Mr President, please have mercy
In the last couple of weeks, there has been agitation around the increase in the price of petrol due to the removal of subsidy by the Federal Government; avoiding the controversy around the existence or otherwise of the subsidy in the first instance. Equally of similar dimension in terms of protests in the nation is the purported removal of subsidy in the unit price of electricity per kilowatt. As a result of the increments and the reactions from several quarters, particularly the labour unions, I have been inundated with a lot of enquiries from my readers both in this column and other platforms, particularly Twitter, on my take on the hike in electricity tariff and the increase in the pump price of petrol. It is true that I have not said anything on both increments, not so much because I don’t understand the basis of the action nor the implications for the people. My silence is out of ‘Siddon look’ for the reaction of labour and, by extension, the people ( Nigerians) in general.
Recall that I have, in several engagements in the past, alluded to the passive nature of Nigerians. That passiveness is not so much of a challenge to me, but the amusing and amazing thing is that, beyond their docility, whoever opts to fight on their behalf is often considered their enemy. From my personal experience, therefore, I tend to be cautious these days in responding on behalf of Nigerians. This attitude of Nigerians will seem to be the unique feature of an average African, with due respect. However, arising from the presidential speech justifying the increment in the pump price of petroleum, I am constrained to crawl out of my shell to interrogate the subject. Let me, from the outset, appreciate the reaction of some Nigerians to the rationale supplied by the President for the increase in the petroleum price.
In a swift and in-depth response by some Nigerians, they have cursorily and correctly punctured the President’s argument that Saudi Arabia’s citizens pay more for petrol, notwithstanding that the country is one of the highest producers of petroleum. The question is, can we truly and objectively compare the two nations on this without mixing up apples and oranges? The answer seems to be in the negative. As rightly pointed out by some of the commentators, the minimum wage of Saudi Arabia is much higher than that of Nigerians, implying that the conditions of living largely differ in favour of Saudi Arabians. From my little research, the minimum wage in Saudi Arabia, translated to United States dollars, is $800, which by Nigeria’s exchange rate is N380,000.
The minimum wage in Nigeria remains N30,000 where you find some ‘gracious’ employers. Beyond this disparity in minimum earnings and standard of living, I am not too sure the presidential researcher equally looked into the social security scheme of Saudi Arabia, both formal and informal, before advising the President. The social security scheme of Saudi Arabia is so robust and captivating that it will take a whole column to analyze, but suffice to say that the basic amenities are fully catered for, inclusive of provisions for the unemployed and the unemployable. Ranging from healthcare, education to housing, prompt payment of compensation in case of acquisition of private property by the government, there is abundant provision for the people. This certainly excludes the religious social security scheme that is well beyond local consumption. The justification by the President will appear to have stirred the bee’s nest as Nigerians now query the basis of the comparison. Whoever is responsible for this piece of presidential advice has done a poor job; the person has taken a pedestrian and parochial view of the situation.
In circumstances of this nature, one would have expected a holistic consideration of the issues before putting Mr. President on the spot. Be that as it is, let me categorically state that I wholly subscribe to the deregulation of both the power and the petroleum sectors. However, the timing of the increments is certainly ill-advised. In the first instance, this is a period when Nigerians are still struggling with the impact of the pandemic on their economic life.
Many businesses have collapsed, leaving their proprietors in penury and gasping for survival. Many Nigerians are struggling with survival challenges, while the new normal effects of the pandemic are still raging. In most other progressive climes, due to the pandemic, individuals and businesses are being supported by the government, definitely not in the manner the Nigerian Central Bank is distributing largesse like a charity house without a statutory provision for its mandate, and with activities shrouded in secrecy and complexity beyond the transparency radar of the government. I recall that the British application forms for accessing the palliative by self-employed taxpayers only have seven questions to be answered online, the rest thereafter is automatic deposit in the holder’s account upon satisfactory evaluation by the system.
Notwithstanding the purported due diligence by the Central Bank of Nigeria in the selection process and eventual disbursements, details of beneficiaries of the various schemes are yet to be disclosed. That probably should be awaited on the day of resurrection. Furthermore, in other countries, tax liabilities are rescheduled while others are postponed. Rather than alleviating the suffering of the masses, the Nigerian regulatory agencies are still chasing people with challenged businesses all over. The agonizing thing is that not only one of the two sectoral increments was done during these harrowing times, but the two are practically simultaneously imposed on the people. Nothing can be more impacting than this.
The removal of the supposed subsidy on electricity tariff, as essential as that could be also, suffers this same irrationality as that of petrol. Opportune time should have been searched for than the present. As it stands today, if I may take the liberty to do my own comparison between England and Nigeria, cost of electricity in Nigeria is now higher than that of England, where the minimum wage is higher than that of Nigeria and the social security system is stronger.
The summation of all the above is that, apart from the timing of the increments being inapt, reasonable interval should have been allowed between the two sectoral increments. Is all hope lost for Nigerians in the circumstance, particularly now that the labour unions have chosen to drop the ball of agitation? I am not too sure that all doors are closed for a truce. I know that the situation in town is not only unbearable but unsustainable. The peace in town will appear to me to be that of a graveyard.
There is no way Nigerians can survive with the increments with the current minimum wage. A simple narrative will drive this home. A worker with minimum wage of N30,000, if lucky in any of the cities, will pay house rent of N15,000 on the outskirts of the town for a bedroom. The minimum amount he can spend on electricity as proposed will be N10,000, while his transportation cost can never be less than N10,000. He is already in deficit. By that, he must either become a beggar or compromise his job to make extra income for survival. This is a trigger to corruption. The net effect of the illustration is that his salary cannot take him home. This is not peculiar to the low-level workers. I reckon this is the same story all over.
This will be in addition to the astronomical increase in all products and services as a result of the escalation of the prices of both electricity and petrol. I am sure that nobody is in doubt that there will be multiplier effects on all other goods and services. Certainly, there is always a consequence.
How do we now navigate out of this? My belief is that government should have, while increasing the costs of the products, contemporaneously, or shortly thereafter, reviewed upwards the minimum wages of workers. This necessarily needs not be in terms of total application of the saved amount on subsidy, but at least half of it. Having failed to do so then, I believe that it is not too late to do.
Government should, as a matter of urgency, embark on immediate review of the minimum wage in the country. As indicated above, half of what is purportedly being saved from the removal of subsidy, both on the electricity tariff and the petroleum product, should be deployed towards wage review, while the rest of the saved sum could be diverted into infrastructural development. It is only a survivor that can utilize and enjoy infrastructure provided. The multiplier effect of the review will impact the private sector to the extent that the purchasing power of the public and civil servants will positively impact the returns in the private sector.
The proposed bus mass transit approach that is being initiated cannot, from experience and precedents, serve the desired purpose of real palliatives to the challenges of Nigerians. It has never been a pragmatic solution as it tends to compound the situation. It is an ancient measure that has failed on all instances. Where are the roads the buses will be plying? Is transportation the only line expenditure of the people? The way to reflate the economy, therefore, is through the said injection of funds into people’s pockets, as a cushion to the impact of the increments. Please, spare me the fallible argument around inflation. In this way, I believe, both the government and the governed will have a win-win situation.