By Dele Sobowale

…“If they go about solving the problem this way, how many more problems will they have created by the time they are through” -James Baldwin, 1924-1987, VANGUARD BOOK OF QUOTATIONS, VBQ, p201, available online.

By any objective measure known to adults globally, what we have on our hands with regard to fuel problem is a fiasco. You cannot ask any of those in control of our fate in this regard a straight question and receive a reliable answer. Two Presidents, the Minister of Petroleum, the Minister of State for Petroleum, the Minister of Finance, the Central Bank of Nigeria, CBN, the Debt Management Office, DMO, the Group Managing Director of the Nigerian National Petroleum Company Limited, Alhaji Aliko Dangote, all the regulatory commissions and agencies of government. The conspiracy of falsehood started since the Dangote Refinery was nearing, but still far from, completion in March 2023.

As many Nigerian observers will recollect, President Buhari commissioned the Dangote Refinery using the language that gave the impression that fuel production would start within a few months. We now know the truth. Buhari and Dangote just wanted the former President to be the one to have his name on the refinery plaque instead of his successor. Among the promises made or implied were the following: The refinery would end fuel scarcity and queues at filling stations; it would crash the price of petrol which was about N180 per litre at the time and create 150,000 jobs-directly or indirectly. The impression was also given that Nigeria’s four refineries would be resuscitated to complement the Dangote Refinery supply; and, government would no longer dictate fuel price. It all sounded great then; but my Fellow Nigerians have failed to understand one abiding truth.

“Every government is run by liars; and nothing they say should be believed” – I. F. Stone, 1907-1989, VBQ p80.

Of all the entries in my book of quotations, this I perhaps the one most frequently used; and for easily demonstrable reasons. In Nigeria and elsewhere in the world, the totally honest politician is almost impossible to find. Since politicians run for office, the electorate in every country is condemned to choosing between all the available dissemblers running for office. That, however, is in even a so-called democracy. In totalitarian regimes, the people are destined to accepting the falsehood published by their captors. Nigerian politicians are not the worst by any means; in fact they are better than those in Cameroon or Afghanistan. When it comes to peddling untruths, they are ranking amateurs. That is why what they say is so often easy to disprove – as in the issue of petroleum resources and fuel. Everything that was said by virtually everybody in government and the private sector providers had turned out to be false.

WAS DANGOTE REFINERY ESTABLISHED TO STOP IMPORTATION?

“I am beginning to wonder how many fools it takes to make the term ‘My Fellow Citizens’” – Honore de Balzac, 1799-1850, in LOST ILLUSIONS.

Most of the 220 million Nigerians alive today are not in any way better than their forefathers. Ask anybody if there was free education in the old Western Region?

And, ninety-nine per cent of the time, the answer would be “yes”. I thought so too until August 1964 when I took my Economics la Course at the university in the US. The lecturer would usually start his first class by telling a story which I will repeat below. A young prince, 12, became king when his father, just 40, suddenly died. Not wanting to make terrible mistakes in governance, the monarch gathered all the leading experts in every field – including economics – and instructed them to summarise the ideas, principles, laws etc in their fields. All returned three months after with truckloads of documents; which overwhelmed the poor youth. He asked for further reductions. They returned with twenty four pages of Executive Summary. Finally, like all those with absolute power; he ordered that the ideas be reduced to one sentence. The economists quickly put their heads together and the leader raised his hand; after being recognised he pronounced: “There is no such thing as a free lunch.” For that matter, there is no such thing as free education, free health service and there should be no free ride on highways. I raised my hand out of ignorance to state categorically that “there is free education in the Western Region of Nigeria, Sir.” Dr Cohen looked up; and said:

“You are the third Nigerian who would repeat that statement in my class. How many more fools are there in your country; who cannot distinguish between ‘free and public education?’ What is practised in Nigeria is public education, just like several countries in the world. The taxpayers are paying for that gimmick.” I would have gladly crawled into a hole if one had opened up. I learnt a simple economic principle the hard way. Later, in the third year, I received another knock on the head to drive home a truth which has escaped many Nigerians today. The professor teaching Business and Economy, when opening the section on ‘Entrepreneurship’, would kick off by announcing that the capitalist investor is motivated primarily by his desire to make as much money as possible.

