Editorial: Nigerian Government Dishonesty About Fuel Subsidy

The Fuel Subsidy Debate

The Nigerian Social Media space has been considering the possibility of Nigerians waking up from their docility and acceptance of everything thrown at them by their indifferent government to the inspiration of their own Arab Spring early next year.

This has been predicated by the decision of the government to remove subsidies from Premium Motor Spirit what we generally call fuel subsidy early next year.

The chatter has really been confounded by the situation where over decades there have been threats and salami-sliced implementations of the removal but no one is particularly sure of how much that subsidy really is, that it has become some imaginary slush fund of ready cash that the government suggests it will plough back into the economy taking cognisance of the effects such a removal might have on the working classes.

The Truth About Our Government

Sadly, the government has never really had a track record of ploughing oil profits back into the pockets of Nigerians except in the mid-70s after which plunder and squander has been the tack of those in leadership with little consideration of the bottom-line and particular welfare of the generality of the people – there are points for argument in the previous statement but little to dispute in terms of results.

Fundamentally, the fuel subsidy is literally the substrate of the totality of the Nigerian economy, it will touch on every aspect of life in relation to prices for food, goods, transport and every other service apart from the inflationary pressures it will present, but those issues are best left to central bankers and economists whilst one deals with a few other brass tacks.

Plans or Fables?

As a producer of petroleum products, it is bordering on the atrocious that Nigeria imports about 85% of its refined fuel needs because its existing four refineries are poorly managed and are lacking in serious productive capacity which means that the federal government subsidies imported fuel to the tune of $4 billion annually. [TransparencyNG]

Commonsense will suggest that the long-term goal of the government will be to facilitate, encourage or sponsor raising our refined fuel capacity to levels that will ensure that the subsidy expended in imports is radically reduced, at least that is what informed the signing of the memorandum of understanding with the China State Construction Engineering Corporation in May last year to build refineries in Lagos, Kebbi and Bayelsa States at the cost of $23 billion. [TransparencyNG][China in Africa][BBC News]

Whilst it is interesting to note the activity of the Chinese in building refineries in Ghana, Niger and Nigeria, what made interesting news a few months ago was the idea that Niger might get way ahead of Nigeria in commissioning its own refineries and end up exporting refined fuel to Nigeria. [All Africa]

How Much Is The Subsidy?

Besides, it appears no one is sure of what the cost of subsidising fuel is, the Central Bank in its MPC Meeting minutes suggested that the cost was about $6 billion, the on-going debate in the Nigerian Senate suggests the Federal Government budgeted NGN 240 billion ($1.54 billion) for subsidies in 2011 but have found that cost inflated to NGN 1.5 trillion ($9 6 billion) in what is a looking like a typical Nigerian scam. [CBN (PDF) Page 3][All Africa]

This amazing discrepancy should have heads rolling faster than when the Bastille movement chopped off heads in the French revolution, but none such will happen because the matter of responsibility leading on to accountability is just absent in Nigerian governance.

As an aside, the real big cost of governance sits within the profligate nature of our Federal Government, the abuse of security votes at state government level and the exorbitance of our legislature that consumes over 25% of our Federal Government overheads without essentially being a productive sector of our economy.

Indonesia Caught in Denials

Much as the idea of building more refining capacity in Nigeria does not seem to appeal to those resolute in finding another largesse to nudge their greedy snouts into, what adds insult to injury in spite of the now seemingly white elephant plans to build refineries in Nigeria is the news that Nigeria plans to invest Rp 24 trillion (US$2.68 billion) in Indonesia to build three refineries. [Jakarta Post]

The Nigerian Government has gone to great lengths to deny this report, but one has to ask why Indonesia will dream up such a scheme if there were no iota of truth in the same. The Nigerian Government unfortunately for all its protestations has a Matilda Complex about it, its propensity for denying fact and defending lies is legendary especially with the instrument of Social Media personnel it has employed for propaganda, obfuscation, distraction and alienation. [All Africa][AkinBlog]

Our Insurrection In Planning

It has become known that any opposition to the government is quickly construed as unpatriotic whilst the government has perfected a complacency of siege mentality proffering more excuse than reason for any action or inaction they have found themselves in.

