A deserved economic-induced protest

The politicians should be feeling the heat now. But it is a different heat from the one the masses feel. The anticipation of where the pendulum will rest in the course of the hunger protest is enough apprehension for anyone who holds a membership card, particularly those who hold political positions. The common man feels the heat of living in Nigeria where the politicians have turned lives upside down through greed, selfishness, arrogance and indifference. In the 25 years of unbroken democracy, they cannot provide the basic needs of food, shelter, water, affordable health services and quality education for the citizens despite huge financial resources. It is the cumulative frustration that has culminated in the current protest.

Since the enthronement of democratic governance in 1999, every succeeding government has performed worse than the one before it and just like labour does not get anything from the government without a strike, the citizens are not likely to get good governance without protest. Anyone who feels happy with the living conditions in Nigeria today must be part of the political class; part of those who are sharing and monopolising the nation’s commonwealth. Whenever the President says he feels our pain, I believe him but I expect him to initiate policies that could reduce the pain. Every President seems more interested in satisfying the political class than respecting the feelings of the ordinary citizens. Examples abound.

The economic policies were bringing out negative responses but economic managers stuck to their guns when they needed to review and modify accordingly. The fuel subsidy removal, desirable as it is, would naturally induce social and economic reactions, particularly price effects with consequent backlash on the cost of production and standard of living, and also induce reaction from fuel importers and oil mafia. Of course, the government did not anticipate the magnitude of reactions to the economic factor. So it rolled out a once-and-for-all policy even without monitoring the outcomes and the need to review or modify the policy. There were supposed to be short-, medium- and long-term economic policies to tackle the outcomes. There was a need to monitor the progressive effects of the subsidy removal and the policy over four to six months. Instead, another economy-threatening policy was quickly introduced.

The merging or harmonisation of the various exchange rate markets should be expected to generate another price effect given the import dependency of the economy. The price outcome of the second policy reinforced the first and rapid price increases or inflation occurred, eroding the purchasing power of the people, increasing the cost of production, shortage of goods as producers cut down production and some closed down their businesses with resultant job losses to those who were disengaged in those businesses. This is a loss of income to individuals and by extension to their extended families and a loss of revenue through taxes to the various governments.

The Federal Government tried to shore up its revenue by increasing taxes from businesses and allowing businesses like electricity, telecommunication and other services to raise their prices without raising efficiency or productivity so that they can make huge profits and the government invariably collects huge taxes from them. Everything was geared towards price increases to generate revenue for the government rather than improving production to generate revenue. In addition, domestic and foreign borrowing was going on largely to run programmes and projects in the budget or to travel around the world for conferences that brought no development gain to the country. How many businesses have come in since the presidential travels to mobilise foreign investors? Even local investors are being discouraged by policies such as high interest rates, and the sale of crude oil to local producers in dollars which the president recently reversed.

The CBN deliberately devalued the naira through uncontrolled deregulation, allowing speculators to operate unhindered and bringing the naira to its knees against all other currencies, both tradable and non-tradable. The deliberate devaluation of naira was in order to have more money when monetising oil receipts. That is why federal allocations to the three tiers of government increased and the money illusion created made corruption grow to a higher level. Extravagant spending in the open by the political class through budgetary and non-budgetary channels followed, and the level of arrogance or “I don’t care attitude” became obvious in the legislature and executive arms of government when citizens were openly wallowing in poverty.

Improving production will require lowering production prices or providing subsidies for production to mitigate the rising cost of production from fuel subsidy removal and exchange rate harmonisation. That would have saved production levels or increased outputs and consequently promoted employment. The economic managers preferred dolling out money as palliatives in the face of falling outputs. That is, inadvertently fuelling inflationary pressure. Nothing destroys a government more than inflation because it discounts the life of citizens by increasing the cost of living; destroys businesses through the high cost of production and falling demand from consumers; affects government revenue due to the closure of some businesses, cuts down in production and results in unemployment as both corporate and income taxes are reduced.

Economic managers must always aim at price stability or even a low inflation rate to get the reverse side of the forgoing negative outcomes of uncontrolled price hikes. It is as if achieving all other macroeconomic goals like full employment, economic growth, income distribution, and even the balance of payment depends on the achievement of price stability. This implies that a country cannot achieve sustainable economic development without price stability and that is why one of the central bank monetary policy frameworks is inflation-targeting.

The current monetary and fiscal policies are not working, and the economic managers must accept this. Working policies should make life better for the citizens unless it is deliberately done to promote poverty and underdevelopment. Last week on my way from Obafemi Awolowo University, Ile-Ife, I stopped along the road to buy some tubers of yam to supplement the upkeep money at home or home allowance because I know that at the current rate of inflation, the value of the home allowance has been reduced to half, if not below it. I cannot afford to increase the allowance. Buying foodstuff when I travel is my way of intervention or subsidy rather than a permanent increase of the allowance. If and when prices come down, I may not be allowed to reverse the home allowance. It was in the process of buying the yam that I realised how prices have shot up. In that same spot, I used to buy five tubers of yam between N3,000 and N4,000 but in that instance, one tuber was selling for N3,500.00! I then realised the import of my wife’s complaint. Hopefully, our leaders will go out sometime to feel the market.

There is this story about one of the disciples of the Holy Prophet Muhammed (SAW) named Umar-bin-Khattab. During his reign, he heard that there was a famine in the land and went out in the night, disguised to confirm what he heard. He found a woman cooking what he perceived as food while passing by. On his way back, he was surprised that the woman was still cooking, he then stopped over to know what was on the fire. The woman did not recognise him. She told him she was cooking stones so that the children would sleep feeling food would soon be ready. She then started raining abuses on Umar and the leadership, as many Nigerians are doing today. Umar went home immediately and quickly sent some foodstuff to the woman and for distribution in the land. You can call that palliative. Our leaders should go out to feel the environment directly.

The economy managers should set up a technical team from the CBN, Ministry of Finance, and Ministry of Planning with assistance from the Nigerian Economic Society or generally from the Social Science Academy of Nigeria, for multidisciplinary inputs to policymaking and evaluation. They should assess the existing policy and chart a new course. For example, the government should control some prices. If the Nigerian National Petroleum Company Ltd is selling petrol at less than N600, why should independent marketers be selling at N700, N800 and above? Such arbitrary pricing causes multiple agonies in the commodity market. There is truly hunger in the land. The protest is deserved. As long as the government cannot provide the basic needs of its people, it is bad governance.