BY KENNETH EZE
Economists, social crusaders and perception management experts, have warned that the Federal Government’s attempt at unconventional communication of dwindling contribution of the Nigerian National Petroleum Corporation to the Federation Accounts Allocation Committee, as a tool to negotiate increment of pump prices of petroleum products with the populace, will yield no dividends.
They rather urged the government to allow free market to determine prices, enthrone prudent financial management, while providing conducive operating environment for the private sector, particularly the Small and Medium Enterprises, to thrive.
A former Deputy Governor, Central Bank of Nigeria, Obadiah Mailafia, expressed disappointment with the Federal Government’s handling of communications of the fuel subsidy matters.
To him, public engagement is totally non-existent.
“I am disappointed with the Federal Government. The public engagement strategy that you are referring to is non-existent. Most of such policies are being approached in terms of secrecy and sinister, backhanded secret agendas,” he said.
He recommended transparency and use of an independent commission made up of experts, saddled with the responsibility of determining real market price of oil and coming up with recommendations on smooth implementation.
“In a civilised government, one would have expected an independent enquiry by a public commission made up of industry experts and top economists. Their task would be to look at the numbers objectively and fairly and to determine what is a fair market price for the pump price of oil and how to systematically phase out the subsidy without too much disruptions,” he told The Point.
In her contribution, a social crusader, Dr. Joe Okei-Odumakin, thumped down the Federal Government’s communications and engagement strategy, saying that it would rather increase the trust deficit already in place between the leaders and the led, as all she could see were imposition of economic policies.
She said, “It has not been in anyway impressive, especially when you look at the audacity with which government imposes some of its economic policies on the citizens. The culture of consultation and citizens’ engagement is gradually being eroded and this will further impact on the trust deficit, currently existing between government and the citizens.”
In the same vein, seasoned marketing communications specialist and Managing Consultant, Precise (Reputation Design), Bolaji Okusaga, pointed out that structural defect crept into the Nigerian oil sector when efforts of the military administration of President Ibrahim Babangida on turnaround maintenance of the refineries failed in 1991.
According to him, the wounds inflicted by that failure have yet to heal.
He said, “The present administration would always have issues managing the banana peels in the oil sector, because since we started exporting and importing crude and refined products respectively, the dollar has continued to have advantage against the naira.”
He noted that, that was what gave rise to the issue of subsidy, while the free fall of the naira against the dollars combined with bureaucratic bottlenecks to make a bad case worse.
“Dealers imported at higher prices and sold at lower prices, because the pump prices were regulated. Some of the affected businesses exited the Nigerian market because the requirement of securing approval from government for reimbursement was neither viable nor palatable. So, the domestic economy is left with companies without much capacity to service the huge demand and agents of the government took advantage to tighten grip on the sector,” he said.
On the government’s style of engagement and communications, he advised the government to lead by example.
By his reckoning, people were no longer listening with their ears, “rather the eyes serve them better.”
He maintained that “Government must learn to walk the talk. Nigeria has over 90 million citizens living below the poverty line, which makes it difficult to engage them on issues of increasing pump prices of petroleum products.
Even the 7.5 per cent Value Added Tax being charged is below what her neighbours are paying, but government is aware that high poverty levels might fuel civil resistance to any effort to adjust taxes or other related costs.”
“It is beyond what government has to say or the way it is said, the people want to see how their leaders are behaving; what the leaders are doing. Whereas it is a valid argument that government is trying to free some funds from subsidy in the bid to raise money for the development purposes, the thought of the number of aircraft in the presidential fleet, for instance, is enough to engender civil resistance,” he added.
Mailafia, Okei-Odumakin and Okusaga, opined that on this matter, the Federal Government’s citizen-engagement and communications strategy had been doubtful and shrouded in secrecy; characterised by imposition of economic policies.
