Jonathan Must Not Waste this Crisis

Simon Kolawole Live!, Email: simonkolawole@thisdayonline.com

Question: How did President Goodluck Jonathan manage to rally the entire country against himself barely 24 hours into the New Year? Answer: He underestimated public reaction to a major public policy—the removal of fuel subsidy. And I’d like to be honest: even though I knew that removing the subsidy (or, more appropriately, fuel price hike) was always going to elicit negative public reaction, I never knew demonstrations would grow in monumental proportions by the day. Judging from past experiences, we thought the strike called by labour would be a huge success on the first day and then gradually peter out. After all, President Olusegun Obasanjo increased fuel prices nearly on a yearly basis until he left power in 2007 and the strikes and demonstrations were never as massive as what we’ve had so far.

But under Obasanjo, there was no twitter, no facebook and no blackberry as tools of mobilisation. There was no Arab Spring. There was no “occupy”. Things have changed dramatically over the years and it was Jonathan’s luck to be the first Nigerian leader to taste the bitter fury of social media-induced resentment. Apart from underestimating public reaction, Jonathan made the mistake of thinking that Nigerians have not changed. His advisers thought removing fuel subsidy was a pure technocratic decision to be taken without any serious consideration for the political backlash. They also did not do enough scenario-painting, such as who was likely to take advantage of the situation to whip up public sentiment against the government. They simply took a decision and expected a standing ovation from the citizens who are already confronted with soaring costs of living—electricity bills, toll gates, new driving licences, new number plates, and so on.

I laughed hysterically when the Peoples Democratic Party (PDP) started grumbling that the opposition had hijacked the protests. Can anything be more naïve? What is the job of opposition? To project and protect the interest of the ruling party? Was PDP expecting the opposition to start defending and marketing deregulation? Watching the Republicans debate in the United States, you could see the candidates make deliberate efforts to blame President Barack Obama and his Democratic Party for all the woes of America, even when they knew that he was not the architect of the country’s misfortunes. But that is politics. You tell the people I am better and I have better policies than the man in power. At the last Republican debate, the candidates deliberately ignored newly released figures which showed that employment figures had improved, with additional 200,000 jobs created. That is politics.

My offering to Jonathan today is quite simple: don’t waste this crisis. He has a rare opportunity to listen to the people and take a broader and deeper look at the entire governance structure. Fuel subsidy sparked off the crisis, but a lot of messages have been passed across in the process and it would be tragic if Jonathan missed these signals and concentrates his energy on blaming the opposition for politicising the protests. The first message is that something is wrong with the marketing of deregulation. From what I have heard most of the commentators and activists say, deregulation in itself is not bad. However, it is just one aspect of the reform we need to carry out in order to reduce the cost structure in governance. This is a very important message. Governments, over the years, usually rushed to increase fuel prices without taking a global look at the hindrances to our development and how to make judicious use of our resources. Regulated pricing is the not only problem and deregulation is not the only solution. We need to see a larger picture of our fiscal nuisance if things would ever change in Nigeria.

What exactly is Jonathan’s deregulation strategy? That is a very important question. It is not enough to have a policy that will ultimately benefit Nigerians; it is also very important to manage the entire process methodically and get the buy-in of the stakeholders. The best economic policies that ignore political realities will suffer in the public arena. Now, are we looking at a one-year or two-year deregulation programme? How would it achieve results? How do we realistically encourage local refining? Or should we just hope deregulation would automatically force licensees to build refineries? What if they don’t build even after deregulation? What options are available to us? How do we address the issue of what to do with the existing refineries? Sell them or lease out the management? If licensees refuse to build under any guise, should there be an interventionist strategy by the Federal Government? Or should we continue to rely on importation for ever?

Furthermore, in achieving the objective of deregulation, are we going to remove subsidy 50 per cent now, show the people what we have done with the savings and then remove the remaining subsidy later? In the meantime, how do we cut the rot and clean up the subsidy regime? How do we deal with those who have abused the subsidy regime over the years? What is the overall government engagement strategy for deregulation? How do we get the critical stakeholders to make constructive inputs rather than just dump the policy on them and expect them to simply fall in line? What is the communication strategy? What is the exit strategy if it doesn’t work out as expected? In public policy, these are critical questions that can only improve the quality of planning and implementation. Those who think the public have no right to make any input into the policy process are deluded; good governance is best attained when the co-operation of the different publics is gained through mutual trust and respect. If the key stakeholders had been part and parcel of the deregulation process—not just calling them to a meeting and presenting a fait accompli to them—resistance would not have been on this scale.

The second message—and the most important one for that matter—is: how do we reduce waste and corruption in government? We keep saying the citizens should sacrifice, but does it make sense for the Federal Government alone to spend N1.3 trillion on personnel costs every year (I don’t have the figures for states)? As many analysts have pointed out, do we need 43 ministers? Does every minister need four aides? Do we need 469 federal lawmakers, each entitled to aides and what have you? When I was growing up, I used to hear of Minister of Information, Youth, Sports and Culture—just one person. Today, it has become four ministries, each with the full compliments of bureaucracy! Why? How has that improved governance in Nigeria? Is that not why costs keep going up? Also, can’t we have four or five senators per state and abolish the House of Representatives entirely? Do we need both the Senate and House of Representatives? Can’t we make do with just 20 ministers?

