Why (Most) Nigerians Oppose Subsidy Removal

SIMONKOLAWOLELIVE! BY SIMON KOLAWOLE

On Monday afternoon, my friend in Benin, Edo state, went to his father’s house for some daddy-and-son time. His fuel gauge was on red, but because the next gas station was on the other side of the road and he would need to make a long turn, he decided to buy petrol on his way back. That was what his driver suggested anyway. After watching President Bola Ahmed Tinubu’s inauguration and listening to his speech, he headed back home. But the world had changed within the twinkle of an eye. He ran into a sudden traffic caused by fuel queues. That was when he remembered Tinubu’s statement of “subsidy is gone!” which was instantly greeted with petrol “scarcity” all over Nigeria.

With all of Tinubu’s experience in government, I thought a presidential pronouncement on such a very sensitive and emotive topic could have been better managed. There are people who have built their careers on opposing the removal of petrol subsidy and you do not expect them to take it lying down. Policy communication is as important as the policy itself. Many good policies have suffered miserable death in the slaughter room of populist activism partly because of the way they were communicated or marketed. One mistake many policy makers make over and again is to assume that if a policy makes sense and has benefits, it would be readily embraced. It doesn’t work like that.

I do not suggest that if a good policy is well marketed, there would be no resistance. It also doesn’t work like that. However, there are people who genuinely want to understand a policy and its promises. There are people who want to be persuaded so that they too can persuade others. In reality, there will always be resistance to the removal of petrol subsidy in Nigeria, no matter how well you communicate it. But you have a duty to sell the idea to educate your people, especially the new generation of Nigerians some of who believe that the UN will take over a country if a public protest goes on for three weeks or that INEC can only announce election results between 8am and 4pm.

I must also admit that there is no best time to remove petrol subsidy. No matter when you remove it — morning, noon or night; January, May or October; Sunday, Wednesday or Friday — there will always be some resistance. You do not withdraw a 50-year-old benefit that Nigerians have taken as a birth right and expect them to give you a standing ovation. It is our entitlement, as far as we can see. Since we hit oil boom in 1973, we have been hooked on subsidies, most of which we have got rid of — like giving meal tickets to university students and even paying for their laundry. We have successfully ended subsidies on diesel, gas and kerosene. But petrol is the most stubborn of them all.

Why do most Nigerians oppose the removal of petrol subsidy? At this point, I would like to speak for myself. I was a fierce advocate of petrol subsidy — until shortly before President Goodluck Jonathan pulled the trigger in 2012. By then, I had become more receptive to the economic case. I used to be nauseated with the argument that removing subsidy would curb smuggling, which I considered a grand celebration of the weakness and incompetence of state institutions. That Nigeria’s petrol was the cheapest in the world, as was being advanced as a major reason to remove subsidy, was also a problematic argument to me because I didn’t see why anybody should be saddened by that.

But the core economic argument that won me over in 2011 was that petrol subsidy was not an efficient way of spending a country’s resources. If you must subsidise, pick the productive link in the economic chain, not the consumption point. I think it was the then CBN governor, Mallam Sanusi Lamido Sanusi, that kept hammering on that. Moreso, why pour trillions of naira into subsidising petrol when healthcare, education, power and roads are crying for help on a daily basis? Is that not a more efficient way of spending money compared to dispensing petrol at subsidised pump prices? These arguments resonated with me more than the claim that petrol was cheaper than Coke.

It got more interesting for me when Jonathan withdrew the subsidy in January 2012 and some of those who openly supported it were lobbying me, through back channels, to argue against it in my writings. I was shocked. All my life, I had been playing into the hands of these buccaneers with my pro-subsidy campaign which I thought was helping the poor. It finally dawned on me that the more government retained the subsidy, the more these buccaneers profited from the system and the less the real object of my campaign benefited. Jonathan was, unfortunately, forced to beat a retreat as the opposition parties came after him. Otherwise, we would have passed this stage ages ago.

Nevertheless, there were two fundamental reasons for my lifelong opposition to the removal of petrol subsidy until I abandoned my position in 2011. One, I strongly believed (and still believe) that the poorest Nigerians would suffer the most, at least in the short run, in terms of the cost of living, particularly as transportation is a major expense in most Nigerian cities. Two, I did not (and still do not) trust the government to spend the gains judiciously and make life better for Nigerians. There were other reasons — such as the smuggling argument — but those were tangential. Generally, I was never in the mood for anti-subsidy debates and I dedicated my life to savaging the campaign.

On my first point, for instance, there is no doubt that the burden of subsidy removal is disproportionately borne by the poorest whose incomes can barely sustain their living costs. Transport fares go up instantly and they have no wriggle room to deal with it. For an economy that runs largely on “I pass my neighbour” generators, cost of doing business for barbers, beauty salons, eateries and vulcanisers will go up. Cost of food items will go up, notably in the cities which rely on road transportation for supplies. Poor people will surely suffer. This was my position when I was a pro-subsidy campaigner and it remains my position even as I am now in support of subsidy removal.

