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The subsidy game

December 13, 2021

The mind is heavy. Very heavy that we are back to an old game: the subsidy debate. The actors are the same: the managers of the Nigerian state, the off shore actors i.e. the World Bank and the International Monetary Fund (IMF). And of course the masses of the Nigerian people. Not to mention the invisible beneficiaries of the decadence which passes for our oil policy.

It is an old game, made much more interesting by the fact that, we are in a democratic dispensation and as such, the government must of necessity tread very carefully. This is more so in the light of the 2023 elections. This is why; one cannot but wonder why, amidst all the contentions and counter-contentions, the voice of the main opposition party the PDP is missing. Possibly, they are playing it safe!

But even then, nature abhors a vacuum and to this extent, other social forces have since picked up the gauntlet. These include student organizations and the labour movement. I am almost bored. This is because the cast is familiar. But I cannot afford to be so. If only because what is being debated goes beyond subsidy. It speaks and eloquently too, to the governance profile of this administration. It is a profile that is characterized by broken promises and contradictions. Let us look at the former more closely.

One of the pledges by the Buhari administration, when it was on the hustings was that refineries will dot the Nigerian landscape. And in the process the infamy of oil producing country which lacks functional refineries would have been wiped away. Some six years after, the promise remains a mirage forever receding into the horizon. Even then, such is the age that we are in that, it is easy to recapture records and see how, and in a blatant way, pledges of the past are yet to be honoured in any meaningful way. Luckily, we have records. Records which speak to the fact that, what was pledged was not redeemed in anyway.

For some invincible forces, it is best for us to be locked up in this shameless practice of importing refined oil. There are stupendous profits to be made.

In addition to much of the foregoing is that, the government also made the solemn promise that if the subsidy were to be removed, functional refineries would be put in place first. So what is happening? At this juncture we may as well look at the issue more closely. How and why is it that an oil producing country like Nigeria lacks refineries? The point is that for some invincible forces, it is best for us to be locked up in this shameless practice of importing refined oil. There are stupendous profits to be made. Cooked books, phantom margins and the rest of that unflattering scenario abound. But the shame does not end there.

Even though the refineries are not functioning, still they are being run with huge resources. Are we damned or what? As the reader may have noticed this may well be a rhetorical question. So rhetorical that, no answers are really needed. One serious way of coming to terms with the subsidy hoax is to understand and appreciate certain realities in the oil industry and beyond. And perhaps the first one is that, in substantive and concrete terms, Nigeria is not an oil producing country. The reality is that the oil is being produced for her by the international oil companies. In the light of this surrogacy, a major contradiction abounds. This is in the form of non- functional refineries.

Read also: Subsidy removal: Necessary but deceitful

So what to do? Fall back on the expediency of importation. Incidentally, what is being stated here, runs through the entire gamut of what passes for the Nigerian economy. In other words, in a manner that borders on perverse consistency, Nigeria lacks the capacity to add value to the stock of her primary products, of which oil is just one. We can just imagine the counter- factual for a minute. If we are able to add value to our various primary products, unemployment will simply thin out and be reduced substantially. The case of oil is only so visible, because it is so central to the economy and to the rest of the world. What is also not appreciated is that, under the present circumstances, what passes for the price of crude oil is largely and politically determined by OPEC. And Nigeria figures prominently here, being a member of this intergovernmental body.

So having succeeded in driving prices so high, the populace then becomes a potential victim, by the threat of oil subsidy withdrawal. It is clearly a case of double jeopardy for the hapless Nigerian populace. This is owed to the fact that, low prices also engender grunting from the managers of the Nigerian state-that they will not be able to fulfil their obligations to the populace. On the other hand, high prices translate into the threat to cut subsidy, with the attendant negative consequences for Chike Ibrahim, Ayesha and Olu. It is clearly a Hobson’s choice for the Nigerian people. The other actors, the World Bank and the IMF have, on a predictable basis, continued to weigh in heavily in support of the idea. To them subsidy should be removed and thereafter according to them, Nigeria will be ushered into some form of economic nirvana. Unfortunately, past results and showing do not bear this out.

What the removal portends is the deepening immiseration of the Nigerian people. And on this note, it is possible to contend that, the managers of the Nigerian State are really in exile, even though the presumption is that they live among us. Take a look at someone who lives in the expatriate bubble of Victoria Island, has an office on the self-same Island. Dashes off to Abuja where he lives it up in a place like Sheraton. Chances are that such a person will be largely immune from the day to day realities of existence in contemporary Nigeria. And as such, it is very easy for them to contemplate a seemingly easy option like subsidy removal. Much of the immediate foregoing also holds for those well heeled fellows in the World Bank and IMF. Worse still is that their prescription is something they do not dare advocate in their own home countries, Europe and North America. On this note, please remember that robust welfare systems and safety nets are well provided in these social formations. These reprieves are largely absent here.

A striking instance is the massive subsidy in the area of Agriculture. Woe betides the politician who decides to tinker with subsidies in this particular and important area. That will certainly be the end of his/her political career.

We may as well pose this question here, by scrutinizing another reality. This will be done by asking the question: Who is subsidizing whom? A look at the stratospheric salaries and allowances of the legislators gives an indication of those who are really being subsidized in this country. Again look at the presidential fleet, and you will also know those who are being subsidized in the Nigeria social formation. Beyond these polemical thrusts however, is the urgent need to ease this policy log-jam.

My suggestion therefore is the urgent need to put in place, functional refineries. These will be fed by non OPEC defined price. OPEC price is politically driven and was primarily put in place to stem centuries of the historical injustice between the first and third worlds. So with our refineries being fed with non-OPEC prices, the price of petrol and other derivatives will be much lower. This is no rocket science. This is the way to go, and not the IMF/World Bank Way. Should the hard-headed prescriptions of the Washington twins turn awry, they will be the first to hands off the country, as they did in Afghanistan recently. Therefore, we must build our house ourselves, in the light of subsisting realities which will draw the majority of Nigerians into the safety net. Else?

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