The history of the Rastafarian movement will never be complete without the mention of the “imaginary” Babylon they profess as the stumbling block to the exultation of adherents of their faith.
Their synergic operationalization will be the foundation of the accelerated growth of our economy that is defined by tangibles of employment, infrastructural development, food abundance, quality education and other residual factors that engender good living. Over the years, we have existed as a nation which thrived on mediocre planning and fruitless implementation of governmental agendas. The time has come for us to make a difference and show the world that we have men and women of expertise solidity. In a country where the labour pretend to be working and government pretend to be paying, a concise approach to governance anchored on puritanism is needed to pull the entire nation out of the ditch before setting in motion. The analysis here will beam the searchlight on policy directions in the key areas and proffering of alternative roadmaps for better result where necessary.
The Ministry of Finance is central in defining the policy orientation of the government, primarily because of its exchequer role and monitoring. In maintaining fiscal stability, it must take into account the prevailing economic reality of the country. Without advocating for a relapse into the immediate past fiscal recklessness, the function of government as a key inducer of economic activities through procurement must not be neglected. What is required is the sanitization of the procurement process to minimize waste. The mindset that waste can only be curtailed through the abrogation of socio economic safety nets of the citizenry should be reconsidered by policy makers. The twin issues of subsidy removal and continued deregulation of the economy should be handled with utmost care to avoid total annihilation of Nigerians. This is where the Ministries of Finance and Petroleum Resources must work in tandem to ensure that the best interest of the masses are protected at all times. The consequence of unfettered deregulation on the economy without consideration of our economic dynamics is better imagined than experienced, therefore necessary questions must be asked and answers provided before implementation of the policy.
These questions include:
1.Are we really subsidizing petroleum products?
2.If the answer to the above is yes, in what form are we enjoying the subsidy?
3.Considering the claim by the Petroleum Products Pricing Regulatory Agency (PPPRA) that premium is subsidized at N83.72/ltr, will it not be in the interest of all if full disclosures of price build up is made?
4.What is the ex-refinery price of a liter of petrol?
5.Wha is the landing cost of same product?
6.What percentage of the ex- pump price is attributable to margins?
It will help the debate if we make a comparative analysis with Ghana that imports about 50% of its local consumption of petroleum products. The pump price of petrol in that country is an equivalent of N150/ltr, but the government was honest in disclosing to the people that over 40% of the price build up was as a result of taxes. So, are we importing at ex-refinery price of supplying countries or their ex-pump prices? This can also be linked to the argument that subsidy is responsible for the depletion of our foreign reserve which is far-fetched. Are the good people of Nigeria responsible for the comatose state of the refineries? Will the increase in pump price reduce the consumption requirement of Nigerians? What is depleting the foreign reserve is the failure of the government to repair existing refineries as well as construct new ones to minimize importation of refined petroleum products. This malady cannot be cured by deregulation either. Like I stated in an earlier piece, there are three price determinants of petroleum products in a deregulated regime which the government must deal with to curb wastages due to operational inefficiencies. These are:
1.International price of crude oil: This the government can control through the quick repair of the refineries and construction of “Green Refineries” as promised Nigerians during the presidential debate. Once the refineries are operational, buying crude oil from NNPC under a hedged pricing arrangement will also eliminate cost associated with shipping and sundry maritime charges.
2.Exchange Rate Differential: Fiscal and Monetary indiscipline on the part of the government will definitely result in high inflation and depreciation of the local currency. Considering that crude oil is priced in United States Dollars, a fractional depreciation in the value of the Naira will lead to adjustment in the pump prices of different products. The government must not pass its inefficiency to vulnerable Nigerians to bear.
3.Cross Subsidization: This is the measure the government relies upon in ensuring the protection of the lower income bracket. The government could for reasons of affordability and protection of the environment reduce the deregulated price of kerosene and make up the difference in aviation fuel which tilts to a middle/higher income usage. It is also used to offset the cost of maintaining product availability in all parts of the country. This guarantees equilibrium in petrol pricing across the nation.
The nationalistic collaboration of the two discussed ministries will impact positively on the agricultural sector which is a significant contributor to our GDP. It is a national shame that we relegated agriculture to the present abysmal level because of our quest for cheap petro-dollars. Pre crude oil dominated economy was defined by higher GDP growth, lower unemployment rate and sustained maintenance of basic of infrastructure. The government can restore agriculture to this high pedestal if it is willing to create employment and minimize crime. Any economic growth that does not lead to job creation is delusional and confirmation of an import oriented economy. The ministries must weigh their options before embarking on the deregulation and “subsidy” removal route. The chain reaction of an upward adjustment on prices of petroleum products is well known and the biggest casualties are agricultural and industrial growths. Presently, farmers are unable to compete with their counterparts in Europe, United States and Asia due to high operational cost and any increment will worsen this situation. Have we asked ourselves why a kilo of imported frozen chicken is cheaper than locally bred and processed chicken, notwithstanding the higher cost of labour in those countries, freight and other handling charges? The point is that deregulation without tackling the problem of our dead refineries will not engender real growth and contribute to the resolution of the unemployment situation which breeds crime in the country.
Another major constrain facing the development of agriculture is the post-harvest losses necessitated by poor storage facilities and lack of value adding agro based cottage industries. The poor power generation, transmission and distribution facing the country is a huge disincentive to small scale investors in this area. The Ministry of Power is a strong fourth leg of this agenda in driving growth, employment, eradication of diseases and other related economic activities. The quantum of waste suffered by farmers will be eliminated with adequate power supply through the aforementioned industries. The case of citrus farmers in Benue state is typical in illustrating the importance of adding value to farm produce. Basic electricity supply could have encouraged the conversion of wasted oranges into preserved exotic juices, thereby creating wealth for the farmers. Official pronouncements by public figures have shown that the total power generation as at December, 2009 was 3710mw while installed capacity was 5,226.6mw. Based on the declaration by Dr. Segun Aganga that we have never exceeded 3,800mw in output as at March, 2011, it is depressing to note that a paltry 90mw was added to the national grid within the period, not minding the trumpeted attention to the sector. His Excellency, the President vowed to deliver a total of 7,000mw by April, 2011, which the managers of the sector failed to meet. This simply meant an addition of 3,290mw at the time the promise was made. With an obvious shortfall of 3,200mw, my conclusion is that the drivers of the policy are failing the president. Nigerians are hoping that the new team constituted by the president will tackle this problem and kick start the growth of small and medium scale industries in taking our economic growth to the next level.
Policy synchronization is the panacea to obliterate the obtuse developmental agenda that has bedeviled the country for years. A clash over assigned turfs will be detrimental to the achievement of government set goals and objectives. With chilling crime rate and annual expenditure on food importation running into trillions of Naira, the implementation of the discussed roadmap will contribute in moving our country to the next level. The success will dovetail into improvements in other sectors of our national life. The various strata of government must understand that a hungry man does not understand macro-economic indicators. He only listens to the purchasing power of the little Naira in his pocket.