He does not start a business for any other reason. That is why it was at first amusing, and later alarming, to me when several self-deluded Nigerians, including President Buhari, the CBN Governor, financial/economic analysts and commentators, assumed that the Dangote Refinery was being established to stop fuel importation, to create jobs and to grow the Gross Domestic Product, GDP, of Nigeria. Starting with that fallacy, they quickly jumped to the fatal conclusion that Dangote must be given 100 per cent support to achieve his objectives; apparently without regard to the individual and collective interests of “Fellow Nigerians”. Well, the Dangote Refinery is here. Why then are we paying N1, 200/litre for petrol which we fetched for N180/litre before it was established? I must have been one of the few Nigerians who knew right from the beginning that Nigerians were being taken for an unpleasant ride. For reasons I don’t now want to disclose, it is my candid view that the establishment of Dangote Refinery is not the salvation we expected. Most certainly, it will not crash fuel price as expected

https://www.vanguardngr.com/2024/11/fuel-fiasco-as-metaphor-for-governance-by-dele-sobowale/

By James Aduku Odaudu, PhD, FPA

Introduction

The intricate relationship between economic policy and the living standards of rural populations often reveals itself through pivotal changes in subsidy programs. In the context of Nigeria, the recent discourse around oil subsidy removal has sparked critical debates regarding its potential ramifications on rural communities, which predominantly rely on affordable fuel for agricultural and economic activities. Subsidies have traditionally served as a buffer against the volatility of global oil prices, providing essential support to an economy deeply intertwined with crude oil production. However, the potential elimination of these subsidies invites an exploration of alternative economic frameworks and the possible socio-economic repercussions that could arise, particularly for those at the grassroots level who may lack the resilience to absorb sudden increases in fuel costs. This essay will delve into the multifaceted economic implications of this policy shift, examining both immediate impacts and long-term consequences on Nigeria’s rural populace, ultimately arguing for a nuanced understanding of subsidy reform in the broader context of economic development.

Overview of oil subsidies in Nigeria and their historical context

The historical context of oil subsidies in Nigeria is deeply intertwined with the country’s quest for economic stability and development. Initially implemented in the late 1970s as a response to volatile global oil prices and domestic inflation, these subsidies aimed to shield consumers from the adverse effects of fuel price fluctuations. Over the years, they evolved into a critical aspect of Nigeria’s socio-economic fabric, often being justified through the lens of providing affordable essential goods to the populace. However, this well-intentioned policy also cultivated a dependency that distorted market dynamics, led to inefficiencies, and exacerbated corruption. By the early 21st century, the financial burden of these subsidies became increasingly unsustainable, consuming a significant portion of the national budget. This unsustainability has prompted discussions on the necessity of subsidy removal, sparking concerns about its potential economic repercussions, particularly for Nigeria’s rural population that relies heavily on subsidized fuel for transportation and agricultural activities.

Economic Impact on Rural Livelihoods

The removal of oil subsidies in Nigeria has profound implications for rural livelihoods, particularly regarding income stability and access to essential goods. When subsidies are eliminated, the immediate effect is an increase in fuel prices, which disproportionately impacts rural communities that depend on affordable transportation for both the movement of goods and access to markets. This heightened cost of living exacerbates existing vulnerabilities, leading to a decline in purchasing power for rural households whose income is predominantly derived from agriculture and informal economies. Consequently, rural producers face higher operational costs, ultimately jeopardizing food security as agricultural outputs decline due to reduced investments and higher transportation expenses. Furthermore, the ripple effects within local economies amplify these challenges; diminished income for farmers can lead to decreased demand for services and goods in rural areas, creating a vicious cycle of economic stagnation. Thus, the removal of oil subsidies serves not only as a structural shift in fiscal policy but also as a catalyst for heightened economic precariousness among Nigeria’s rural population.

Analysis of changes in household income and expenditure patterns

The economic landscape in Nigeria is undergoing transformative changes, particularly in rural areas, as households navigate the ripple effects of oil subsidy removal. As these adjustments unfold, a noticeable shift in both income sources and expenditure patterns can be observed. Rural households, previously reliant on government subsidies for affordable fuel, are now compelled to reassess their budget allocations in response to increased fuel prices. This reassessment often results in a reallocation of funds, diverting resources from non-essential goods and services—such as education and healthcare—towards more pressing needs such as transportation and food. Furthermore, a significant portion of the rural population may explore alternative income-generating activities, seeking to compensate for diminished purchasing power. The interconnections between household income fluctuations and expenditure patterns underscore a broader socio-economic challenge, suggesting that adapting to these economic changes may ultimately exacerbate existing vulnerabilities and inequality within rural communities. Such dynamics warrant close examination to inform effective policy interventions.