“one would have expected an independent enquiry by a public commission made up of industry experts and top economists. Their task would be to look at the numbers objectively and fairly and to determine what is a fair market price for the pump price of oil and how to systematically phase out the subsidy without too much disruptions
“
They would want to see openness and maintained that anything short of this might continue to depreciate public confidence in the government, which would continue fueling civil agitations.
Observers conversant with the petroleum sector in Nigeria pointed out that it had ignited civil resistance several times in the past.
Recall that attempts at tampering with pump prices of petroleum prices kindled the fire, which consumed the Ernest Shonekan-led Interim National Government in November 1993.
It is also noteworthy that before the advent of democratic governance in Nigeria, the military dictatorship applied scarcity, strategic supply to and starving certain parts of the country of petroleum products, to elicit public outcry and approval for some of the increases in prices that they did. The military was alleged to be deliberately creating problems in the petroleum sector to justify the increment of pump prices.
Yet, some of the price adjustments sparked nationwide protests and agitations, often strong enough to compel downward reviews by the government of the day.
The democratic administration of former President Goodluck Jonathan also tasted bitter civil resistance to attempts to reform the oil sector, particularly as it had to do with increasing pump prices of products.
Industry watchers are concerned that a script, similar to what obtained under the military era, is being acted out under the present administration of President Muhammadu Buhari.
Mailafia counseled the government to be courageous enough to hold itself accountable to ensure the books of public accounts are balanced.
For him, market forces should determine prices and save Nigeria the burden of subsidies, which he described as a malicious and unhealthy scam.
“Ultimately, public finance is about being able to balance the books. This requires courage and guts. It is a foolhardy government that tries to live above its means. Every administration must cut its coat according to its actual size.
Economic science has shown that markets remain the best mechanisms for running national economies on a rational basis. So, I am all in favour of a fair, market-based price for oil. The so-called “oil subsidy” has largely been a pernicious and unhealthy scam. We need to phase it out. But let it be done within a transparent framework,” he added.
Alternatives for stimulating the economy
Okusaga admonished that instead of focusing on oil alone, Nigeria should look at the small and medium enterprises segment sector to create employment and boost the economy.
“There are over 17 million small and media scale businesses registered in Nigeria. If the government can get them active to the extent that each one can employ only two people. That would take about 36 million people off the unemployment market. Imagine the impact it could have on the domestic economy,” he said.
He counselled that the government should be sincere with the proposed turnaround maintenance of the existing refineries and lend more support to the new ones being constructed. With the issue of supply of the products fixed and relatively under local control, the government can take a position. As things stand, any effort would be almost an attempt at building on nothing.
“Government should focus on seeing the proposed turnaround maintenance of the refineries through. With or without stake in the Dangote Refinery, they should encourage the investor as well all modular refineries in the works.
Once, these get going, it means that Nigerian crude can be processed locally for the domestic market. That should reduce the landing cost of petroleum products, not just at the ports but at the dispensing points across the country,” Okusaga added.
Okei-Odumakin maintained that government ought to be concerned with policies that support macroeconomic stability, inclusive growth, which would help tackle youth employment in the bid to alleviate inflation.
“providing the enabling environment and supporting the private sector would boost the domestic economy, as against increasing taxes and/or pump prices of petroleum products, which would further fuel hardship and inflation
“
She said, “While government seeks workable measures towards protecting the economy, under this kind of circumstances, it is also essential that it initiates policies that are focused towards economic recovery for the overall interest of the larger population of her people. These policies must be such that support macroeconomic stability, inclusive growth, youth employment and others that can mitigate against further inflation.”
Recall that a committee of the Nigeria Governors’ Forum, which also had the Governor of the CBN, Godwin Emefiele, as member, had recommended that pump prices of petroleum products be reviewed upwards earlier in the year.
The NNPC’s contribution to the FAAC also fell to an all-time low in April, when the NNPC made zero contribution to the FAAC.
Watchers opined that providing the enabling environment and supporting the private sector would boost the domestic economy, as against increasing taxes and/or pump prices of petroleum products, which would further fuel hardship and inflation, at the detriment of the domestic economy.
