This is not an trivial argument, it in fact carries weight as the funds spent on fuel subsidies can be channeled to building roads, schools and other activities that will strengthen the economy. Liberalizing the downstream oil and gas sector will also increase the sector’s attractiveness to investors that will in turn build refineries and possibly create jobs and other economic benefits. There is also the argument, which is of lesser weight, that subsidy removal will stifle corruption and the activities of smugglers who take precious crude abroad through the black market to sell at real market rates at a profit. Also, that subsidy removal will break the back of a clique that controls the parallel sector. This second argument is true but disingenuous, as it is asking ordinary Nigerians to pay a (high) price for the ineptitude of government agencies.
Subsidies on fuel cost the Nigerian Government over 1.43 trillion naira in 2011 alone. Now, however you like to look at it, that is a lot of money that money would go a long way in providing valuable services to the Nigerian people. The use of 30% of annual government expenditure to subsidize the fuel price (3.7 trillion naira between 2006 and 2011), 118% of the amount spent on capital expenditure and 4% of national income, is clearly at odds with any reasonable management strategy. So why don’t the people get it? Or don’t they? The truth is that this round of “to subsidize or not to subsidize” battle is noticeably different from past “alutas” in that more and more people seem to buy into the premise that, at the very least the subsidy regime is an unsustainable one.
Former die-hard anti subsidy Nigerians now say, “well Dora, has a point” or “maybe subsidy no be good thing” and so on. However in all cases, these words preface a “but” which, with telling concurrence leads to the same conclusion, why should I trust the government to use the subsidy revenue correctly. The issue with Nigerians is therefore not only subsidy removal per se (though it is a big part of it), one of the most pressing points that graduates, unions, professionals and Nigerians of all stripes are trooping out to the streets to make is: why should we, who have endured a cacophony of failed promises, as far back as the eyes of any living Nigerian can see, trust the government? The issue can be rephrased as, it is not about THIS government, but about ANY Nigerian government.
If we were to take a quick poll on the issues that most seriously affect Nigerians and the promises that have been made to address them, the reasons for the deficit of trust then become clear: Vision 2000, Vision 2010, Vision 2020 (make we dey siddon look), full electricity supply (Nigerians had to hear tales of how Ghana achieved near constant energy supply while the “giant of Africa” was wondering in the dark), adequate supply of potable water, Universal Primary Education (now UBE, 'Primary' has been changed to 'Basic'), healthcare for all, I could go on and on. You see, there is a strong perception that many in government are just seek out for themselves, and unfortunately that is often borne out by reality – public servants who immediately upon leaving office earned a place on the “unofficial” Forbes list of richest people on the planet. That is the real problem, where there suffering people often see themselves having to borrow from their magnanimity to subsidize the government's trust deficit.
Lets Consider the fact that with an average production of about 2.2 million barrels of oil per day the Federal government received USD$95 billion in gross revenues from 1999 to 2004. Probably more relevant is that States received allocations from the Excess Crude Account and the oil producing states received derivation allocations. Why is it that, try as you may, even with the most advanced magnifying glass money can buy, you will struggle to see these amounts of money translate into a better life for Nigerians. To be sure, there have been some imrovement but it has been extremely lopsided and in many cases, they have occurred in spite of government. The economy has not grown to keep pace with the realities that Nigerians face, infrastructure is still sub par and social stability is likely at one of its lowest states since independence. Unfortunately, it appears to many that the only thing to benefit from having a government is a relatively low price of fuel. This is not merely quixotic, Take Iya Aramide for example, a tomato seller who has to travel from Mile 2 to Surulere where there is a market for her produce. The bus fare would normally be a slightly bearable 20% of her gross monthly income, however, if the fare goes up over 100% or 200% as it is likely to, Iya Aramide will need to look for new work in the saturated Mile 2 food market, or be out of work altogether.
Into this mix comes the debate over the removal of fuel subsidy, notice of which was given over two months ago to simmer into the minds of the general populace, and then the policy is unexpectedly implemented on the first day of the year. It was like stepping on the tail of a hungry tiger and expecting to walk leisurely back to business as usual, you simply cannot. The reality is, with that approach, most Nigerians will be against the policy rather than view it as a necessary bitter bill.
The Finance minister has made her points and many do not disagree with her, there are great savings to be made and If done properly (and in Nigeria that is a capital IF) a liberalized downstream oil and gas sector can be a catalyst to economic growth, investment in power stations, refineries, creates jobs and infusing much needed capital in the system. However, there are many reasons to be skeptical, why not focus on other areas of economic growth for now? In any case if subsidy must be removed, Nigerians must be made to see why this is in our long term interest and why there is really no other way. This can only be done first over a period of time – at least a year - where the government focuses on filling it's trust deficit first by showing personal sacrifice on the part of government officials, making alternative transportation like trains and exclusive bus lanes available is all major cities (the announcement that the 1600 diesel buses have been purchased to ameliorate the suffering of Nigerians is misguided, what is needed is good infrastructure and clear policy for private sector participation in public transportation) and other similar initiatives.
Finally, if there is going to be a removal of subsidy time must be given to carry all civil society groups, unions and other professionals on board. It will always impossible to have full support for a policy like this, however with a clear long term policy that brings the people onboard, over a set period of time will help create a consensus and a manageable situation.
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