At the end of the day, the reasonable thing about fuel subsidy is for Nigeria to build and sustain its refining capacity by whatever means encourages that trajectory and it is only after that is put in place that the desire to remove the fuel subsidy can be justified.

Nigerians have two and a half long months to put everything in place to start off their justifiable insurrection against a moribund, ineffective government in détente and inertia, for once, let us – Arise, O Compatriots and heed a call for a democracy that is fair, just, honest and true.

Nigeria: Sanusi a worthy Nigerian

Speaking the truth to occasion

It was heartening to read that the Nigerian Senate attempt to bully the Governor of the Central Bank of Nigeria yesterday did not get far.

Mr Sanusi Lamido Sanusi whose almost eccentric dandy bowtie attire conceals a steely reserve is unready to buckle at the yelping of a cabal of loafers whose megalomania exceeds their ability to reflect on why they have been elected.

The governor at a lecture delivered at the 8^th convocation of Igbinedion University has said 25.4% of the nation’s overhead cost [1] was spent on the National Assembly.

To the psychotic headmaster’s office

For this statement the Senate called him in for a carpeting along with the technocrat Finance Minister who apparently is supposed to be his boss and what a boss he was.

The Finance Minister vacillated with mollifying sycophancy that the Senate committee found it more amenable to have the governor talk through the minister rather than have him speak directly to them.

There was no doubt that the truth was finally out about how exorbitant [2] our legislature is, a point I have made time and time again in many blogs and this left the Senate Select Committee chaired by a garrulous lout with the unfortunate prize of undeserved democratic leverage quite livid with rage.

In whatever way the Finance Minister tried to redefine the context of what was said by the governor the fact remained that the Nigerian legislature burns NGN 136.2 ($892 million) and the fact is there isn’t much to show for the hot-air, postulation, grandiloquence and politicking that goes on in there on behalf of Nigerians.

What we pay for - harassment

As at November 2010 a newspaper report suggested in the House of Representatives this term had 459 bills of which 319 were about to be abandoned leaving them with a work rate of just 30%, the Senate was at that time too disorganised to give an account of what work they had done but we know where the money is going now.

Having tried to browbeat the governor and even belittle him they resorted to ad hominem attacks which just speaks volumes of the flock of cretins we have wished upon ourselves through allowing for our democratic process to be usurped by criminals.

The fact of the matter was that the governor did not pluck the figures out of the air but was quoting figures he got from the Director General of the Budget Office.

Much as the Senate disputed the figures they had no alternative figures that could be independently corroborated as truth of what they cost the country which left Mr Sanusi quite within his rights not to feel apologetic, not by a smidgen for revealing that veritable fact.

I will honourably quit

For one senator to suggest that the governor might not have the character to stay in office was just below the belt but the governor displayed qualities that you rarely find of Nigerians in public office, that of character, of principle and the resolve not be cowed by power-brokers whose intelligence is questionable at best.

When asked if he still liked his job and there was every indication after that kind of heinous barracking to suddenly cultivate a dislike and willingness to walk away with your reputation intact, he delivered a line that I doubt any one politician with their snouts so deep in the trough would ever have to courage to say.

“My name is Sanusi Lamido Sanusi, (my name is) not Central Bank Governor. I enjoy my job but if you want me to quit, I will honourably quit.”

At which point he drew applause from the crowd of spectators who would have been invited to see the governor ridiculed and humiliated but now had seen the Senate committee behave like a mob ready to rubbish and besmirch the good reputation of a very able and competent Nigerian.

Get incited now

Meanwhile, the Nigerian legislature are left with that little problem, Mr Sanusi’s statement which the committee chairman thought was made to deliberately incite Nigerians against the National Assembly might well just get Nigerians agitated first for their cost and now for their harassment.

Whoever thought Nigerian politicians do not like to be loved even under false pretences? Well, with all the comments that have followed the news stories, Nigerians can only wish for more Sanusi’s, less of that ilk of legislators and as for the Finance Minister; a career so glorified in Goldman Sachs seems to have lost both its glitter and its mystique, he has been subsumed into the quagmire of Nigerian skulduggery.

Sources

[1] Sanusi stands by comments on National Assembly spending | 234Next.com

[2] Akin: Nigeria: Our exorbitant government

The shabby handling of the Naira redenomination

The rotten announcement

Reading about the news of the suspension of the Naira Redenomination exercise by the “Chief Law Officer” of Nigeria Mr. Michael Aondoakaaon (SAN) Chxta’s World brought cold comfort.

