That Nigeria may have a better tomorrow

Folks, these are tough times for all Nigerians. The past few days have been testing and discomforting for millions of us.

Everywhere you look or turn to, the discussion on people’s lips is the new petrol pump prices and its immediate impact on the prices of goods and services. Though we all see these things from different perspectives, depending on our positions which are human nature, the fact is that the pain is felt by every one of us.

Please permit me to reiterate - this is not about fuel subsidy that has disappeared since December 2015. It is about deregulation of the downstream oil sector - creating a free market for people to bring in PMS with independently sourced foreign exchange within rules and standards.

We are feeling the multiplier effect of running a mono culture economy reliant on crude oil sales which as we all know has collapsed taking us into uncharted waters.

The math is simple - the government spends a colossal amount of our foreign exchange earnings on fuel importation. In an era of declining revenue with oil hovering at breakeven prices coupled with serious competing requirements on the government’s lean purse, this is not sustainable.

The government is faced with a choice of fooling Nigerians or taking difficult decisions. Independent marketers have brought in little or no fuel since late last year since they have not been able to source foreign exchange. With almost all of our local consumption being imported, the consequences are dire.

The burden has fell almost entirely upon NNPC to import PMS for local consumption, leading to serious depletion of the Federation account and impact on Federal and State Government revenue. I have heard some people talking about options like crude oil swap etc. These are artificial attempt to correct market distortions, they are interventionist measures NOT permanent solutions.

Anybody that attended the briefing by the VP last Wednesday, May 11th 2016 and is being sincere will tell you that our finances are very very dire and if nothing is done immediately, the country will gradually grind to a halt as the government runs out of money.

Apart from declining oil prices, Nigeria’s output has been falling as Niger Delta militants are increasingly attacking oil installations, affecting our oil exports. As of today, Shell and Mobil are only producing at half their usual capacity as they have had to shut their pumps connected to pipelines that were blown up in the last two weeks.

The data available shows that in April 2016, we earned $550b from crude oil export (even this is on a downward slope as militant attacks cripple some oil pumping facilities affecting our crude oil exports). Our crude oil swap agreement gulped about $225b leaving us with about $325b for all our other import needs - food, drugs, industrial input, debt servicing, etc. Clearly, this is not sustainable.

Comparatives with the fuel price hike during the subsidy removal in January 2012 are unfair as crude oil was selling at around $110 during that period. Many of us had argued passionately at that time against deregulation because there were other options available then. However, the situation is drastically different now.

As at 7th May 2016, Nigeria produced 2.7 million barrels per day and sold at $42.3 per barrel. The facts are simple - we are faced with declining foreign exchange revenue. The little we have has to go towards providing basic importation of goods and services for the people, raw materials for industries and debt servicing.

Deregulation now will allow unimpeded importation by anyone who has the foreign exchange within the acceptable guidelines. Prices may go up temporarily but in the long run, it will come down. The high price will attract investors, more local refineries will be built and the huge supply will force down the price as competition deepens.

The issues are multifold, let me recount some of them briefly;

? For months now NNPC has been saddled with the sole responsibility of importing PMS as independent marketers complain of high foreign exchange rate. At the prevailing dollar exchange rate, it was impossible for them to bring in PMS and sell at the recommended rate. Unfortunately, NNPC can barely match half of our daily requirements, hence the lingering fuel scarcity for the past few months.

? The issue of smuggling continues to drain our meager supplies (how many of us noted the recent spike in Customs Officers being killed as they battle smugglers). This is a serious leakage from our supply chain.

? Our refineries are in comatose - most of them barely producing at 30% capacity utilization due to their decrepit and derelict state, despite monstrous amounts of funds spent on their turn around maintenance (TAM) in the past.

The reality is that many of us were already paying anything from N100 up to N140 per litre in most places outside Lagos since the fuek scarcity started a few months ago - have we paused to ask why most fuel queues have disappeared in the last couple of days. I daresay that high petrol prices will make us seek and embrace fuel efficient habits and possibly drive innovation in energy consumption. Let us ponder how households using electric meters have become more conscious of their electricity usage.

There is also an increased surveillance and monitoring of banks to check round tripping and other foreign exchange malpractices.

Overall, increased PMS supplies should see prices gradually stabilize in the short term. Increased production from local refineries as the new ones come on stream should reduce the pressure on foreign exchange and gradually bring down prices in the medium term. All things being equal, I expect Nigerians to embrace and adopt energy saving and fuel efficient measures in the long run.

We are paying the price for not diversifying our economy when the going was good. Oscillating and declining crude oil prices have caught us napping with our foreign reserves depleted. I am aware that orthodox economics might have failed us in some areas in the past but we must appreciate and be mindful of changing circumstances in our economy, and the attitude and mind set of the people in government - leadership.

One of the challenges we face as a nation is having leaders who shy away from making difficult decisions. As alluring as it is to be a populist, it is akin to eating red meat and drinking beer, we will only be killing ourselves as the facts will not go away regardless of how long we keep burying our heads in the sand.

