Electricity tariff, food and petrol price hike – who will bankroll Nigerians?

The Buhari administration has ruptured the ceiling of liberties it enjoys. Like King Solomon in his last uneventful years, the government has compounded the yoke of the people with the rocketing of the prices of essential commodities. It appears the administration has lost its sensory organ and has become insentient to the ‘’wailing’’ of citizens. And like the Israelites in the twilight of a failing Solomon rule, Nigerians are seeking another ‘’messiah’’.

Just five years ago, President Muhammadu Buhari made overtures of blunting the economic perils Nigerians endure. He seduced citizens with the promise of humbling the dollar and arresting the price of petrol. Buhari once famously said: “Who is subsidising who?’’ This was in reaction to the fuel subsidy controversy and the intransigent price of petrol.

Initially, the president was very unequivocal about detaining the price of petrol. On different occasions, he insisted that the price of the product will not be increased to attenuate citizens’ burden. Perhaps, he did not understand the economics of the oil industry or he was just making political statements. Also, it could be that his genuine intentions do not dovetail with the realities of the oil market – this rests solely on ignorance.

Nigerians took to the streets in January 2012 when the Jonathan administration announced a hiked petrol price. The mass action wore on for weeks. Some of the appointees of the Buhari government were the dramatis personae of that protest. The Buhari campaign seized the citizen angst and deployed it for political advantage in 2015. There were posters of Buhari promising to slice the price of petrol to N87 from N97. Today, the price of the product is about N160 per litre in the retail market.

Really, I submit to allowing market forces govern the price of commodities – in deference to the principles of a market economy. I also believe that the fuel subsidy regime deserved to be couped and banished. It was an egregiously corrupt system. However, my grudge against the current administration and I think that of many Nigerians as well is its insincerity. The government was never honest about its intentions; all its promises were just a gambit. And it has reversed itself in plethora of pledges and aborted its contract with citizens.

Also, these are perilous times for Nigerians. Citizens have been negatively impacted by the COVID-19 pandemic. Unemployment rate is at its highest – 27.1 percent — and businesses are shutting down and furloughing workers. Who will bankroll Nigerians? It is a contradiction, that while the prices of commodities soar, there is no form of safety net for citizens. Yes, while we allow market forces to play, it is the duty of the government to protect citizens from the crushing effects of this free-for-all – as it is the case in other market economies.

But instead of frontally addressing the economic fallout of the pandemic, the government busied itself with programmes such as — feeding school children at the waning of the lockdown – in which over N500 million was wolfed down. Let us even assume that the children were fed, have their hunger pangs ceased? Were they given the bread of life? This is simply deodorising a problem instead of surgically attacking it. Lack of access to jobs, education, and growth opportunities foregrounds poverty and hunger.

And while the government was administering the “COVID-19 lottery”, its agencies were going after Nigerian businesses which ordinarily should be protected from the perils of the pandemic. NIPOST announced a new licensing regime for the post and delivery sector, mandating businesses to renew their licence with N20 million. The agency backed down after an outcry by citizens, but this does not obviate the general insensitivity of the government.

A thinking government will identify real businesses (especially SMEs) afflicted by the pandemic and intervene seminally; not this conjuring by the ministry of humanitarian affairs. It is even more complex when the government cannot aggregate the data of businesses needing a lifeline in the country. The economic interventions by other governments in countries in the throes of similar health crisis have been heavily on SMEs.

But instead of protecting businesses, the government is over-burdening them with taxes and tariffs in the heat of a meltdown effectuated by COVID-19. Nigerians need a stimulus not asphyxiation. What has the administration done for Nigerians and their businesses this period? This is the reason for the pushback and outrage over the electricity tariff and petrol price hike. To Nigerians, the government would rather tax than help them through a rough patch.

Really, it appears the response of the government to the concerns of citizens is tax and tariffs. Even if the price hikes are natural, the question still is, what is the government doing to protect Nigerians, especially the poor? I believe Nigerians will pay whatever tax or price there is to pay, if there is an enabling system for their business to thrive and opportunities for jobs and growth.

