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The day of reckoning is here

FEC 5 1 The day of reckoning is here

IT is a factual error to conflate the subsidy uprising of 2012 and the crisis of 2020. True, both speak to a national emergency, but the circumstances are starkly dissimilar. Nigerians that marched across the nation in the harmattan-scorched January of 2012 were actually protesting a touted rising economic tide that didn’t in any way raise their individual boats.

Rather, what they saw was an emergent tribe of free-loaders fattening on petrol subsidies. Then-Senator Bukola Saraki had blown the whistle: billions of naira budgeted as petrol subsidy originally were ballooning into trillions. And the beneficiaries were mostly campaign donors to the ruling party in the 2011 polls in the most audacious sort of political incest.

Just a teaser of the profligacy and squandermania that had seized the land then: the Excess Crude Account, ECA, with $22bn bequeathed by Umaru Yar’Adua in May 2010 had been decimated to $4bn by the turn of 2010. The people saw briefcase buccaneers without recognizable addresses receiving fat concessions to import fuel while established oil majors with known massive storage facilities got far less. Very little, if anything at all, was imported eventually. While the nation’s treasury was being bled to death. It is, therefore, a misreading to assume that what drove people to anger then should also be leading them to street protests today.

What then seems to confound to many naysayers gifted at imagining the worst possible scenario in the circumstance, is why Nigerians didn’t pour unto the streets in droves spontaneously in anger like 2012 immediately the fuel stations jerked up petrol’s price this time. Provocative enough, the hike came at the same time as the increase in electricity tariffs.

Painful as the twin-blows might feel, most Nigerians appear to have chosen not to live in denial. Those circumspect enough have surely realized we have arrived at a defining maelstrom –  that point when a cataclysmic occurrence alters the course of history forever.  One, it should be noted that President Muhammadu Buhari, by personal philosophy and instinct, will ordinarily side with the poor. For the ascetic from Katsina, it is always a thing of pride to be labeled the champion of the poor and the vulnerable. But the dire economic reality of the moment obviously leaves him with little or no option.

Indeed, the world economy we once knew before March this year has been severely disrupted by COVID-19, displacing even the most affluent. Almost all the big economies around the world have officially declared a recession. Even a “nanny state” like oil-rich Saudi Arabia has since cut down sundry subsidies, doubled VAT, and stopped monthly cash handouts to citizens, to stay afloat. Elsewhere in the US, according to a CNN survey, no fewer than 40 million mortgage-owners in the acclaimed “God’s own country” were facing eviction by the end of August over back pay. Now, back at home, our revenue and forex earnings fell by 60 percent in the first half assessment of the Year 2020 on account of the COVID-19 pandemic. Contrary to even the modest growth earlier projected for the Year 2020 barely a year after exiting the recession inflicted by the steep crash in commodity prices in 2014/2015, our economy has instead suffered a contraction of more than six percent in the first half of the year on account of the total shutdown of the economy for four months, with expected foreign inflow shrinking by about 78 percent.

True, disruption is a given in the world economic climate almost every decade. For instance, the prime mortgage crisis birthed the tsunami of 2008/2009, with the attendant dislocation of big businesses and national economies across the universe. If the impact was benign for us in Nigeria then, it was large because of combined foreign reserves of over $60bn. Aside from the foreign reserve of $46bn, there was ECA in excess of $20bn. Of course, this offered a robust buffer for the government then to navigate the turbulence with little inconvenience.

In 2015, the ECA the Buhari administration inherited was $2bn. Even at that, $1b had to be set aside to procure military hardware and software to strengthen the nation’s push against a decade-old insurgency in the North-East. If the 2015 situation was lean, the condition of 2020 is, therefore, better imagined with practically nothing left in ECA to allow the administration any flexibility in responding to the COVID-19 emergency. Against this backcloth, it is clear that the ordinarily populist advocacy for a policy option mindful of social protection is simply no longer feasible in the face of the sparse reserve. Whether we want to admit or not, the truth is that the day of reckoning is finally here for us to atone for past iniquities in a way that will reset the nation to a more sustainable path henceforth.

An account is given at a town-hall meeting in Lagos in 2012 by then CBN Governor, Sanusi Lamido Sanusi, perhaps sums up all that is wrong with our downstream sector and the subsidy regime: “Between January and November 2011, the total amount of foreign exchange we sold to petroleum marketers … was in excess of $8b. Over the same period, the total amount of subsidy that was given to these same marketers was another $8b. That is $16b… Actually $16.2b, if you want to know the numbers. Now, do you know what?… The total amount of money that came to us in the federation reserve from the entire oil sector in the same period was $200,000 less than that!”

This simply meant throwing away all the crude produced in Nigeria for almost a whole year and, to add insult to injury, incurring an additional debt of $200,000! Of course, it must be admitted that that gaming the system had always benefited from the emotions the issue of subsidy readily evokes. The subsidy is generally thought of a protection for the poor. So, anyone mulling subsidy removal is easily blackmailed as anti-poor.

But trusting his fellow-feeling, most Nigerians would seem predisposed to give Buhari the benefit of doubt at this trying time. By retaining an austere lifestyle and shunning the temptations to parlay office to erect personal financial empires like most of his predecessors, they see him leading by example. They believe he feels their pain.

In enduring the hurt, the consolation Nigerians can draw is that the erasure of fuel subsidy from the nation’s budget head will henceforth mean that the significant sum that used to end up in the pockets of a small oil cartel would now be freed to be plowed into funding education, healthcare, road infrastructure and other forms of social investments that benefit the greater majority of the people.

Dissecting this uniquely historical development in a recent piece titled: “Beyond fuel, electricity rates hikes”, popular columnist Segun Ayobolu, however, cautioned that the government should not be gloating over public’s

“understanding” so far, but should demonstrate sufficient emotional intelligence by being empathetic in messaging to a populace left to endure existential challenges they least anticipated, much less prepared for. I can’t agree more. But it bears restating that with President Buhari, the interest of ordinary Nigerians has always been a priority. Recall that when oil price earlier crashed in March, the government did not wait for any public agitation before ensuring that the pump price was adjusted downward to reflect this. The pump price was first reviewed downward to N125 and later N121.50k.

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