An economist, Tope Fasua has warned that contrary to what the banker types and liberal economic thinkers and pushers of ‘orthodox’ economic thinking would have us believe, the issue of perennial fuel scarcity is not just the petrol subsidies.
Fasua, founder and CEO of Global Analytics Consulting Limited, said the problem of fuel scarcity and falling value of the naira are much deeper, structural and historical.
According to him, if Nigeria succumb to pressure from the IMF and World Bank and remove the subsidies, the country risk a total collapse
“Not like we haven’t tried before though. Nigeria agreed when Buhari removed the subsidy by raising the price of petroleum from N87 to N145 in 2016. What undid that ‘full and final’ removal of subsidy was the devaluation of the naira that came right after.
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“All of a sudden, N145 which had been equivalent to about 80 cents, became less than 40 cents, bringing back the subsidy, which was then termed as ‘under-recovery’ by the Nigerian National Petroleum Corporation (NNPC). I don’t think any serious economic argument has gone on under the Buhari administration.
“The same issue is surely affecting the power sector as we chase an elusive ‘market-reflective tariff’. The people are groaning. The economy is dying. Crime is rising. Inflation is rising. We are in another economic depression and something needs to be done urgently.
Fasua argued that Nigeria cannot complain about scarcity of money when it is not producing anything worthwhile for others to buy.
“As far as a nation is concerned, we must understand that almost all the countries that matter want us to remain where we are – as markets for their manufactures and technologies, while they sometimes humour us by buying some of the crops that we produce.
“The African Growth and Opportunities Act (AGOA), promoted by the United States of America is one such. The focus is on raw commodities (which they often reject for reasons of standards and traces of pesticides – what they call phytosanitary conditions). Indeed, the AGOA is dominated largely by crude oil from countries that produce in Africa.
“We need to reflect on our excesses and under productivity. We need to understand that when it all comes crashing down, we have all contributed to the malaise.
He said the real problem with the Naira, which is why it is important for the Central Bank of Nigeria to continue managing the rates very actively as it has done, lest Nigeria and the naira fall into a bottomless pit.
“The problem is that we don’t make up to $20 billion from crude in some years – being our 30 per cent share. In our list of imports are other top-hitters, like pharmaceuticals ($3 billion), plastics ($2.5 billion), cereals ($2.3 billion), fish and other crustaceans ($1.3 billion), iron and steel ($1.2 billion), and others like dairy products and sugar, on which we spend about $900 million EACH! These are the 2020 numbers.
“I will suggest, therefore, that rather than Nigerians – be they bankers, importers, students, travelers, speculators, rich, comfortable, or from whatever walk of life – hassling and insulting the central bank for not being able to meet demands, what we need is sobriety.
“We need to reflect on our excesses and under productivity. We need to understand that when it all comes crashing down, we have all contributed to the malaise. No one can be singled out for the shellacking.
“From my own analysis, since we are stuck with a bad subsidy problem, and now that we are under pressure from the multilateral agencies to devalue and deregulate at the same time, we have to be wise.
“We actually have no choice than to stay our hand on the deregulation of petrol. It is bad enough that people now have to pay N800 – N850 for diesel and N12,500 for a 12.5 kilogramme can of cooking gas.
“We dare not deregulate petrol now, as it is literally a volatile issue,” he added.