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Before
We
Deregulate
By
Clement Okitikpi
Newsdiaryonline Sat Dec
3,2011
President Jonathan
A friend who resides
along the LASU-IGANDO part of Lagos once told a story of how
about four years ago, few landlords came together to address the
problem of low power outage in the area, after several efforts
to get transformer from PHCN and the government failed .
Knowing that it will be
a difficult task selling the idea of contributing to the
purchase of a transformer to residents except they see one on
ground, the landlords
agreed that a few financially capable landlords should pool
resources together to procure the 500kva transformer.
Interestingly, he said the strategy worked. After the delivery
of the transformer, the residents voluntarily reimbursed those
who originally contributed to the purchase. ‘The landlords will
be replicating the transformer model in repairing the major
entrance into the area ,even though CCECC(a Chinese construction
company) has its office located there and the vice chairman of
the local government resides
there’, he lamented. The lesson to be drawn from this narrative
is not about PHCN or CCECC. Neither is it about the reelected
deputy chairman who after all, has a large pool of stagnant
water in front of his house. It is about the principle of
‘seeing is believing’. How does this relate the current
discussion on deregulation? The fact remains that if government
wants Nigerians to buy into the current discussion on
deregulation, there has to be infrastructures on ground to
mitigate the effect of deregulation.
In other words,
promising to provide safety net after deregulation is like
putting the cart before the horse. Nigerians have heard every
successive governments promise safety net and each time they
have been left poorer. Nigerians are very trusting people and
have sacrificed so much to encourage good governance and each
time have been betrayed by political office holders.
To a large extent
government has concluded plans to deregulate in January 2012.
The current dialogue or discussion may well be an exercise in
futility. Deregulation is not entirely a bad idea as it is the
growth driver in all economies. The problem is how it is done.
Every economy has its peculiarities. To introduce deregulation
at the current state of infrastructure in the country is
courting disaster. The level of discontent we see in Greece and
other European nations will be nothing compared to what may
happen here if the deregulation program is not well managed.
The small businesses
that are barely surviving will fizzle away. My fear is that it
will be an excuse to unearth all the ethnic, religious
agitations that have lied dormant in the past. It may also be
the excuse that Boko Haram and the likes need to unleash further
terror. However, if government goes ahead to deregulate and
Nigerians as usual take it in their strides, then it will be
another stroke of good fortune for the president.
Government sleuth found
corruption at every level of the downstream sector to be the
bane of the petroleum industry and the only solution is the
removal of subsidy –shekina. This new argument of
corruption may seem plausible but is not compelling a reason for
government to remove subsidy at a time such as this. It rather
exposes the ineptitude and to some extent the conspiracy of
government in the fight against corruption. Corruption remains
the cause of Nigeria’s underdevelopment. Government say so,
Transparency international confirms it. Based on the premise of
government we can conveniently conclude that most public office
holders are corrupt (I dare say that there are decent, honest
and God fearing public office holders). Government
is contradicting itself by asking for the removal of fuel
subsidy on the grounds of corruption while retaining subsidy for
kerosene. Is there no corruption in kerosene transaction? Is
government not trying to shift the corruption from petrol to
kerosene, perhaps to placate their friends- the petrol
importers? If we must remove subsidy at all, should it not be
total so that the debate on subsidy be closed once and for all?
However, it is important that government thread carefully
before they draw the curtain on the debate on subsidy. The
deregulation as President Olusegun Obasanjo once said; should
have human face and the milk of human kindness.
Deceit unfortunately
remains endemic in
governance in our country and it is difficult to trust
politicians.
Nigerians see politicians as necessary evil for democracy to
thrive. So when Gen.Colin Powell said corruption is a virtue in
Nigeria during the Abacha era , not many quarreled with that
assertion. He was stating the obvious about leadership in
Nigeria. . Nigerians however, see President Jonathan as a man
working hard to prove that he is different. The onus is on
President Jonathan to keep fate with his election promises of
providing the greatest good for the greatest number. Needless to
say that it is the trust in him that led both the politicos and
the apolitical to queue behind Jonathan during the election for
his politics of inclusion, humility and his empathy for the
vulnerable in the country. This same people are looking to see
if he will betray them.