The issue now is: how do you make things less painful for the poorest? This takes me to my second point. The N3 trillion we have spent on subsidy this year alone is enough to make public hospitals hospitable to Nigerians. If we pour N3 trillion into the health sector today, buying the necessary equipment and drugs, upgrading the wards and paying the medical personnel decent wages and benefits, the “poorest of the poor” would feel the impact. If we choose to pour the N3 trillion into public schools, modernising the infrastructure, training teachers and treating them as human beings, the “poorest” would benefit and be glad. People need to experience, not just hear of, the benefits.

Obviously, the core reason for opposition to subsidy removal is lack of trust in government. People would rather petrol sells at N185/litre and their daily transport fare remains N500 than to be promised better life if petrol is N500/litre and transport fare goes to N1000. They would prefer the devil they know. Besides, many believe that “if not for corruption” Nigeria is rich enough to spend N6 trillion yearly on subsidy and still provide free electricity, free education and free healthcare. Many do not know that we currently owe over N46 trillion. Even if no kobo is stolen, we are in a mess. The simple truth is that we cannot afford petrol subsidy anymore. The economy is choking to death.

In fairness, Nigerians have earned the right not to trust the government. Of all the fuel price increases and the promises of better life in the last 40 years, why are we still here? Why are most roads, schools and hospitals still like this? Why are primary healthcare centres still lacking in basic drugs and personnel? Why are primary schools still lacking chalks and good teachers? Why are public taps still dry and poor people are drinking from the stream and contracting cholera? And we keep reading that one minister has stolen N20 billion, one governor has bought private jets, and one commissioner has mansions. And we expect poor Nigerians to embrace subsidy removal like a pillow!

In our history, only once or twice has the government increased petrol price and the people could point to how the gains were spent to improve their lot. In November 1994, Gen Sani Abacha raised the price and set up an intervention agency to rebuild public infrastructure, mostly roads, healthcare, education and water. That remains the gold standard. Alas, we are now operating a federal democracy and the president cannot dictate to states on how to spend their money. If Tinubu says let’s modernise hospitals but a governor says it is “cargo airport” that he wants to build in a state with poor health facilities, what can the president do? Nothing. That is our “true federalism”.

The best way forward, nonetheless, is for the government to win the trust of the people. As a starting point, I propose that all the revenue that will accrue to every tier of government from petrol subsidy removal should be isolated into a special fund and spent on specific social intervention programmes. Agreed, no tier of government can dictate to the other on how to spend its funds, but they can mutually reach a consensus in the interest of national development. How these funds are spent should also be publicised monthly for transparency and peer review purposes. Tinubu, as the leader, has to work harmoniously with the governors to deliver dividends from this subsidy removal.

AND FOUR OTHER THINGS…

FAREWELL, DOKPESI

Dr Raymond Aleogho Dokpesi died on Monday after falling on his treadmill while recuperating reportedly from a stroke that had held him down for months. It was so painful. The maritime engineer is best known as the founder of Ray Power 100 — Nigeria’s first private radio station. He later launched the African Independent Television (AIT). With Ray Power and AIT, Dokpesi built men and women and contributed in no little way to the growth of journalism and entertainment industry. I first heard his name in a Sunny Ade song decades ago but I had no idea who he was, only to learn that he owned Africa Ocean Lines, Africa’s first indigenous shipping line. He was a great man. Adieu.

MIND THE GAP

Although President Bola Ahmed Tinubu has spent less than one week in office and deserves his honeymoon, some things need to be handled better in the days ahead. For one, press statements have been signed by at least three different persons. We in the media don’t even know who to relate with. We are practically scavenging for photographs of official engagements on the internet. Senator Remi Tinubu, the first lady, tweeted congratulations to Rt Hon Femi Gbajabiamila before he was officially announced as the chief of staff. The transition between the Buhari and Tinubu administrations was not as seamless as you would expect of people from the same party. Lacuna.

ACT OF COMMISSION

The senate passed an amendment bill last week effectively castrating the chairman of the Independent Corrupt Practices and Other Related Offences Commission (ICPC). After reading the amendments to the ICPC Act, I concluded that the commission does not need a chairman any longer. The board will be able to meet at his back and appoint a member to preside. Certain provisions mentioning the “chairman” have been replaced with “commission”. Could it be that the current chairman, Prof Bolaji Owasanoye, has stepped on some toes and the senators believe the best way to deal with him is to destroy the 22-year-old institution? Will he be chairman forever? Bewildering.

DSS VS EFCC

Nigerians woke up on Tuesday to the disturbing news that there was some beef between the Department of State Services (DSS) and the Economic and Financial Crimes Commission (EFCC) at the Ikoyi office whose entrance they both share. They are in the same compound. The property used to belong to a DSS legacy agency before EFCC was created. Until now, there was no sign of any dispute or tension between the two. The EFCC accused the DSS of preventing its staff from gaining access to the office. The DSS response was coded. I still do not understand what went down but I hope we will never witness anything like this again. Not a good way of welcoming a new president. Mysterious.