Effects on Agricultural Production and Food Security

The removal of oil subsidies in Nigeria is poised to create both challenges and opportunities for agricultural production and food security. On one hand, the increased cost of essential inputs such as fertilizers and fuel could lead to higher production costs, exacerbating existing vulnerabilities among smallholder farmers. These farmers, who often operate on thin margins, may struggle to absorb increased expenses, potentially leading to reduced crop yields and a decline in overall agricultural output. Conversely, the subsidy removal could encourage a shift toward more sustainable agricultural practices, as farmers are forced to innovate and adopt efficient resource management strategies. As the market adapts, investments in alternative energy sources and improved agricultural technologies could emerge, fostering resilience in food systems. Ultimately, the net effect on food security will hinge on the governments ability to implement supportive measures, such as providing targeted assistance and promoting access to credit for rural farmers, enabling them to thrive in a more competitive economic landscape.

Examination of the relationship between fuel prices and agricultural productivity

Fluctuations in fuel prices directly influence the cost structures within the agricultural sector, significantly affecting productivity levels. High fuel prices increase operational costs for farmers by raising expenses associated with machinery, transportation, and inputs such as fertilizers and pesticides. Consequently, these elevated costs can deter investment in essential agricultural practices, leading to decreased yields and reduced profitability. As farmers struggle to adapt to this financial strain, shifts toward less fuel-intensive methods or even the reduction of cultivated areas may ensue, further exacerbating food insecurity. Additionally, the cyclical nature of fuel price increases can create an unpredictable environment, making long-term planning challenging for agricultural stakeholders. This volatility undermines not only individual productivity but also broader market stability. Therefore, understanding the intricate relationship between fuel pricing mechanisms and agricultural output is crucial for policymakers, particularly in contexts like Nigeria, where rural populations heavily rely on agriculture for their livelihoods. A strategic approach to addressing these challenges could foster more resilient agricultural practices and enhance rural economic stability.

Conclusion

The culmination of this analysis highlights the intricate relationship between oil subsidy removal and its economic ramifications on Nigeria’s rural populace. By eliminating subsidies, the government aims to redirect funds towards infrastructural development and social services, ostensibly fostering long-term economic stability. However, this shift presents immediate challenges for rural communities, which heavily rely on subsidized fuel for transportation and agricultural activities. As fuel prices surge, the cost of goods and services inevitably escalates, disproportionately affecting the livelihoods of rural households already grappling with limited income and access to resources. Furthermore, the anticipated benefits of subsidy removal, such as improved public services, may take considerable time to materialize, leaving vulnerable populations in a precarious position during the transitional phase. Ultimately, careful consideration of the socio-economic dynamics at play is essential to ensuring that the policy shifts do not exacerbate existing inequalities but rather promote equitable growth for all segments of Nigeria’s diverse society.

• Dr James Odaudu is a development scholar / administrator and a Fellow of the Chartered Institute of Public Administration of Nigeria. Email: jamesaduku@gmail.com

* Umahi describes project as a jinx broken and true testament of Mr. President’s love for the North

The Minister of Works, Sen. (Engr.) Nweze David Umahi has described the award of the contract for the construction of Sokoto – Badagry Superhighway as a forty-eight year jinx being broken and a show of love for the people of the Northern part of the country by President Bola Ahmed Tinubu. He disclosed this at the flag off ceremony for construction works on the Section I, Phase 1A of the project in Ilelah town, Sokoto State on Thursday, 24th October, 2024.

Umahi informed the gathering that the idea of the project was first muted during the first tenure of former President Shehu Shagari but could not be started earlier than the present, describing it as a payback to the people of Sokoto for the massive support given to the Tinubu Presidency at the 2023 polls, while also soliciting for same and much more during the 2027 elections. He further described the epoch-making event as a manifestation of one of the Legacy Projects of Mr. President, spanning over 2,000 km with the North having 52% and the South 48.

