The Federal government’s announcement of the removal of the subsidy on fuel and other commodities is an action that is not new to its citizens as the successive government had tried to remove this subsidy but failed due to fear of political and civil unrest.
But every time, the announcement gets a number of mixed reactions among the citizens, one major criticism seems to have caught the attention of a lot; the former Vice President Atiku Abubakar (1999-2007).
Nigeria is largely a net importer of fuel and other petroleum products, huge demand for petroleum products has led to different government’s attempts to subsidize its products for the citizens’ benefit.
The subsidy removal by the Buhari-led government saw a 10% increase in petrol to about 160 naira.
The Senior Special Assistant to the President on Media and Publicity, Mr. Shehu Garba, in his response to the subsidy criticism on Sunday 6th of September, 2020, stated that it was “necessary and overdue.
“The question now is, are Nigerians willing to understand the implications of not removing the subsidy or should we continue to brisk through the tide till the economy hits the iceberg of heavy recession and comes crashing like the case of Venezuela? Or are we going to listen to a businessman who is oblivious of an economic perspective?
Well, let me shed more light on the necessity of the subsidy and hope that the businessman who at the time he left the seat of power in 2007, left pump price at 75 naira as against the 11 naira it was in 1999, learn the economic implications of this and not the business aspect which he seems to be on top of.
The Presidency through the late Chief of staff, Abba Kyari, inaugurated a new presidential Economic Advisory Committee, led by Professor Doyin Salami of Lagos Business School, Professor Chukwuma Soludo, ex-CBN governor, and Mr. Bismarck Rewane, a financial consultant; you’ll agree with me that these are economists.
The committee was saddled with the responsibility of creating a solid and viable economic developmental policy for Nigeria.
With the adverse effect of COVID-19 and the volatile state of the crude-oil price, which has left the economy of the country in an abysmal state; this initiative seems to be a timely one.
But why is the removal of the subsidy necessary?
Shehu’s statement revealed that this was necessary “to avoid the mismanagement of taxpayer’s money; this is indeed valid.
The level of corruption that the subsidy abets is alarming. A trip down memory lane reminds us that former VP Atiku was the chairman of the committee that was responsible for the privatization of Public Enterprises (PEs).
Investigations revealed that the process was riddled with corruption also the transfer process lacked transparency.
The businessman allegedly amassed wealth by selling the PEs to his friends who could be called upon at the slightest notice to part with some of the heist. In 2011, the Petroleum Product Pricing Regulatory Agency (PPPRA), reported that about 2.11 trillion naira was paid as a subsidy which is a more than 90% increase of the appropriated sum of 245 billion naira for the year.
The Buhari led government realizes that some corrupt companies and some ‘Political Elites’often connive to submit highly inflated subsidy claims.
The Presidential Probe Committee set up at the time, revealed that 382 billion naira was lost to the subsidy scandal and was unaccounted for.
This money could have provided about 15,200 small businesses with long term, collateral-free start-up capital loans of 25 million each and upon repayment could be re-loaned to others.
According to PPPRA Annual Performance Report, 10 trillion naira was spent on petrol import subsidy between 2006 and 2018, imagine 10 trillion being dispensed into other sectors of the economy and infrastructural developments that the nation needs, wouldn’t the development be satisfactory?
In essence, the subsidy is depriving the nation of the fundamental development of other sectors, which has led to an imbalanced growth of Nigeria’s economy.
Subsidy deprives the country of funds needed for socio-economic development and discourages investors from investing in the downstream sectors of refinery construction and operation because they thrive well in a deregulated industry.
With the population expected to increase in large proportion, Nigeria risks carrying financial burden of a subsidy program that could drown the development of its other sectors over the next 20 years.
The President, however, is allowing market forces to determine the pump price of fuel which is letting justice take its course.
Having focused heavily on its anti-corruption campaign in the 1st term, President Buhari is fully committed to making his 2nd term campaign ‘The Revival of the Nigerian Economy’ which begins with the removal of fuel subsidy.
Economic policies will be formulated to help pull out the nation’s economy from the quagmire that it has found itself and redirect it towards the much-needed change, he promised the citizen; a stride in the right direction.
Contrary to Atiku’s economic perspective, any sane economist, knows that since crude oil is still being exported and the refined imported, the buying price would be more than we sell. As it stands, Nigeria ranks 8th among countries with the lowest pump price, the US and UK are not in the top 7 above Nigeria as the businessman posited, he needs to do more research since he wants to be speaking from an economic perspective.
Conclusively, for the economy to take its full course on the path of strengthening, subsidy needs to be removed.
This is the drawing board, and the hardship being felt by the people will soon ease, it is just a matter of time.
It is quite unfortunate that anyone who can use his parents as political bait just to win votes can stoop so low unashamed to say anything just to gain support.
Be rest assured, that contrary to the claim of the so-called orphan who bought his mum a house before he was 38, President Buhari is committed to seeing through all he promised Nigerians.
By Dr Tom ohikere