Clearly, the President has scored well on some issues, notably, in confronting the monster of corruption and mediocrity in public office (throwing out budget-padding officials). He has, however, shone less brightly on some other important subjects.
In less than a month, President Muhammadu Buhari would have used up one-fourth of his first term as president of the Federal Republic; that is a rather circuitous way of saying, he would have spent one year in office! As is to be expected, analysts and chroniclers are already sharpening their pens (or dusting their computer keyboards) to analyze for the present and record for posterity the President’s performance over the course of this period.
Let me start this conversation by stating a personal conviction. All Nigerians, except, perhaps, extremist opposition elements, want President Buhari to succeed. However, to succeed, the President must be willing to listen to other Nigerians, within and outside his government, on the way to move the nation forward on the various “battle-fronts” which the country must open of its choosing or at which it would, from time to time, be challenged to a fight. Today, such battle-fronts include the epidemic of corruption ravaging (or which ravaged) the nation, adequate, uninterrupted supply of fuel and electric power, Boko Haram (now seemingly degraded), marauding Fulani cattle herdsmen, foreign exchange policy management, outsized cost of governance, specifically in the executive and legislative arms of government, creation of an investment-favorable climate, possible only with dedicated provisions of the appropriate infrastructure in roads, world-class railway systems, completely refurbished and re-empowered educational systems, a reassuring and satisfactory public security environment, and so many others.
Now, when on 29 May 2016, Nigerians pull out their scoring-sheets to grade President Buhari’s first 366 days in office, how would the President rate, overall? At this point, one could safely say that the assessment would be mixed. Clearly, the President has scored well on some issues, notably, in confronting the monster of corruption and mediocrity in public office (throwing out budget-padding officials). He has, however, shone less brightly on some other important subjects. For instance, few would have believed that almost a year into the President’s first term, Nigerians would go through excruciating fuel shortages and see little or no improvement in the supply of electricity? One year is short, yes, but it is a long-enough period to craft and start implementing game-changing policies in strategically important sectors of the national life.
In the fight against corruption, President Buhari would do well to remember that the enemies he’s leading us fight, that is, the “devourers” (thieving and looting public-sector officials and political office holders) are like goats: goats are very stubborn animals that would always come back to eat your yam tubers no matter how mercilessly you kick and whip them for such a trespass. Once your door is left unlocked again, the same goats would pounce on your yams and eat them up almost without remnants. That’s why “goats” in one’s neighborhood must always be put on leashes as guarantee of protection of one’s “yam-store.”
What this means in political terms is that President Buhari, concurrently with the on-going battles on corruption, must set upon himself the task of formulating and securing the passage of constitutional provisions that make it near-impossible for the devourers to pounce on and cart away, again, our common, public wealth with the straightforward consequence that overwhelming numbers of Nigerians are thereby further locked into a state of excruciating poverty and want. Given the “colors” of most of the people in our current legislative houses, no one would imagine that this would be an easy task for President Buhari. Yet, as a former army general, he would not be expected to entertain or swallow defeat in any form just like that in a matter bordering on the existential future of this nation, no matter the price that must be paid.
It would be a colossal tragedy if the gains of the current anti-corruption battles were to disappear as soon as President Buhari leaves power at the end of his (maximum, two) terms of office. As he would recall now, his war-against-indiscipline (WAI) quickly evaporated as soon as his military regime (1984-85) was replaced. By the time he regained his personal liberty years later, I’m not sure he found much trace of WAI anywhere, anymore. Let this not happen to WAC (this on-going war-against-corruption)!
If we go back to the problem of fuel shortages/fuel subsidies, it would appear that the Buhari administration has been rather timid to make a clean break with the past and “change track” completely in the way the simple commercial activity of buying and selling petroleum products is administered and managed in Nigeria. The administration also seems to be stepping back from its no-subsidy policy to a sort of “price-stabilization” template that provides for intermittent subsidies. The government, as you probably know already, has announced subsidies to petrol prices for the current template period. This is all rather confusing. Worse still, doors to possible subsidy scams are being thrown open yet again!
If the government really wants to soothe the pains of the weak and the vulnerable in society, a laudable policy stance in itself, it has the choice of doing so in the smartest, most efficient way. Clearly, subsidizing tradable, easily transportable goods like petroleum products is not the smart way. If it were, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, would not be in the press some two weeks ago lamenting the discovery of fuel-laden trucks from Nigeria, heading for Cameroun!
Why not just shift fuel subsidies to products and services like domestic cooking gas, electricity and water supply, cheap but decent housing facilities for low-income urban families, toll-free highways for motorists, low-cost mobile telecommunication, tuition-free, well-staffed and well-equipped public schools and universities complete with free feeding and accommodation for the latter? These are products, services and benefits that cannot be smuggled out of Nigeria, misappropriated or looted but whose reduced prices/tariffs or free access would keep more money in the pockets of less rich Nigerians and compensate for higher market prices of fuel and transportation they would face under a no-subsidy, full-tax regime.
