OPINION I Before We Kill the "Ugly Wife" Called Fuel Subsidy

OPINION  I                Before We Kill the "Ugly Wife" Called Fuel Subsidy

By Mujib Dada-Qadri (Caballo).


Many of us will not be so lucky to marry a pretty looking woman but many will be caged by ugly wives not because they lack the ability to go for prettier ones but because they are caged by an uncontrollable dilemma. What the dilemma will be or can be is what is so similar to the case of Nigeria's historic fuel subsidy analysis. I will hesitate to give a definition of what subsidy is let alone defining what fuel subsidy is specifically. But i do know that almost all Nigerians or all Nigerians are "beneficiaries of fuel subsidies", the only subsidy i think we are enjoying maximally. Though, some Economic thinkers have called for it's "death" and calling for death of many other subsidies. We will know eventually in this boring write-up whether they are "social scientists or mere academic thinkers".

Obviously, Nigeria's subsidy regime is the most juicy and the most embarrassing. It has always been sucking Large chunk of the annual budget but events have shown that it started "sucking" more during Former President GOODLUCK JONATHAN'S regime, i mean the fuel subsidy started to "suck" almost 15% of our annual budget. Trillions started to kiss the wife called "fuel subsidy" and it kissing it more now. But can we say only the oil sector has been enjoying the "subsidy favour"?. What can we say of total cost 1.23 trillion as bailouts for DISCOS who promised us guaranteed power supply?. Or what should we say of 3 trillion Naira cost of bailouts for banks in 8 years according to CBN?. Don't think i will not mention the failing banks that got 2.5 trillion Naira but failed to return after 12 years, Charles Soludo will forever be my "darling witness". Should we also let go of the story our saviour called AMCON that has saved many failing private companies with trillions. Summarily, all these costs will amount to over 7 trillion Naira presumably, a good "twin brother" to the amount of money that had been spent on fuel subsidies in 10 years. No doubt, the fuel subsidy in Nigeria is far beyond ugly and many that have dug hole to save it eventually become uglier too. In respect of this ugliness, some thinkers have called for total end of fuel subsidy in Nigeria and total deregulation of the oil sector.

Interestingly, we have a growing population of economic analysts who are getting too intelligent to be real. Why will you call for end of fuel subsidy in Nigeria due to its ugliness but will not clamour for same for the failing power sector, or the bailouts being showered on the Discos are not fit to be called subsidies. What amazes me most is that these categories of thinkers are calling for total end of fuel subsidies with total disdain for the status of toxic poverty in Nigeria and falling purchasing power. They quickly mention Greece, Portugal and Venezuela as countries suffering from the judgement of "expensive subsidies".

Furthermore, Nigeria is not the only country running fuel subsidies in Africa and even in the world, America which some our thinkers are blindly mimicking spends not just 4 Billion dollars on oil subsidy as at 2012 but also spends on other subsidies such as Agric subsidies, ethanol subsidies, housing and health subsidies. Even UK is the largest spender on fossil fuel subsidy of all EU countries according to EU reports. I don't know why IMF "the regular saviour" has failed to stop these rich COUNTRIES with bogus GDP to end such "needless subsidies". 

Recently, Morroco in wanting to boost its Social infrastructures majorly reduced its fuel subsidies but did a smart job by not just spending on Capital projects but went ahead to boost its regular Social Welfare Programme by introducing "compensation fund", going to the extent of introducing Taysir meant to give grants to widows and aged". Egypt on the other hand had been pressed in the "head" to end its bogus fuel subsidy but the stubborn Egypt cannot joke with the moderate social standard of citizens with total cost of 18 Billion dollars on all different kinds of subsidies like water and flour subsidies and 2.9 Billion dollars on oil subsidy in 2017, this cost on subsidies does not include cost on social infrastructures like schools and hospitals. I am still wondering why a country of 90 million will continue such spending on subsidies while Ethiopia and Nigeria with similar population cannot boast with that country in standard of living and social infrastructures.

My point is this, it is obvious that the "anti-fuel subsidy agents" are too intelligent or too emotional to consider the socio-economic implications of the total removal of fuel subsidy. Fuel in Nigeria is like a "life wire" that connects a lot of Economic activities such as cost implications of expensive diesel leading to more costly manufacturing, more expensive transport costs, increase in cost of foods, increase environmental hazards with rapid use of woods as alternative to fuel, increase of unemployment as labour intake will reduce considering high costs of fuel etc. The critical points validating end of fuel subsidy include more revenues to spend on education, health, security, road infrastructures and other infrastructures. But we have forgotten too early that NIGERIA'S infrastructural deficits is over 75 Billion dollars and why should the anti-subsidy policy that is anti-people be pursued when we have other revenue leakages that are worth over 10 trillion Naira.

In conclusion, Egypt spends 34% of its First half of 2017-2018 fiscal year on subsidies excluding other social infrastructures. The only soft landing NIGERIANS enjoy is the fuel subsidy unlike other countries especially in North Africa that run several subsidies coupled with spending on Capital projects. The question is "why should poor NIGERIANS endure more at this toxic time?", how certain are these anti-subsidy agents that if fuel subsidy is ended, there will be automatic transformation of social infrastructures". If yes, why have we not seen similar infrastructural transformation despite bit removal of the fuel subsidy?. Why have they not recommended alternative social welfare schemes in response to subsidy removal like they have practiced in COUNTRIES that have executed such policy. And why have they failed to recommend radical review of revenue leakages that are less toxic economically instead of calling for end of fuel of subsidy that has more ECONOMIC implications on the already battered poor population.


Mujib Dada-Qadri is a Lawyer, development and policy analyst.