As the NLC continues with its industrial action against the #FuelSubsidy removal or better, #FuelHike, I was compelled to do some background checks to see the validity arguments put forward by the supporters of this action of the Federal Government of Nigeria. A friend here, well informed about Laws of Economics argued that the action would make fuel more available and cheaper because there is no government control now. He made comparison with the telecommunication sector in how, after the collapse of Nitel, several independent network providers came on board and today the average Nigerian can afford to buy SIM card which is often given freely after first sold at about N30,000. However, my background checks, although my knowledge of Economics is still unsophisticated, makes me unconvincing about the action.
1. The major advocate of free market economy today is the United States of America. But even there the government gives direct subsidies in many areas including agriculture, housing, coupled with social welfare programs, students loan scheme and indeed the oil sector. The guardian ran a piece written by Bernie Sanders, the US Democratic Presidential hopeful, titled, “US taxpayers subsidising world’s biggest fossil fuel companies” Sanders’ argument here is that these companies are wrecking the ecosystem and hence there is no point for the State to keep giving them subsidies. Now if the mother of capitalism is subsidising the oil sector, what stops Nigeria from doing so? Are we becoming holier than the Pope himself?
2. Back in school I was taught that our economy is mixed, meaning that it is partly capitalist and partly socialist. But recent events, from 1999 to the Present, we are daily putting more weight on the capitalist side. NEPA was partly privatised, with obviously calamitous results as the power supply reduces to a very minimal level. The former President, Obasanjo was saying the other day that he regretted not to have privatised the NNPC. Now, I believe that instead of privatising everything, the question should have been why these sectors don’t produce under the government? So that if an answer could be found, we can work on it.
3. The whole issue about deregulation and removal of subsidies was vigorously campaigned by the world monetary god, the IMF. However, it is important to understand that these economic systems are being imposed on weaker or more positively, developing countries. Most of our economic systems are rubberstamped, “IMF.” I read an article ran by the Focus on Africa titled, “Silent Tsunami” where the writer laments that Africa is yet to come up with a viable economic policy that can liberate the continent from dependency and neo-colonial servitude of the super powers through the World Bank and IMF. Isn’t it ridiculous that the IMF pressures countries like Nigeria to deregulate their currencies and the Chinese to strengthen theirs? Both actions would favour the West and America. My take on this is that why do we have to adopt everything because it is agreed upon by a certain school of thought in Economics? The writer of the just cited article argues that Laws of Economics are not same as those in Physics because the former deal with human beings, who are by their nature dynamic. So sticking to a law might not save the day.
4. This hike, also called deregulation of the oil sector is not fully presented. If it is a real deregulation, why would the government set any limit as to how much fuel should be sold? How do you expect a marketer sourcing the dollar from the parallel market to import oil and then be restricted to a certain amount?
5. Still, the timing of this hike was very wrong. One doesn’t have to ask to know that Nigerians are suffering. If the government must do this, why not delaying it till money gets circulated and more jobs created as planned in the ’16 budget?
I am still not convinced though I desperately want to be.
Written By Dikko Muhammad. Dikko Muhammad is a lecturer and the pioneer SUG President of UMYUK.