The fact remains that
the IMF/World Bank hawks in the cabinet prefer total removal of
subsidy without regards to the effect on the vulnerable in our
society. There is pressure by the Bretton Wood group on nations
around the world to remove subsidy from fuel. The reason is not
difficult to discern. It is to ensure a steady supply of
petroleum products to their economy.
That has been the tradition of Bretton
Wood
as we have seen in
Greece and some European countries.
The president must
realize that he is dealing with real people most of who barely
have a meal a day. The president should therefore, draw
inspiration from Empress Catherine of Russia who on reviewing
the hard government reform proposal of
philosopher Denis
Diderot said among other things ‘Ah, my dear friend, you write
upon papers, the smooth surface of which presents no obstacle to
your pen. But I, Poor Empress that I am, must write on the skin
of my subjects which are sensitive and ticklish to an extra
ordinary degree.
The point is petrol is
at the heart of this economy. Remove the subsidy and you over
heat the economy. Petrol is the connecting rod to the critical
parts of the informal sector of the economy. It is subsidy that
has provided the safety net for the misrule of successive
governments. There are also plans to remove subsidy on
fertilizer for the same corruption argument. That will be double
whammy on the vulnerable in our society; a double barrel attack
on the price of food and related items. What Fela Anikulapo Kuti
called ‘double wahala for dead body’ This will lead to high
crime rate at the lower rug of society and more corruption at
the higher end of
political leadership,
because the value of the naira would go down. Ultimately there
will loss of jobs due mainly to high cost of production. More
people and businesses will further migrate out of the country.
Today, we all live in fear because government in the past had
failed to provide for the poor that are many.
Now, they are unable to protect even the rich and the not
so rich that are few. It will be interesting to see how the
Central Bank will check inflation under the circumstance.
Government has promised
to provide safety net. What safety net? Why must we believe
government? There is no evidence on ground to show that the
hypocrisy that has been part and parcel of previous governments
is no longer there. Have
they not said it in the past but did they keep their words?
The Obasanjo government
was seen by many as a government that fought corruption
particularly with the arrest of high profile political office
holders. . But the Senate probe on privatization has exposed the
hypocrisy of that corruption campaign. We have also seen how
laudable economic programs that were successfully applied in
other societies made no meaning
in our country mainly due to corruption and the
insincerity of leadership. In
1979, Mrs. Margaret Thatcher, the
former prime minister of Britain privatized public enterprises
to free resources for other sectors of the economy that needed
attention. That patriotic act helped to improve the economy of
Great Britain.
Unfortunately, a few years later Nigeria introduced
privatization. Rather than economic growth the privatization
program is enmeshed in controversies. In 1979, Brazil built the
Volkswagen plant just as we did . Today, Brazil has the largest
Volkswagen plant outside of Germany while the Volkswagen plant
in Nigeria has been turned into a bonded warehouse for imported
rice and vegetable oil. At the same time that Nigeria converted
its Army riffle unit into the Defense Industry of Nigeria
(DICON), Brazil also did the same thing. Interestingly, while
Brazil has been able to produce tankers and submarines, the
Nigeria defense industry can only produce salt. In 1979, Deng
Xiaoping introduced export free zone(EPZ) to the coaster city of
Shenzhen, six years later, the gross domestic products (GDP) of
China doubled. By
1984, satisfied with the contribution of EPZ
to GDP, he introduced
EPZ to fourteen more coastal cities. By 2000, the GDP had
quadrupled. With that initiative China has move from a vastly
poor agrarian society to the second largest economy and still
growing. About the
same time Nigeria also introduced EPZ, unfortunately today
the contribution of EPZ to GDP is insignificant. It is in
this light that I see the One hundred billion naira Koko export
zone as one of the first deliberate effort to industrialize
Delta state since its creation twenty years ago. The Koko export
zone may well become the Shenzhen of Delta and most possibly of
Nigeria. If Governor Uduaghan is not distracted, he should be
able to replicate the EPZ in two or more coastal towns before he
leaves in 2015. It is important to highlight this because it is
coming at a time when most of his second term colleagues are
slowing down and do not see any motivation to provide the
dividend of democracy.
