsidy base their arguments solely on the untold hardship that would be brought on the masses who are already suffering. But would the continuation of the oil subsidy suddenly remove all of the economic problems in Nigeria? Would it stop the people who are stealing government funds from stealing? If oil subsidy were the panacea for poverty in Nigeria, why hasn’t the same program eradicated or at least put a small dent in the poverty rate in Nigeria for all the years that it has been in place? Could it be that the real people who are benefiting form the oil subsidy are not the poor but the cabal that runs the oil import cartel?
d) Some say they oppose the removal of the oil subsidy because the timing is wrong even though they can see some merit in the decision.
e) Some others insist that the government must first completely eliminate official corruption before embarking on any progressive program. This is the group I would label as one track minded fellow compatriots. What stops the government from working to eliminate corruption while at the same restructuring the economy to make it more diversified and more viable?
f) finally some other opponents of the removal of the subsidy program–the ones I consider most irritating are those who are simply behaving like some religious fanatics at a retreat where they continue to listen only to the reverberations of their own voices, leaving no room to examine and consider alternate proposals—while regurgitating the same old worn out arguments that have never worked in the past.
Leaving the oil subsidy in place is like condemning the vast majority of Nigerians to continue living on food stamps–as a social program to alleviate their sufferings. Oil subsidy is just like the food stamps which some jurisdictions in the USA distribute to the poor, with the only difference that in Nigeria the ‘food stamps” i.e. the oil subsidies, instead of being targeted only at the poor who deserve it and need them –are also distributed to the rich, the upper middle and the middle class.
Just like food stamps in the USA, fuel subsidy only provides subsistence living for Nigeria’s poor while further enriching the middle class, upper middle class and the rich; –it does nothing practical to lift the poor out of poverty.
What the poor needs are not handouts but jobs, jobs, jobs and more jobs–especially those that pay living wages.
Relying on cheap oil in Nigeria is like living on rent on an on inherited property without spending any funds to maintain the property. Eventually, the building will crumble and the tenants will leave and the landlord will have no more rent to collect. The corollary to this in the oil industry is when the oil wells finally dry up. This is our fate if we continue to rely only on consumption of subsidized fuel–imported from other countries at a big cost to the Nigerian treasury without developing our own industries.
The huge amounts of money being paid to subsidize imported refined fuel can be invested in building our own refineries in Nigeria. As Sanusi pointed out no one will invest in building a refinery in Nigeria because a liter of PMS refined in Nigeria would cost more than N65 Naira per liter unless we give the owner(s) of the refineries Nigerian crude oil at no cost to them. This is unthinkable. It is time to think beyond short term measures. We need to think long term.
The current course will only lead to disaster. We have a huge population of educated and uneducated youths] who are unemployed. The ranks of unemployed youths will sky rocket in another 5 to 10 years as our economy is not producing enough jobs for the them.
Oil subsidy in Nigeria is a job killer for Nigerians. Subsidizing imported fuel only creates jobs in other countries. Nigeria cannot continue to be a nation of hewer of woods and exporter of crude oil–while producing nothing of added value in any sector. One day the oil wells will dry up? What are we gonna do then?
Decisions in mature democracies throughout the world are not based on the number of people who demonstrate for or against a particular government policy or action, even though public protests along with opinion polls are frequently employed by governments to judge public opinion and reaction to the issues.
The real poll or referendum that counts is the one that are held every four years to elect the President and all other government officials.
While the citizens have the right to peaceful protest, such protests cannot be used to intimidate government to continue programs and policies that no longer work!
President Jonathan and his cabinet should stand firm and be consistent in their decision to remove the fuel subsidy. As I have written before, I would have preferred a gradual approach to the removal of the subsidy –that is phased over a 3 to 4 year period in order to provide a cushion for the shock and the suffering that the inflationary effect of such a sudden increase would have on the poor in Nigeria. Notwithstanding, I will differ to the experts who are currently in charge of the economic policy in Nigeria for not considering a phased approach to the removal of the subsidy.
Dr. Ola Kassim, a founding leader of the Nigerians in Diaspora Organization (NIDO), worldwide, is Chief Pathologist and Director of Laboratory Services of a Health Centre in Canada.
Please check the Features Column of Economic Confidential for hot debates on the Removal of Fuel Subsidy
