About a month ago, I had an interesting conversation with a senior citizen who retired as a top management staff of NNPC on fuel subsidy. Our discussion was prompted by an article I wrote questioning the disbursement of the savings from the subsidy removal, its effect on the economy as well as some President Bola Tinubu’s policies, which have caused widespread hardship and suffering in Nigeria.
In the article, I supported the removal of fuel subsidy but called for the reversal of the policy on the floating of the exchange rate. The senior citizen whom I have known for a few years agreed with my call for the reversal of the draconic exchange rate policy but offered a different perspective on fuel subsidy removal.
He explained that subsidy is not as bad as the government has made it seem, citing examples of developed nations that subsidise commodities like electricity and other essential items for their citizens. This was a new idea for me, and coming from an expert with over three decades of experience in the oil and gas sector, within and outside the country, I was convinced that the government has not been honest about the issue.
The retired expert changed my perfection that day and I now believe that the problem lies not in the concept of subsidy but in its implementation in Nigeria. What the government should have removed is the fraud in the system not stopping the policy entirely. Choosing to take the easier route, which is putting the burden on citizens, has been counterproductive. Government should have cleaned the system by confronting the oil mafias to ensure that subsidies are implemented correctly.
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The idea that subsidy is a scam is not entirely true. If implemented correctly, it would benefit citizens and the country. But what we had before was a system that allowed a large sum of money to be misappropriated and diverted to the pockets of those who have nothing to do with the product.
Besides, the figures released by the NNPC on fuel consumption are also manipulated as Nigerians, realistically may not consume up to 70% of the quoted quantity. This means that government was paying subsidy for products that were either not consumed by Nigerians or products that didn’t exist at all. If the government were to subsidise the actual quantity consumed, the cost would be significantly lower than the figures quoted, and this would’ve left a significant amount of funds to take care of other things.
However, it is unfortunate that successive administrations have demonstrated a lack of political will to confront the fraud perpetuated by the oil mafia and, instead, have always gone for a softer option, which is to put the masses through the hardship the citizens are going through today. If you are running a social initiative aimed at benefiting the masses and a few people are enriching themselves from it at your own and the mass’s detriment, the appropriate thing to do is to find a way to stop them by fishing them out instead of stopping the initiative completely. No reasonable person would stop going to mechanical workshop to fix his/her car because some mechanics are exploitative and fraudulent.
President Tinubu’s economic policies under this “subsidy is gone” regime, driven by increased taxes and palliatives, are not working. The government has demonstrated insensitivity to the plight of the masses with frequent increase in essential commodities like electricity, petroleum, etc. It is even rumoured that further tax increases are underway with the presidential committee on tax reforms recommending a hike in VAT rate from 7.5% to 10%. It’s concerning that the Tinubu administration wants to enter the Guinness world record as the first to tax its country to greatness.
While we await the government to set the record, the President must be reminded that if he is truly interested in the well-being of Nigerians, his government must urgently reverse some of its economic policies and restructure his cabinet to bring in experts to help pull the country out of its current crisis. Ultimately, Nigerians voted for “Renewed Hope,” not “Renewed Suffering”.