President Obasanjo privatized the refineries in the twilight of his administration but President Yar’adua cancelled them all because the process was allegedly flawed yet he did not replace them with anything, we all applauded him then but look at where we are today. Please don't get me wrong, I am not defending the transactions or agreements but cancellation without having alternatives or replacements was wrong, that's like taking one step forward and three steps backwards.

Let us appreciate the hard work this administration is doing around restructuring the Nigerian economy. Yes, we know in the past, Nigeria was raped and corruption ran through to the highest echelon of government.

However, that is no more the case as the government tackles corruption in both public and private sectors. We have seen the prosecution of corrupt suspects in the public sector like ex Defence Chief Alex Badeh, ex NIMASA DG Mr Akpobolekemi. We have also seen the detention of people in the private sector like ex Fidelity Bank MD, Nnamdi Okonkwo, Access Bank MD Herbert Wigwe and Sterling Bank MD Yemi Adeola on corruption allegations. Several politicians are being investigated and detained by EFCC, there are no sacred cows.

The drive for increased government revenue has seen the government task and position major revenue collection agencies to be productive. Many of them have been entrusted to capable and proven hands rather than career politicians. Ahmadu Alli is shaking up Customs with vigor and inspiring them to deliver on their ambitious revenue target of N1trillion naira.

Babatunde Fowler is restructuring FIRS with fresh hands and minds whilst strongly focused on positioning the service to meet and surpass its N4.9 trillion naira revenue target. Work is in progress to tame the beast called NNPC to ensure it becomes well managed so that it can fulfill its mandate of being an effective manager of our crude oil resource.

How many of us realize that many of the federal parastatals have no board or substantive Director Generals/Executive Secretaries yet because the government wants to rationalize their numbers and responsibilities to save money. Most visitors to the Villa are shocked when all they are offered is tea, coffee or water.

We are regaled with tales of feasts and abundance in State House in yester years. We all agree that in the past, our leaders were unashamedly looting the country but let’s appreciate that things are now different. Whilst many people are enjoying their dinner with friends and family, people in government are working late into the night tackling the problems of this country. Civil servants in the Villa will attest to the different and demanding work schedule in the Presidential office and residences since the start of this administration last year.

This government has and continues to demonstrate good governance and prudent management of public resources. Some of these measures include pruning the obscenely bloated wage bill by fishing out ghost workers, banning government officials below Ministers and Director Generals from travelling first class, banning foreign medical treatment for government officials, stopped funding religion pilgrimages, etc.

We have seen Ministers complaining about insufficient housing accommodation allowance as the government tightens the national purse. This is an ongoing process which will continue till public finances are completely sanitized.

Some people have asked why not spend some of the recovered money. Unfortunately, it is not as simple as that. All locally recovered funds are kept in CBN, they cannot be simply or quickly spent as some of them are subject to litigation, some are being disputed while some are still in the form of frozen accounts. The foreign ones will take years to get to us because

of all the legal and international treaties issues. Once all the encumbrances are sorted, they should swell the government’s coffers. Even some of Abacha’s loot is yet to be returned.

Some people have alluded to the huge cost of the National Assembly amongst other unproductive institutions bleeding the country.

Are we aware that the federal government has around 520 MDAs (many of them with conflicting and overlapping duties and some with mundane roles) which the government is working through rationalizing.

Agreed that many things should change but are we really ready for these changes??? We run a bloated democracy - 90% of the states are bankrupt, our government machinery/bureaucracy is grossly inefficient but any attempt to tackle this is met with a huge cry and complaints from the populace who are being fooled by the elites eating fat from these dubious arrangements, you even hear some people clamoring for more states – this is the beauty of democracy. Many of the suggestions or alternatives I have heard are flawed and impractical.

Let us be aware that whilst as individual we look at issues from our point of view, the government has to look at them from holistic and comprehensive view. Despite the fact that most Nigerians acknowledge that our structure of government is not sustainable, sadly the government is constrained by the constitution on the powers it has to restructure the body polity. Kindly remember we are in a democracy and guided by a constitution.

The government may make some mistakes but at least they will learn and correct it, the key thing to note is that they are doing something not pretending its all nirvana. They are not perfect, they listen and consult widely but difficult decisions have to be made. Please let us support them as they embark on the difficult and arduous journey of putting this country on the right path.

It is unfair to keep looking at the Nigeria project with yesterday's picture, let us see and appreciate the difficult work going on here, even if we disagree with some of them. At least, give them credit for their sincerity and dedication. We have two people at the helm of affairs who are incredibly focused and driven by a desire to fix this country. Men of proven integrity, discipline and faith leading a team of committed and patriotic Nigerians.

Change is not an end state, it is a process. Change is not something to look for, it is something that starts within us. Change is facing reality and admitting things are not right, and something needs to be done about it. It will be a long difficult journey, even if we don't enjoy the fruits, generations after us will thank us for it.

Brothers and sisters, no pain, no gain. Let us suffer the pains of today so that Nigeria (and our future generations) can have a better tomorrow.

Let us all play our own role in building and developing our nation.

This country will be great.

Proudly Nigerian.

 Toibudeen Oduniyi FBCS CITP

 muyiwa@oduniyi.com

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