As a matter of fact, such a compensating price-matrix can be constructed and applied such that liquid fuel consumption becomes a fiscal revenue-generating macroeconomic variable by way of levying positive tax (VAT, special taxes) on it rather than be a revenue-destroying variable, as implied by the “negative tax” (subsidy) “levied” on it. This is what we observe in most of the countries that have made any success of their oil and gas sector management and one wonders why this cannot be the case in Nigeria?
Personally, I do not believe that the best or the only way to deliver “dividends of oil,” welfare or a rosy future to Nigerians is through the nozzles of fuel pumps (in offering them cheap fuel).
As far as I can see, there is no reason to believe that this administration has got its bearing right in the management of petroleum sector policies and it’s not for want of brilliant minds within its ranks. My fear is that if the President insists on running Nigeria’s oil and gas sector with the paradigms of the late 1970s or of the mid-1980s when he held the positions of federal (military) commissioner of petroleum resources and (military) head of state, respectively, he may not obtain the intended/desired results. In the former periods, the preferred route was for the public sector (i.e. government) to occupy the “commanding heights” of the national economy (“crowding out” the private sector).
As already noted, buying (importing) and selling petroleum products is a purely commercial activity that should be administered by the ministry in charge of commerce and jointly regulated with the Department of Petroleum Resources for the technical side of the business. Unfortunately, the buying and selling of petroleum products is considered in Nigeria as a petroleum sector activity such that the NNPC, whose declared mission is to “add[ ] value to the nation’s hydrocarbon resources for the benefit of all Nigerians and other stakeholders,” is now more than anything else saddled with the errands of running around to fetch imported fuel for people to use. With time, every manner of middlemen and moonlighting buyers and resellers of petroleum products also became known as oil and gas sector operators. Surely, by this logic, the kerosene hawker is also an oil and gas operator?
In the process, we integrated into the wrong business segments and created the wrong, budget-guzzling, looting-conducive institutions. Just two examples: The NNPC, after being left with practically no refining capacity (for which the hardworking personnel of the corporation could not be blamed), integrated vertically downwards into petroleum product retail business by opening “mega-stations” to sell imported fuel that were touted to end fuel shortages. As it turned out, that did not happen. Rather than push the NNPC to dabble into a business that was better left to private investors, wasting valuable investment dollars in the process, all the government needed to do was create the propitious environment for private investors, driven by profit motives, to stake their dollars and invest in that purely commercial business. To use a simple analogy: it has never been necessary for the government to go into bread-baking business for Nigerians to find enough bread to buy everyday (even if, sometimes, at prices they don’t much like). One can safely conjecture that the day government decides to start baking bread for Nigerians in order to bring down bread prices, Nigerians should expect to witness acute bread scarcity as “bread-subsidy” billionaires cart away their loot to Geneva, Dubai, Florida…!
Talking of creating the wrong institutions, the PPPRA, for instance, should never have been created. Get the point right: this has nothing to do with the brilliant young men and women giving their best at their jobs in that (and similar organizations). The problem is that they are being made to do a non-existent job, at huge costs to Nigerians. The major output of PPPRA’s work is the monthly pricing template (i.e. computation formula) for petroleum products. This computation can be done by a desk officer together with two smart assistants, using published (global refined products and international shipping) data and government guidelines; the result is reviewed by an inter-ministerial committee coordinated by the ministry in charge of commerce, which recommends adoption to the government. Go to any of our neighboring francophone countries and that is more or less the model you find and it is what has made it possible for private oil marketing companies to do business and make money legitimately in those environments where petroleum product consumption is invariably taxed to generate fiscal revenues. Compare that with funding a whole agency, complete with a board of directors and all the paraphernalia of office…just to compute monthly-recommended petroleum product prices for the national market. Clearly, these are luxuries we can no longer afford. This indicates why the Oronsaye presidential committee on reform of government agencies report (released in 2012) recommended the shut-down of more than one hundred unnecessary federal agencies but this President is yet to act on that report.
On a final note, I think President Buhari should be applauded for the innovation of combining the positions of CEO of the NNPC and Minister of State for Petroleum Resources into the hands of a single person. When one realizes that the temptation is strong for a Minister of Petroleum Resources to see himself/herself in the role of executive chairman rather than his/her statutory role of chairman of the corporation’s board of directors, with the potential for visible and invisible conflicts that such a setting may engender, one will appreciate how the President’s deft move here has removed such possibilities of friction and this should augur well for the corporation and the industry as a whole.
Dave Liaji is an economist and formerly served as Executive Secretary of the African Petroelum Producers' Association in Brazzaville, Congo.