This is my first ever blog post and it took me a bit of time to decide what topic to write on. It wasn’t an easy decision but while I was on YouTube, I came across a video of Mrs Oby Ezekwesili (Former World Bank Vice President) speaking today on the current state of the Nigerian economy. She was basically making an argument against the seeming obsession of President Muhammadu Buhari with a “command and control” system of economy, as she put it.
In making her argument, she went down memory lane, discussing how Nigeria fought hard to earn the relative economic stability she enjoyed in the past decade. Laying emphasis on how various military regimes, and their command and control of the Nigerian economy, did not yield any significant positive outcomes for the country until we returned to democracy in 1999 when a conscious effort was made to liberalise the markets, she wondered why all of a sudden we are going back to our old ways of controlling the markets.
To begin with, I know that even within the decade she has spoken of, the growth and economic stability was not inclusive in any way. But it was growth nonetheless and there were millions of Nigerians who still benefitted from it. Even so, there was still some element of control then. For instance, every government from Obasanjo to Jonathan always wanted to maintain uniform prices for petrol in every city and every petrol station, regardless of distance or any other costs associated with getting the petrol.
This is where I become confused because it simply does not make sense to me. It doesn’t make sense to say that the price of petrol is the same in Maiduguri as it is in Lagos. I will just focus on one cost here that could significantly alter the pricing of the product; that of transportation. When we add the costs of transporting petroleum products from wherever it lands into the country to Maiduguri, there will definitely be some sort of distortion in the uniform price that it is intended to be sold at. Why then does the government insist on selling it at N86.50? The idea is that it can pay the marketers the differences in the cost and how much they actually sell it at the pump- the subsidy.
A problem arises however when the product isn’t even available. Now you end up with scarcity and those extra costs of sourcing the product and the result is higher prices at the pump and unnecessary hardship for Nigerians. One of the stated reasons of the government whenever they refuse to deregulate the oil industry is that the masses will suffer. However, I wonder what suffering could be worse than what they already go through. Daily, people lose significant amounts of their income by spending their day at fuel stations. This is time that they could use to engage in productive activities. Rich people are able to avoid these problems because they can pay a little extra to have easy access to the stations that do sell fuel, or they are friends with the owners and therefore access is not hard for them. Whichever way we look at it, the poor suffer the brunt of a problem that arises because of poor policymaking that encourages inefficiency.
My idea of a solution will be to let go of this obsession with controlling the prices of petrol (and any other good or service in the country), and let the markets determine the allocation of the distribution of the goods services. If Katsina wants 2million litres of petrol a day at N95 and Katsina is able to pay for that, let Katsina have it. Presently, the same people who are being “protected” end up paying higher prices for petrol anyway, so who is truly being protected? I have a feeling that the prices may even be cheaper in some places with deregulation in the markets and a little bit of competition. It is ironic that the price of a barrel of oil has fallen but the price of a litre of petrol as gone up in Nigeria. The idea that the government can control an economy as big as Nigeria’s is pure fallacy. This is what brings about scarcity and breeds inefficiency and until the day the rulers of Nigeria come to this realisation, we will keep having all sorts of self-inflicted problems.
I really hope we start speaking up against all forms of left-wing ideologues who are obsessed with so-called pro-poor policies, but who in the end always find a way to make Nigeria worse off. If something has not worked in the past, it simply won’t work now and the sooner we open our eyes to this fact the better.