The concomitant effect of the petrol price hike is the ballooning of the price of foodstuff and other essentials. This is why Nigerians are wailing. If there was a means to afford an adjustment in their lifestyles or living conditions, they would not be railing against it. No job, no business and no medium of survival. How do you extract a toll from a broke man? He can only pay with his blood – and that is by a revolt.

The Buhari administration has failed to “bankroll’’ Nigerians where it matters. Instead of spreading prosperity, it is promoting and perpetuating poverty. The administration will remain an asymptote of hypocrisy and deception long after it is gone.

Fredrick Nwabufo is a writer and journalist

Twitter: @FredrickNwabufo

How to Pull Nigeria From The Brink

On Monday, April 27, 2020, British oil and gas giant, BP, became the latest in a growing number of energy firms to declare a massive quarterly loss. Their loss was in the region of $4.4 billion dollars. Bear in mind that this was a conglomerate that posted a $2.6 billion profit in the corresponding quarter of 2019.

The challenges that are already engulfing the oil and gas sector will continue to plague that industry for at least the rest of the year, and may reach apocalyptic levels sooner than we expect.

As I write this, there are hundreds of crude oil laden ships, all filled up, with nowhere to berth, and accruing daily charges of an average of $30,000.

We have also seen crude oil prices plunge to record lows, to the extent that some variants of the product have been given out for free, or worse still, producers have paid storage facilities to take their products.

As at today, Nigeria is pricing its very low sulphur sweet crude at $10 per barrel, yet buyers are balking. Our sweet crude is becoming a little bitter.

I had earlier warned that Nigeria needs a Strategic Reserve to store unsold crude. Now, we have so much crude and no one to buy it, nowhere to store it, and little idea what to do with it.

Barely three years ago, I had also alerted that the “crude thinking” promoted by our dependence on crude oil will lead to a rude shock.

“If you are still talking about oil, you are in the past. As far as I am concerned, the era of oil is gone. If you want to believe it, believe it. If you do not want to believe it, you will see it. It is crude thinking to continue to talk and base development projections on crude oil”, I had said at a public event in the nation’s capital.

We must face the fact that reliance on crude oil is failing Nigeria and other mono product economy crude oil exporters. Now is the time for Nigeria and her contemporaries to cure their addiction to sweet crude. For far too long we have grown high on our own supply, to the extent that we have neglected almost every other sector of our economy.

This present rude awakening should be seen as a blessing in disguise — a blessing that compels us to take those drastic actions that will free us from the crude oil trap.

We need to diversify our economy, and yes, it is easier said than done, but that does not mean it is an impossible task.

Prior to Nigeria’s October 1, 1960 independence from Great Britain, not only were we a nation self reliant in food production, but we also exported food to other countries, earning precious foreign exchange in the process. Who can forget the great groundnut pyramids in Northern Nigeria? For example, in 1957, agriculture formed a whopping 86% of our export revenue. By 1977, agricultural exports had dwindled to 6%, and today, the figure is less than 3%.

How did our country go from being a net exporter of agricultural products to a net importer of food products? How did we go from a country that could feed itself to one that desperately depends on foreign imports for survival? The answer to these questions is leadership focus.

During elections, Nigerian politicians spend a significant amount of their campaign time discussing how they will manage the nation’s resources. However, the fundamental difference between a leader and a manager is that while a manager focuses on managing existing resources, a leader sets out a creative vision which the country must follow to chart a course to political and socio-economic greatness.

Certainly, what is abundantly clear is that Nigeria is never going to become an industrialized nation by selling more oil, even if the oil market recovers. The lessons from Venezuela’s current predicament come to mind. If oil and gas could have saved any nation, that nation would be Venezuela. Unfortunately, Venezuela is bankrupt and insolvent.

Saudi Arabia, despite its huge reserves and a highly publicized listing of Saudi Aramco, is feeling the pinch and working rapidly towards its Vision 2030, which requires Saudi Arabia to diversify from its dependence on Oil. Other prudent countries facing the same predicament are doing the same.