I am aware that the Jonathan administration is trying to merge some departments and agencies, but the fact remains that it is never going to be far-reaching enough. By appointing 43 ministers, Jonathan had already lost the opportunity to make a statement that he wanted a lean government, that he wanted a break from the past. It would have been easier for the president to preach sacrifice to Nigerians if he had taken concrete steps to reduce waste and corruption in government all along. The message of sacrifice would have been better received by the populace. Many have suggested that we should reduce the number of aircraft in the presidential fleet, which is a perfect suggestion. Also, most governors take chartered flights. I can’t remember the last time I was on a flight with a governor on board. Some governors even built airports specifically to be able to take chartered flights to their states. These are wastes. Some governors appoint scores and hundreds of aides who do nothing than deplete the treasury. We need to perform surgery on all these wastes.

President Jonathan has a very good crisis in his hands. He has to decide what he wants to do with it. He can seize this rare opportunity in the nation’s history to propose wholesome changes in the way we do our things in Nigeria. He has been talking about constitution review and has even empanelled a body for that matter. The sections that we now have to seriously consider for amendment have been pointed out by the people. Everything to cut the size of government at every level must be built into the new constitution. This crisis must not be wasted.

And Four Other Things...

‘Diesel Refinery’
I guess my reference to “a refinery to produce diesel” in my article last week got a lot of people confused. This is my point: diesel was deregulated seven years ago by President Olusegun Obasanjo; same for aviation fuel. The whole idea, we were told, was to encourage investment in refineries. Meanwhile, petrol and kerosene were still regulated, meaning government was still paying subsidies to make up for the loss by marketers. It follows, doesn’t it, that enough had been done to encourage building of refineries? I mean, you could set up a refinery, sell diesel and aviation fuel at market prices, and then collect subsidies for petrol and kerosene which were still regulated.

In a nutshell, you would not be making any losses, even without deregulation! With all these incentives, nobody still built a refinery. Therefore, deregulation is not the magic wand. We need to find out why investors run away even when the prices are guaranteed by government through subsidies. My sense is that it is cheaper and easier to engage in fuel importation and make your margins immediately than to spend $1 billion to build a refinery that would take years before you recoup your investment.

Occupying with Champagne
The ‘Occupy Nigeria’ movement that emerged after the removal of fuel subsidy came in many colours. At Ojota, Lagos, the crowds kept growing day by day, defying all predictions that protests only last for a few hours in Nigeria. Doctors volunteered free treatment. A cousin of mine took 10 bags of “pure water” and distributed them free of charge at the venue. Many Nigerians from the middle class took active part, trekking lengths to take part in the protests. An in-law told me on phone: “Simon, it’s not that I can’t afford N141 per litre but the government must cut down on wastes too! This is the time to take back Nigeria!” The organisers took several steps ahead of the government. Musicians came to give free entertainment. Activists took turns to address the people. I will never forget, however, the story that the wealthy also took part in the Ikoyi rally. After making known their opposition to the deregulation policy, they settled down to bottles of champagne. Unsubsidised champagne, that is.

‘Hacktivists’ at Work
Last Friday, some “hacktivists”—those who specialise in hacking websites as a sign of public protest—threatened to hit the website of the Economic and Financial Crimes Commission (EFCC). A few hours later, they succeeded in putting out a press release that members of the “fuel subsidy cabal” had been arrested by the agency. Incredibly, the statement was “signed” by Femi Babafemi, who left the agency along with the former chairman, Mrs Farida Waziri. What’s more, two of the people that were said to have been arrested were actually not in the country. One was in Ghana, another in London. Yet EFCC was said to have arrested them! It reminded me very much of the mischief that was circulated three years ago. They said President Umaru Musa Yar’Adua would resign after a “carbinate” reshuffle. The story was attributed to the News Agency of Nigeria (NAN). It is so easy to pick holes in these things sometimes.

Falana on Oil Revenue
A blackberry message was being circulated yesterday. It was attributed to activist and lawyer, Mr. Femi Falana. It read: “1. Crude oil productn/day-2.5m barrels; 2. Current price= $113/barrel; 3. daily sales= 2.5m x 113= $282.5 million; 4. Monthly sales= 282.5 million x 30 days= $8.475 billion; 5. Yearly sales= $8.475 billion x 12= $101.7 billion; 6. Naira equivalent =101.7 billion x $160=16.272 trillion naira per year. 7. Nigeria's budget for 2012 = 4.5 trillion naira. Now the question is: Where is the surplus going?!” I’m not too sure this came from Falana, because this figure completely ignores the budgets of 36 states and 774 local government areas which also come from the oil revenue. Neither is the foreign reserve taken into consideration.