Insanity has been defined by social analysts as doing same thing over and over and getting same result – especially when the outcome is negative, forlorn and full of abysmal mistakes.  The government of Nigeria is on the verge of either submerging itself in the world of socio-economic psychosis or proving that her economic rationality through the recent removal of oil subsidy is sane enough and would be a free enterprise venture that could catapult this most populous African nation to better life.

Diezani Alison Madueke
Nigeria's Petroleum Minister

 Apart from the recent action of the government to remove oil subsidy as a way of deregulating the petroleum sector and ensuring economic consolidation, various governments have tried various economic models such as the structural adjustment program (SAP), which gave birth to austerity  measure as a result of  an ill – taken IMF advise that shattered the economic foundations of the country and devastated the strength of the Naira – Nigeria’s currency which before the  mid- 1980s was well respected in the international market.

Ngozi Okonji - Iweala
Nigeria's Finance Minister

The current removal of oil subsidy in Nigeria, Africa’s prime producer and a high ranking member of OPEC is creating uproar and building up a cyclone which may disperse like the Arab Spring.  According to many locals, oil subsidy is one visible thing the citizens enjoy from the wealth of oil revenues in their country. The removal of oil subsidy seems to be total denial, callous, negligence and a path way to Armageddon.

 There is no doubt that Nigeria as one of the nations blessed with abundant mineral resources, but suffering from acute “Dutch disease” needs a panacea for her economic malady. The government adduced that deregulation of the downstream petroleum sector through the removal of government control, and shrinking the humongous rules and regulations that have restrained free enterprise could be a right treatment for the cure of the inherent Dutch disease in a nation that has all it takes in terms of human capital and natural resources to be a frontline global economy.

 Against the backdrop of various intellectual arguments that the swift way the government of Nigeria implemented the removal of the oil subsidy is tantamount to removing an ailing tooth with a bulldozer and that it would have being better for the removal of oil subsidy to be done gradually and in phases. The government has given a didactic explanation that the removal of subsidies in phases has never worked in any country and that there is a strong likelihood that it would work in Nigeria. The government pinpointed countries such as Malaysia, Indonesia and Ethiopia as some of the nations that completely deregulated their downstream petroleum sector and succeeded in removing oil subsidies in a jab.  While the government’s position sounds eclectic and academic, the reality is that they did not consider the cultural content of Nigeria and its geopolitical complexity. Take for instance democracy has not worked in all nations as it has worked in United States of America.

 By leapfrogging to implement the removal of oil subsidy before implementing the Petroleum Industry Bill (PIB) which could have paved the way for major deregulations in the petroleum sector and provide vital fiscal incentives is like putting the cart before the horse and committing economic hara-kiri.

 Before rushing into a full force removal of the oil subsidy, government would have shown that it is on the side of the poor masses who they claim will be less affected by their action by first providing enabling environment such as building more refineries to lessen scarcity of petroleum products, construct railroads to lower the cost of transportation in the country, build new road networks and repair existing ones – which some are in deplorable state, ensure mass housing  and encourage local agricultural industry. 

 It is a parody to say that the rich will be more affected by the removal of oil subsidy because they are the ones that drive massive gas galloping cars and travel frequently. It is a big travesty and muddles the water of rationality. The government forgets that at least the rich have a means of survival and getting on and the poor will depend on the rich that control the transportation industry, that are the landlords, owners of industries, business, fuel stations, etc and they will transfer the humongous cost of the burden to the poor through skyrocketing the price of goods and services beyond the meager pockets of the poor.  This will translate to extreme hardship and unparallel abject poverty.

 Although, that the government deserves a pat on the back for beginning to think of how to diversify the economy of the country which is about experiencing more growth and the government aims to use the resources freed from the subsidy removal to launch alleviating measures, it becomes apparent that the nation has not really managed effectively the surplus revenue from oil windfalls which the country has been blessed with since the beginning of the Gulf War.  Again, the government knows that it could still garner huge revenue if it can gloriously fight the endemic corruption in the country and fearlessly stop oil bunkering through which the country loses millions of dollars in weekly basis.

 In this circumstance, ensuring sanity in the utilization of the mass oil revenue in the country without robbing Peter to pay Paul is for the government of Nigeria to buffer up the good work it has already started in showing extractive transparency, fighting corruption without riddling it with internal politics and initiating programs that would bring to light establishment of infrastructures that could cushion and alleviate the stringent effects of the yanking of oil subsidy. If free enterprise or market economy appeals to the government of Nigeria as is the vogue in every democratic system, the government of President Jonathan should start to bell the cat by shrinking his government. There are multi government agencies and ministries doing similar functions and unnecessarily wasting government revenues which should have been used in launching the proposed alleviating measures.  Another way of generating more revenue internally without emasculating the already suffering masses is for government to cut down the salaries of national legislators and the executives.  This is what economic sanity means in an altar of transparency propelled through exemplary and committed leadership.

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