Oil economies need to learn a thing or two about economic diversification from the United Arab Emirates. Despite being a young nation, the leadership of the UAE has managed to diversify the economy of this country from an almost complete reliance on oil in the 1970s, to a country where 72% of the GDP comes from the non oil sectors of the economy such as aviation, tourism and services sectors.

In Nigeria, our diversification should embrace agriculture as the primary sector earmarked for development, because agriculture is a low hanging fruit, is key to ensuring food subsistence, and with the recent signing of the African Continental Free Trade Area agreement (AFCTA), which favors Nigeria’s economy greatly, Nigeria can take advantage of this to become an agricultural powerhouse in Africa.

For example, Africa has the lowest intra regional trade amongst the seven continents. Indeed, 68% of Europe’s trade is within the continent. However, Africa does more trade with non African nations than we do amongst each other. Our intra-continental trade is an abysmal 18%. This must change and Nigeria is key to altering this sad state of affairs.

Within the Agricultural sector, the African continent in 2014, earned $2.4 billion from the export of coffee to Europe. That sounds impressive. However, one country alone, Germany, made $3.8 billion from re-exporting Africa’s coffee in 2014. This trend continued into 2015, 2016 and has not changed to date. What is it that Germany does to add value to the coffee, cocoa, and other produce that they buy from Africa that we cannot do in Nigeria? Nigeria can easily become a value-added re-exporter of African coffee to the world.

Ditto for tea, cocoa, wheat, sugar cane, and other cash crops. There are none of these products that I have mentioned that Nigeria cannot either grow in commercial quantities or add value to, in the same way other industrialized economies are doing.

I should know because I am already practicing what I am advocating. I have multiple profitable farms and other businesses in the agricultural value chain.

With about 60% of its land assessed as arable, I truly believe that Nigeria is capable of becoming the food basket of the rest of Africa, and in the process, it can capture a sizable portion of the $48 billion that goes towards food imports in Africa. That money should be circulating within Africa, strengthening our currencies, growing our GDPs, and enriching our people.

I was in Benin Republic recently and I was informed by one of the most successful industrialists in the country that Benin buys its cement from China. Why should a country that shares land borders with Nigeria have to import cement from China 7000 miles away, when Dangote cement is perfectly able, and I am sure willing, to provide the same product at a competitive price?

Is this not what the AFCTA agreement is meant to promote? Why would Nigeria maintain an insane policy of border closures at a time it desperately needs them open to promote trade?

Now is the time for Nigeria to make those hard decisions it has postponed for far too long otherwise the alternative is an apocalyptic scenario we would rather not entertain.

We must, as nation, begin to invest our resources wisely in order to maximize dividends. We must liberalize our land tenure system to make it possible and easy for some of the 27 million unemployed Nigerians to become farmers, even as sharecroppers.

Last year, Ethiopia mobilized its 100 million strong population to plant 350 million trees in 12 hours (a world record). Nigeria can similarly mobilize its population of twice that number to plant billions of cash crops through the planting season. It is possible. I have repeatedly charged my farm associates to sow seeds and they have done so successfully.

When the huge opportunities of agriculture are combined with a rejuvenated manufacturing and MSMEs sectors, then a new era of sustainability and prosperity beckons for Africa.

Nigeria is at the lowest point we have ever been as a nation. We have over indulged on seemingly cheap loans and have quadrupled our foreign debt in just four years. Taking more of such loans will just sink our country deeper and deeper into a quagmire. What is certain is that we can not continue with things the way they are now, except we want to ensure an implosion of our dearly beloved nation.

We must cut our coat, not according to our size, but according to our cloth. Our Presidential Air Fleet of almost 10 planes should go. Our jumbo budgets for our legislature must go. The planned $100 million renovation of our Parliament must be cancelled. We cannot be funding non necessities with debt and not expect our economy to collapse. Our civil servants must come to the realization that Nigeria cannot sustain its size and profligacy. The same cost saving measures must be adopted by the states and councils government.

From henceforth, our energies, resources and focus, must be on how we can diversify our economy, not on how we can increase our expenditure

Atiku Abubakar


Atiku Abubakar

Waziri Adamawa, former Vice President of Nigeria, a dad, businessman and philanthropist.