Someone then left a comment that included a link to that announcement and disappointment was not the only thing that registered in my countenance as I watched what would definitely end up being a rotten farce.

Click to see the video

Real life re-denomination

Now, I am no economist or monetarist as to be able to determine in any way the likeable success of redenominating the same currency in order to make it appreciate in value. However, I was witness to the Netherland Guilder to the Euro transition and I can say that the only thing that seemed to appreciate in value was the cost of goods and services.

In some instances, retailers simply struck off the Guilder sign and stuck on the Euro sign without changing the numerals, even when the exchange rate was 2.20371 NLG to 1 Euro. Much as the government tried to gloss over the situation by saying there was no widespread price inflation, the man in the street stridently differed.

If the knock off 2 zeros ploy were to work in Nigeria where logistics, documentation and market research would be hardly as advanced as in the West, I would wonder how this would stem inflation from a monitored perspective, it probably would have been better to introduce an entirely new currency and severely restrict the time of exchange.

Many developing countries have redenominated their currencies, so it is no new exercise; in fact, Layna Mosley presented a peer-reviewed working paper titled Dropping Zeros, Gaining Credibility? Currency Redenomination in Developing Nations [PDF] in 2005 which in some cases shows that redenomination does not necessarily arrest inflation or garner confidence in monetary policy - See Page 4.

Disgraceful, immature nitpicking

However, that is not the point I am interested in, rather, I am quite taken aback by the onslaught of a toady Attorney General who somehow brought to the President’s attention provisions of Section 19 in the Central Bank Act (2007 as amended, which I could not find) which presumably the Governor of the Central Bank of Nigeria had forgotten to adhere to.

The said provisions of Section 19 which deals with the Denomination and form of currency notes and coins which appears below from the Act of 1999 should not be radically different and it does require presidential approval of the board’s recommendation, but definitely not all this political bluster.

Now, in any setting where civility, respect and maturity thrives, one would have expected that the dynamics of government to have Attorney General make overtures to the Governor about what might have been an oversight and arranged for the so-called written endorsement of the President in closed diplomatic circles.

Schism between Presidency and monetary policy

I cannot believe that such a radical re-alignment of monetary policy which is clearly the mandate of the Central Bank of Nigeria can have been announced without the knowledge of the President – however, given the possibility that this was not the case because the Governor was having “maverick” tendencies, embarrassing him and undermining his remit in this way does more damage to confidence in the Nigerian economic policy internally and internationally, it is a myopic and demeaning posture that borders on disgraceful.

The so-called “Chief Law Officer” who also happens to hold the coveted Senior Advocate of Nigeria designation leaves me wondering if this title has become so devalued that once people attain political office they lose all civility, decorum, respect and dignity in the pursuit of wielding more influence rather than serving the purpose of their offices.

This definitely exposes serious team-dynamic issues within the Federal Government of Nigeria, and the sooner we have all the personnel including the President recognise the authority and demeanour of their offices which should be above the murky waters of village politics, the sooner we can get to solving problems in Nigeria.

Nigeria - a technocrat’s nemesis?

Beyond this, is the subject of technocrats in Nigerian politics, one does begin to wonder if they have any place in serving the country when like Ngozi Okonjo-Iweala, they are systematically undermined and frustrated into resigning as a last resort to retain their honour and dignity, regardless of their principled stances.

The President cannot summarily sack the Governor, it requires the approval of the Senate, just as the appointment of a new Governor – so the easier way to create change is to frustrate the incumbent with nitpicking public announcements that challenge his professional judgement and conduct.

As usual, what would happen is some father of a vested interest would come into the fray to mediate in some exclusive mansion and help settle what is comparable to dogs marking territory and all would be forgiven or forgotten, however, if the Governor would stand for anymore of this nonsense is left to be seen.

Shame on the President and his cohorts on this matter, they could have shown more integrity and maturity in handling their discontent with the Naira redenomination exercise, but they could not rise to that standard of civility.

References

A Brief on the Central Bank of Nigeria {CBN} Act, 2007

Central Bank of Nigeria

Central Bank of Nigeria - Decree No. 24 of 1991 - Decree No. 41 of 1999 (Amended)