The Minister revealed that the choice of rigid pavement i.e. concrete in its design and construction is informed by longevity, while that of the contractor, Messrs Hitech Construction (Nig.) Ltd is premised on capacity to deliver according to specifications and on schedule due to availability of both brand new equipment and requisite manpower. It has done a similar pavement work on the Apapa – Oshodi Expressway in Lagos State and is doing same on the Lagos – Calabar Coastal Highway.

While appreciating the unwavering commitment and support of Members of the National Assembly for the President’s infrastructure renaissance, he equally thanked the Office of the National Security Adviser (NSA) for the promise to provide security for the entire stretch of the corridor, while the work lasts.

In welcoming guests at the occasion, the Deputy Governor, Sokoto State and Commissioner of Works, Hon. Idris Mohammed Danchadi alluded the project to “a dream come true” for the loyal people of the State.

Briefing the massive crowd at the Ceremony, the Director, Highways, Construction and Rehabilitation, Engr. Bakare Umar and the representative of the Director, Highways, Bridges and Design, Engr. Musa Seidu described the 1,068-kilometre Sokoto – Badagry Superhighway as a Trade, Transport and Security (TTS) Greenfield corridor traversing Sokoto state through Kebbi, Niger, Kwara, Oyo, Ogun and terminating in Lagos State. They opined that the project seeks to reduce transportation costs, improve trade, connectivity, efficiency and economies of scale around the corridor and beyond. The 120-kilometre, 6-lane highway, 3 lanes on each side is to be separated with beautiful median landscaping, solar street lighting and modern digital signages, adding that it will link various existing inter-border towns and routes, provide quick access, enhance border settlements for trade, security support and enablement. The length of Section I, Phase 1A starts from Km. 0 + 000 (Ilelah, Sokoto State) and ends at Silame on the Sokoto/Kebbi State border, according to them.

In separate Good Messages, the Minister of Budget and National Planning, Sen. Abubakar Bagudu disclosed that at a Town Hall Meeting in July, 2024 at Birnin Kebbi, the Minister spoke about plans to embark on the project. He said that the flag-off represents the vision of President Bola Ahmed Tinubu to transform Nigeria and a proof that building viable and lasting infrastructures is possible. Also another former Governor of Kebbi State and Vice Chairman, Senate Committee on Works, Sen. Adamu Aliero stated that upon completion of the Superhighway, travel time between Sokoto to Lagos will be drastically reduced by 48 hours, adding that dams for irrigation and electricity generation and rail lines are amongst its integral parts.

The Deputy Chief Whip of the Senate, Sen. Onyekachi Peter Nwebonyi dubbed the Minister of Works as “Mr. Projects,” further assuring Nigerians of getting value for their money. While the Vice Chairman, House Committee on Works, Hon. Usman Banye said it was a rare honour and a privilege to be a part of the epoch-making ceremony, also described the project as a catalyst for economic growth and a testament to Mr. President’s desire to better the lives of the citizenry.

Speaking, the Minister of State for Works, Barr. Mohammed Bello Goronyo revealed that the project is a clear testament of the Renewed Hope Agenda of the present Administration. He further stated that, as a Member of the Federal Executive Council (FEC), he has heard the Minister spoke about the project in Council for a record three times, which is a demonstration of his, as well as the President’s love for Northern Nigeria, also a passion for infrastructure development.

On his part, the Sultan of Sokoto, His Eminence, Alh. Sa’ad Abubakar promised to gather brothers and sisters in Sokoto and its environs to assist the Ministry in the delivery of the project, which is very dear to the people of Northern Nigeria. He used the opportunity to admonish leaders to, always, prioritise the welfare of the populace in their deeds.

In his Speech, the Sokoto State Governor, Dr. Ahmad Aliyu who flagged off the project, on behalf of the President, was full of praises for the Federal Government. While mentioning that the gigantic road project, when completed, will link the state with the Central and Western parts of Nigeria, he promised to provide adequate security cover throughout the length and breadth of the alignment within his jurisdiction.

The Executive Governor also, specifically, expressed the sincere gratitude and best wishes of the entire people of Sokoto to Mr. President for adding yet another Ministerial slot to the State in yesterday’s cabinet reshuffle.

Mohammed A. Ahmed,
Director, Press and Public Relations.
24th October, 2024.