The Familiar Spirit

I had so much of trouble coming up with a suitable topic for this. This is a familiar spirit.


29th August, 1993 was that year that i saw with my own eyes the utter desperation of my countrymen. It was the wake of another increase in pump price of the premium motor spirit (PMS) and of course the military government of that day did not spare bullets. I'm sure you get my point. Let’s just leave the sleeping dogs lying down for now.


18 years after; democracy in progress, double digit inflation and thinning middle class, yet my country men are back to the dark ages. It’s like a De javu and a familiar spirit of some sort. I have been through this valley before. I will save you the agonies of the differential statistics with respect to the retrogressive state of the country. I am sure not the first to state the obvious that Nigeria is a huge paradox.


How come we are still where we are? It’s amazing that in spite of the opportunities and potentials, we haven't quite been able to progress beyond here?


While i leave you to ponder on those questions, let me dwell on the matter of the moment. The deregulation of the downstream sector. Of course the deregulation of any sector is a sound economic concept. If you struggle with the concept, I will save you the semantics and all the highfalutin grammar. Deregulation is a familiar spirit.


Deregulation 101
I need you to cast your mind back to decades ago. Remember the 90s when the Nigerian Telecommunications (NITEL) was the only gateway to the world. In those days, NITEL was the sole player in that sector. It was like monopoly of some sort. The feature of that era was such that with its few lines quite a number of people could actually afford the lines. It was not an all elitist affair. The truth about NITEL is that the government had to subsidize the costs especially outbound calls. This is not an alien fact as this is true with many government agencies. The governments often bear costs to keep these institutions alive and running.


I don't need to recite the doldrums in the services of NITEL. I also don't need to recount the corrupt practices in NITEL which holds true with many government establishments even today.


Still in this retrospection, remember in the early 2000 that the government decided to exit control of the telecom sector and removed subsidy. The implication was gross. The existing NITEL infrastructure was decommissioned, new players came in e.tc. Most importantly the cost of service to consumers rose. I remember that the initial cost of a prepaid MTN line was about N50, 000 and the cheapest Nokia phone was in that region also. My Mom after many months was able to get an MTN line for N13, 000 and she got this popular Nokia ojabo kofo (Ojabo kofo was a term that described the embarrassing weight of the phone). That was then.


Things have since changed. Now, there are more players (MTN, GLO,AIRTEL, ETISALAT,VISAFONE e.t.c) in the industry (this means economics of scale and freedom of choice), costs (especially lines) have dropped so much that an MTN line now goes for N100. It’s such an interesting drama for sure. For one thing, it is arguable that there are good intentions with regards to deregulation (removal of subsidy).


Deregulation (removal of subsidies) in principle helps to reduce government spending on one sector so as to be able to divert resources to other sectors in the interest of all and sundry.


The Bone(s) of Contention:
I believe that there is a single core and fundamental question within the intellectual context of the deregulation agenda that must be answered.


1. Is deregulation (removal of subsidy amongst other initiatives) an idea that will fly with respect to the oil sector? Is this the right time? Will the end justify the means?


My solemn thought
The fallacy of composition in economics state that what is obtainable in a situation may not be obtainable in another. If this is valid, the question is that in spite of the success of deregulation in the telecoms, is this idea (deregulation) the winning formula and the required action for the downstream oil sector. Perhaps the stakeholders need to review the dynamics (Value chain e.t.c) a little more robustly.


How Credible is the government?
Isn't it preposterous that the government of the day has refused to wake up to the realities? Living in denial does no good to anyone. The reality distortion theory even though it works, (at least it worked for Steve Jobs in evolving new technologies) is unforgiving when it comes to laggards and fools.


The President said

We have designed some palliatives to help the citizenry in these times

How on earth is the deployment of 1600 buses a palliative?. Is it that the removal of subsidy which leads to inflation only affects transportation? (Doh). Shame on these brood of clueless politicians.


This government is just insensitive and lacks creativity. This same government promised to build airports in every state capital (a lousy goal). Sounds like an audacity of ignorance or arrogance to me. 70% of Nigerians live on less than two dollars daily. The president spends 1 billion naira (6 million per day on food alone). Our annual re-current expenditure includes furniture allowances (why?) A senator earns N600Million yearly. Something is wrong. What is the Nigerian government doing to show commitment to this noble course? Yet they talk about sacrifices. Isn't this just appalling. Obama and his British counterpart David Cameron showing good examples took pay cuts. Members of the House of Commons willingly surrendered their first class train tickets to save some tax payer money.


Something must change and this time around I assure you that the answer is not prayer and fasting. The answer is affirmative action.


Condolence to the memory of Seun Bolaji who lost his life in the Ilorin January 3rd, 2012 anti-subsidy removal Occupy Nigeria demonstration.


Image Credit: Google