By S.O.K Shillings
I make no claim of any qualifications to speak on scientific economics. My best result is a ‘D’ in ‘A’ levels. But Economics is first a product of philosophy before the evolving patterns are noted as social science.
An economy, like family resources, is made up of the commonwealth and individual earnings. A rich father may be able to give money to his wife and children to augment their earnings and buy things they need. Whatever the father sanctions to be spent is part of the family resources, he being the breadwinner.
A wiser father allows the children to maintain themselves from their earnings and earn more from the family business built from available resources. Those who are working in the family business will then be paid good salaries. There will be enough for all members in the final analysis and the future is not eaten up now.
While subsidy is meant to cushion the effect of the harsh realities of the economy, it is a distortion because both the rich and poor enjoy it. It is only reasonable if the subsidised product is one within the economy and the resource is expended internally. By the law of constant content, when a heap or hill is made, a trench of equal depth is dug because what is lost is gained and vice versa. If therefore the payment is made to another economy, then it is a trench inside and a heap outside. We are enriching others at our detriment. That is the story of the fuel subsidy.
The fuel is imported and government defrays the cost of processing and transportation which is external. Outsiders who produce in Nigeria enjoy the subsidy and make profit for their economies at our detriment. That is the foolishness of having redundant refineries made so for corruption-induced ill-advised subsidy.
What happens when there is no subsidy? The price of fuel rises and shoots the prices of goods and services ‘beyond the reach of the common man’. Braggadash! When goods are sold at proper price, proper salaries will be paid even by government and balance is maintained vide the multiplier. The Emefiele guguru Economics of currency recolouration was a test run.
Subsidy has never been beneficial except when used as a short term palliative. Take a look at Ghaddafi’s Libya which spent its oil money to subsidise almost everything for the citizens as a benevolent government. Where is Libya in African and global economy? Compare United Arab Emirates which has used its oil money to build an empire enjoyed by the emir and citizens.
Doles and subsidies in Europe are used to balance the chicanery of the lopsided feudal economies. The average european is a slave without a known master. They pay mortgage for ordinary flats till-thy-kingdom-come. So, when the imbalances of impoverishing the average man rears its ugly heads, they try cushioning by giving doles and palliative services. Those economies are bound to collapse ultimately due to imbalances in distribution. Goods are good only when there are buyers. Loans, credit cards, doles and subsidies only create artificial buyers. You can see the collapse in the meltdowns. It will ultimately become unmanageable especially when satellite and colonial economies break from the shackles and close their ‘borders’, like stopping subsidies.
If petrol will cost #500 per litre, so be it. Subsidies only enrich the producing economy while we are not growing. Compare fuel at #500 and good roads, great hospitals, adequate electricity supply and better salaries to what we have now. In the immediate, there will be distortions in enrichments as some, especially the marketers, will benefit from the suffering. But in the end, there will be balance by the multiplier.
Government however has important roles to play. The moneys saved from the subsidy removal must not be lost to corruption. It must be used for development especially in the energy sector and road construction. There is need to ensure a kind of price control and monitoring. Salaries of civil servants need review notwithstanding the existing situation of borrowing to pay salaries. The inactive refineries must be revived either by government or by sale to private operators. The importance of this is that even distribution is enhanced and the cost up north will not be so astronomical that economic development there will be further strangulated.
Thank God, the Dangote Refinery is taking off soon. I only fear what the unbridled monopoly will bring along with it as we have in cement and the electricity DisCos. There is high hope of light at the end of the tunnel. Scam or real, subsidy must not be encouraged. There is no childbirth without labour. Government must not go back on it. But it must play its part honestly, dutifully and patriotically.
God bless Nigeria!
S. O. K. Shillings Esq., former Chairman, Ikorodu NBA writes from Ikorodu.
