Subsidy Removal: Which Should Go First?

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By Tonnie Iredia

In the last couple of years, nothing has elicited as much consensus among Nigerians as the need to remove our famous fuel subsidy.

It was officially scheduled to go by June 30, 2023, that is, exactly one month after the inauguration of a new administration. A few people might have imagined that because of the huge implications of fuel subsidy removal, its implementation might stretch a little later than the end of June 2023.

It was also obvious that except a well-thought-out modality for handling the subject was first put in place, the confusion that would follow a half-baked procedure would be too much to contain. Consequently, no one expected that the removal could be fast-forwarded through the instrumentality of a short sentence until it was suddenly done some 30days ahead of schedule.

The simultaneous clumsy communication of ‘subsidy is gone’ and that it is not with immediate effect while a circular on increase in prices was already in the public domain disorganized all and sundry.

.In Nigeria, fuel subsidy removal could rear many contentious issues.

First, of the many subsidies in different sectors of the country; is it the one on fuel that is the most problematic?

Second, Nigeria is a poor country, will fuel subsidy removal halt the nation’s poverty?

Third, will the removal of fuel subsidy bring to an end, oil theft which has remained a major challenge to Nigeria’s economic growth?

If these questions are appropriately interrogated, our fixation on fuel subsidy removal may produce a moderated perspective that would enable us to observe that as negative as fuel subsidy has become, many people especially the poor are convinced that it is not necessarily the first and the most urgent to go.

One obvious reason why it has been difficult to convince such people about the desirability of fuel subsidy removal is that statements on the subject by successive governments had been largely insincere.

.Indeed, messages on fuel subsidy removal had been allowed to create a stereotype of new singers who are permanently singing an old chorus.

It has always been a cat and rat game between government and the organized labour in which government was always reneging on virtually all its promises on palliatives and investments on infrastructure.

In 2004 for example, it was agreed that every state would receive a grant of N100million from the federal government, to which each state was to add N200 million to flood all our cities with buses.

It didn’t happen despite the aggressiveness of the labour leaders of those days who usually shunned court orders stopping them from strikes. As a result, government assurances were never believed.

In view of this trust deficit, it was difficult to convince the average Nigerian that the removal of subsidy was not ‘a 419’ arrangement.

The situation of lack of faith in government has not changed notwithstanding that there is hardly any option now that there is no budget to fund subsidy.

In addition, Nigerians seem to believe that the much-talked about fuel subsidy does not really exist more so as the supposed recipients have always remained anonymous thereby reverberating the public perception that the subsidy narrative was a scam.

There is in fact the story that apart from the version of officials of the foreign oil companies, Nigerians do not really know how much oil is produced and how much is lifted daily in their country.

It is generally believed that after several years of oil business, oil monitoring equipment and allied facilities in the country were not and are still not controlled by Nigerians. So, why should people trust government?

Another reason why many people particularly the masses will still be hard to persuade that fuel subsidy, perhaps the only privilege of the masses should go is the failure of the proponents of the diagnosis to lead by example.

Nothing in Nigeria’s reported economic challenges shows that our leaders are denying themselves any of their own humungous privileges. The big man still maintains at public expense, a visibly unrealistic retinue of vehicles in his convoy.

How is his previous budget able to cover the new reality of huge cost of fuelling official cars? We are hearing nothing about a cut in office entertainment, and other flamboyant expenditures like foreign trips.

The Murtala/Obasanjo military government acted differently in the 70s by limiting their own official cars to Peugeot 504 to prepare everyone for pruning down official expenditures dictated by the challenges of their time.

Today’s top office holders in Nigeria especially federal legislators still earn millions of naira (they always deny) along with allowances attached to every item such as newspaper allowance that is higher than the salary of a Director in the public service.

A typical former state governor earns at retirement, remuneration higher than he got while in office. Yet, many states always claimed they didn’t have enough resources to pay the scanty minimum wage of the poor.

Of course, the narrative is not only irrational, it is wicked to argue that a rise in the prices of petroleum products which would necessarily raise the cost of transportation should be tolerated in the interest of the nation. Certainly, for charity to begin at home, it makes more sense to first remove the numerous privileges of our leaders.

If government is pretending to be unaware of such subsidies of the rich that should be removed without hesitation, they should listen to the irrepressible Femi Falana who the other day listed 21 of such elite subsidies.

The point being made is that at this juncture of Nigeria’s development, the mismanagement of our resources has brought us to a level where subsidies that can crumble the nation must go. One of such subsidies is the one on fuel; so, it is time for it to go.

But the subsidies of the rich must not be retained because it is only that group that benefits from them unlike the one on fuel which benefits all. Bearing in mind that many poor citizens may not survive an end to subsidy, visible and tangible efforts ought to be made to assist the poor to withstand the resultant harsh realities.

The old narrative of merely politicizing the subject must end. In this regard, different segments in society have roles to play which some are already commendably performing.

A few examples would suffice here. First, in the face of the uproar over the removal of fuel subsidy, a group of bus drivers at a meeting in Lagos quickly resolved to ensure that passengers would not witness astronomical increases in bus fares in their areas of operations.  Second, the University of Jos, immediately approved the deployment of shuttle buses to transport staff and students to and from the University campuses.

Third, two state governments, Kwara and Edo decided to reduce workdays for the workforce in their states to lessen the impact of the subsidy removal on their earnings.

While ensuring that reduced hours of work do not adversely affect productivity, the federal government should emulate these gestures and improve the welfare of workers by deploying the gains of the fuel subsidy removal policy to investment in infrastructure and mass transportation to show that the aim of removing the subsidy was not to hurt workers and citizens.  Government must bend backwards to convince the people that the policy would better position her to ensure greater development of society.

To this end, public communication organs such as the National Orientation Agency should be equipped to sensitize the public on the gains of fuel subsidy removal.

For instance, one of the hidden truths of the removal is that it is the best way of cutting off the invisible cartels that corrupt the system to siphon public funds into private pockets.

History has shown that it is such massive public enlightenment programmes that persuasively convert citizens into advocates of zero fuel subsidy for huge development of society.

The only monster that remains to be tackled headlong is oil theft. The reality is that the mere fact that our oil would no longer be cheap as before would not on its own stop oil theft.

If that issue is not addressed, greedy citizens with the collusion of law enforcement agencies could still quite often have a free day.

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