Until there comes a time
when past heads of government and their sleazy collaborators are
held to account for the plundering of the nation’s resources so
brazenly there will be no sanity in the country. Unfortunately,
that time may never come because of the dimension that
corruption has taken. Projects
like People’s bank that countries like Bangladesh used in
lifting rural women out of poverty failed in Nigeria. Projects
like operation feed the nation, green revolution, the
directorate for the development of roads, food and rural
infrastructures and
several other money guzzling programs went down the drain with
nothing to cheer about.
The Minister of
Information Mr Labaran Maku recently said government has given
the Turn Around Maintenance (TAM) of all the refineries to their
original designers/manufacturers. I think that is the first
serious step at putting an end to turn around racket and
ultimately fuel scarcity. I will add that government should
complete the Turn Around before the removal of subsidy.
Government should go further to ask the
designers/manufacturers to run the refineries .I will advise
also that the following steps be taking: (a) fix a time lag for
the completion of the Turn Around.
(b) Supply the
refineries with crude outside the OPEC quota at a price lower
than the international market price for a period sufficient to
provide stable power and the concession of some of the federal
roads and train services. A completion period of not more than
2013 be fixed for some of the infrastructures before
deregulation. If government can connect the major commercial
towns of the country to Abuja and Lagos through standard gauge
rails and allow private sector to run the train service
efficiently, the pressure on fuel consumption will drastically
drop and we can then remove subsidy.
A subsidy of N1.3
trillion to an economy which is the sixth largest exporter of
crude oil has become necessary because of leadership failure. We
have spent billions of dollars on maintenance of refineries that
refuse to work yet nobody is accountable. Governors are saying
they make go bankrupt with the payment of minimum wage except
fuel subsidy is removed. I do not agree.
The Raw Materials
Council report shows we have about 34solid minerals in
commercial quantity spread across the country. There is no state
in Nigeria without commercially viable mineral deposit which can
sustain the state, yet run an ‘Al-majiri’ system of government
where each month the states match to Abuja with bowl in their
hands for the regular allocation. A nation that relies on a
depleting resource with a terminal date is also playing with its
own existence. We keep dancing around our economy because we do
not want to address the real issues that will drive the economy
to greater height. The issues are devolution, decentralization
and fiscal federalism. We
must not be afraid to discuss them and we must not discuss them
out of fear. There is no competition among the states because
they rely on the monthly allocation.
It is time we run a true
federation particularly as the agitation for more states
heightens in the midst of dwindling resources. Fiscal Federalism
was practiced in the first Republic which led to healthy
competition and growth on the part of the various regions.
My fear is that subsidy
removal may cause unrest that will unsettle the President and
deny him the opportunity of transforming the economy using our
peculiar circumstance. The secret to the astronomical growth of
China is its policy of guided deregulation.
I will suggest that
rather than rely on the shadowy silhouettes of anonymous writers
and spin doctors to wet the grounds for the introduction of
deregulation, the President should remain focus on the
public-private participation in high employment generating
sectors of power, agriculture, roads, rails and mining while
encouraging the private sectors in manufacturing,
ICT(manufacture of semiconductors among others), textiles and
auto industries. That way,
you will be meeting the yearnings of the real people that
voted you into power.
Clement Okitikpi
Writes from Lagos.
cokitikpi@yahoo.co.uk
08050498521
Th
This is the document referred to in the Witness
Statement on Oath of Clifford O. Kokogho as
“Exhibit
COK.2”
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