Flashback
to 1 January 2012
Goodluck
Jonathan removed fuel subsidy on New Year’s Day in 2012. This took fuel price
from N65 to N141 at filling stations. This led to massive protests by
civil-rights groups, labour unions, and Nigerians generally. APC, the
opposition party at that time, took political advantage of the situation by
identifying with the suffering and criticizing the Jonathan administration for
removing subsidy. Goodluck Jonathan eventually backtracked. Fuel subsidy was
restored.
4
years later President Buhari officially removes fuel subsidy. Millions of
Nigerians are angry. Nigerians are understandably accusing the present
administration of cowardice, deception, and hypocrisy. This may be true.
But
are we not mixing up issues? Are the facts and figures under Goodluck
Jonathan’s leadership from 2010-2015 the same under President Buhari’s
leadership from June 2015 till date?
Let’s
deal with the facts and figures.
The
facts and figures under Jonathan and Buhari administrations are not the same.
Let’s
start with the figures:
1.
How much was oil price in 2011? Oil price was $113 per barrel. Today, oil price
is $44 after going below 30 dollars early this year.
2.
What about exchange rate? Under Goodluck Jonathan’s leadership, the exchange
rate was $1 to N162. Today, exchange rate is officially N199 to a dollar;
N320-N340 in the parallel market.
3.
And foreign reserves? Nigeria’s foreign reserves stood at $35billion in January
2012 and $29.61billion as at 28 May 2015, the eve of hand over to President
Buhari. Today, foreign reserve is $27.1 billion, amid myriad of restrictive
measures to stem the steady slide in the economy’s external sector.
Now
let’s move to the facts:
1.
Under the previous administration, Nigeria was enjoying an economic-growth rate
of 6% averagely. Thanks to Foreign Direct Investment (FDI) riding on the back
of a devalued naira. President Jonathan also, largely, had the right economic
mix. But corruption and terrorism were two of its greatest challenges. There
were allegations of massive corruption, particularly what was reported to be a
fuel-subsidy scam right under Goodluck Jonathan’s nose.
Rather than tackle
these allegations by investigating and prosecuting those involved in the scam,
President Jonathan decided to remove subsidy as the solution to the problem.
The administration claimed removing fuel subsidy would free up funds for
capital projects. But Nigerians had little or no trust in the administration.
The administration was incompetent and corrupt.
How can it be trusted to save
for the future? This was a fundamental issue. So # OccupyNigeria shot down
Nigeria’s economy in January 2012, not simply because Goodluck Jonathan
increased fuel price but mainly because millions of Nigerians did not trust the
administration with the money it claimed it would “save” for the future. The
rest is history. Today there are strong reasons to believe that if fuel-subsidy
removal had been allowed in 2012, most of it would have ended up in private
bank accounts.
2.
Under Buhari administration, though partly due to some of its own reactive and
over-restrictive economic policies, the Nigerian economy is sick. There is
scarcity of foreign exchange. Oil marketers are finding it extremely difficult
to import petroleum products into the country. FDI has nose-dived. The low
international-oil price meant there was no need for it. So fuel price at
filling stations became 86.5 per litre. Now that international-oil price is
rising again, prices are expected to go higher. This time, the APC-led
administration, the same party that criticised the last administration’s
removal of fuel subsidy has done exactly the same thing. No fuel subsidy in its
2016 budget. It says it does not have the money it needs to sustain subsidy.
National Assembly did not object. The budget was passed. Now that fuel price
has increased internationally, we expect the government to subsidize to
alleviate people’s suffering. The Buhari administration says ‘No. We don’t have
enough foreign exchange to do so.” Oil marketers are having difficulties
opening letters of credit to import petroleum products. The result is that NNPC
alone has had to supply over 90% of petroleum products since October 2015. This
has not always been so.
3.
NNPC used to supply 48% of petroleum products. Since NNPC does not have what it
takes to supply so much, there will continue to be fuel scarcity. To tackle the
scarcity problem, the government painfully decides to free up the oil-supply
system by allowing the international-oil price determine fuel price locally
without any fiscal intervention. Oil marketers are now accessing foreign
exchange (through secondary sources) to import petroleum products into the
country since N145 naira per litre provides some reasonable profit margin after
supply costs. Meanwhile, the government is taking measures to block leakages
through zero budgeting, Single Treasury Account (TSA), and its Anti-Corruption
Agenda (even though one-sided). We are now talking about refineries, public and
private-owned refineries that will eventually make fuel scarcity a thing of the
past. For the first time, we are talking about oil reserves for the country.
But for the actions of Niger Delta Avengers, I think Nigerians would have
started feeling some of the efforts this administration has been putting in to
correct some fundamentals in our oil-dependent economic system.
So
don’t sell your memories for a litre of fuel. Goodluck Jonathan was an
incompetent leader and his administration was fantastically corrupt (apologies
to David Cameron). This administration's poor performance so far cannot redeem
yesterday's corrupt leadership. President Buhari may not be abundantly blessed
with the intellectual capacity to change Nigeria as he hopes to, but his
weaknesses cannot become anointing oil for making the former President a saint
overnight. No, it can’t.
#Nelson
Ekujumi
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