Should Nigeria be Ruled by the Streets?
Professor Paul Collier, Commander of the Order of the British Empire (CBE), asked a question which is the topic of this blog. He provided an emphatic answer. NO!
Professor Paul Collier is a Professor of Economics, Director for the Centre for the Study of African Economies at The University of Oxford. His wealth of knowledge in the field of Economics is not in doubt. It is not everybody that earns the CBE. I am but a lowly analyst in Nigeria with a basic understanding of Economics. I cannot rub shoulders with this man, not at this stage of my life.
However, I beg to differ in this case and I am willing to sit down with this Professor anywhere in the world and argue this out. I read his article from a piece that was published on Business Day. It is quite understandable to fall back on economic theories when you do not understand the pathogenesis of an impasse. We play around with game theories when we are faced with situations that do not directly affect us. This is exactly what Professor Collier has done. The article was based on the myopic view of this gentleman and this is evidenced by a statement he made: "Even in respect of the cheap petrol that stayed in the country, the benefits accrued disproportionately to the rich. Owners of big cars were gaining much more from cheap petrol than the mass of ordinary Nigerians who do not own a vehicle." Excuse me?
All Nigerians depend on electricity for one thing or the other. Many small businesses run their own generators and most Nigerians have small generators they run overnight especially during the hot harmattan period so they can sleep well. Transportation costs doubled when the Federal Government withdrew the fuel subsidy. Price of foodstuff skyrocketed within a few days of the fuel price hike. Our cost of living immediately doubled and the impact was nationwide. It is not the owner of big cars that depend on small generators to power their small businesses or use them to sleep at night. If that was the only thing that made Professor Collier to say that the occupy Nigeria movement was simply to make Nigerians continue to drive around in big cars using cheap fuel, then I make bold to say that he is suffering from confirmation bias.
The kind Professor did not even bother to assess the impact of the policy on the economy before writing the article and it is such a shame. The CBN Governor struggled with double digits inflation throughout 2011 due to the effect of AMCON. He conducted open market operations like there was no tomorrow and we ended up with an inverted yield curve. Lending rates are currently exhorbitant and many Nigerians are no longer creditworthy because of the effect of the global crises. If the fuel subsidy is removed, inflation will skyrocket beyond the 15% the CBN Governor is projecting. Was it not this same man that told us a few months ago that he expected inflation to rise to 12% after the subsidy removal? There is no doubt that he will review it upwards once the effect fully settles in. The Nigerian economy is too fragile at this time for this kind of shock therapy.
While Professor Collier understood that corruption was rampant in the downstream sector, he made a fatally flawed assumption that the corruption would disappear once the subsidy is withdrawn. There is a Nigerian proverb that says that it is only a madman that continues to do something that keeps leading to unintended consequences. Subsidy was withdrawn from diesel but the prices continue to skyrocket. What assurance do we have that the same cartel would not corner the importation of fuel, frustrate the building of new refineries and then continue to sell at ridiculous prices? The cement industry is a case in point. Nigeria manufactures cement but the price is one of the highest in the world. Why did the Professor close his eyes to the possibility of Nigeria ending up with an oligopoly in the downstream sector if corruption is not taken care of?
I believe that the kind Professor did not have enough information before writing the article. That was why his conclusions about the occupy Nigeria movement was wrong. It is entirely different from Tea Party where the ignorant masses fought for the reduction of taxes for the rich. The occupy Nigeria movement is fighting for a drastic reduction in government waste where the least paid lawmaker, in a country with a GDP of $230 billion, earns three times the salary of the President of the United States, which has a GDP of $14 trillion, for doing nothing. The occupy Nigeria movement says that the subsidy should be returned and that corruption should be rooted out of the downstream sector. I doubt that the businessmen who benefited from the cesspool would sponsor this kind of fight. The movement is driven by highly educated young Nigerians who can no longer be taken for a ride.
Nigerians do not trust their government anymore. They have promised so much and delivered little. I wonder why the Prof did not notice that. What has changed between October 2011 and January 2012? Is it not the same Prof that wrote this piece where he outlined the path to Nigerian economic breakthrough? He said the Government should face power first, then housing, then Lagos and then Kano. That piece made a lot of sense to me and I could not fault it in anyway. I did not see removal of subsidy from the petroleum in the piece. Prof sir, if the Nigerian Government is able to deliver only the first phase of your 4-phase reform, trust me, Nigerians will gladly support the removal of fuel subsidy so we can go on to phase two.
There is no doubt that the occupy Nigeria movement represents the 99% and they have decided to speak out, to speak up and to speak now!