Paying For Nigeria’s Wrong Choices

A recent statement by a United States government official, blaming Nigeria’s woes on government’s wrong choices and bizarre spending pattern, is unlikely to sit well with the authorities; but the aptness of the remark cannot be faulted. The USAID Country Representative, Stephen Haykin, said that Nigeria’s scarce resources were being lavished on subsidies on petroleum products, at the expense of critical sectors such as education and health.

Nothing could be further from the truth. As Africa’s leading crude oil producer, about 90 per cent of Nigeria’s foreign earnings come from crude oil export. But due to the lack of capacity to refine locally, nearly all of Nigeria’s refined product needs are imported.  Most bizarre is the fact that, for political reasons, the imports are heavily subsidised, as Haykin rightly noted. There is also a deliberate government policy to ensure price uniformity across the country. The result is low spending to stimulate social and economic development.

Nigeria’s penchant for profligacy is legendary; the country has four refineries, with a combined capacity to refine 445,000 barrels per day, but only function at less than 30 per cent capacity. Rather than heed good counsel and sell them off, the centrist government, inexplicably, prefers to keep them at a huge public cost. The main reasons for holding on to the moribund, money-guzzling refineries include claims that they could be made to function at full capacity, by bringing the original manufacturers to fix them.

Last year, the Nigerian National Petroleum Corporation boss, Maikanti Baru, promised to raise the capacity utilisation of the refineries to 60 per cent, and a further 80 per cent this year. In March 2015, the NNPC promised to achieve 445,000 bpd refining capacity by spending $500 million on repairs. It followed another promise to use in-house engineers to execute the job on the cheap, instead of the $1.6 billion earmarked for it. As usual, they were all empty boasts.

All attempts to get the government to stop subsidising petroleum products have failed. Instead, the subsidy has now assumed a new name – under-recovery.  Within the 12 months to January 2018, the corporation claimed that a whopping N190 billion had been spent as under-recovery. In January 2018 alone, N47.8 billion was incurred. Between 2013 and 2017, a CBN director in charge of research, Ganiyu Amao, said $36.37 billion was spent on import of petroleum products, which affected the external reserves, inducing a depreciation of the naira. The money should have been invested in road construction, the ailing health sector and confusion-riddled education sector.

Undoubtedly, Haykin’s observation is a damning verdict on the quality of leadership foisted on this country over the years. Under successive administrations, Nigeria has transited from a promising country, with potential for greatness, to a seemingly underdeveloped one, where nothing seems to work. Once touted as the richest in Africa, bad governance and corruption have, sadly, reduced Nigeria to the poverty capital of the world – home to the largest number of extremely poor people on earth.

Nigeria now occupies the bottom rung of the ladder in virtually all the basic human development indices. Aside from having the highest number of out-of-school children, put at 10.5 million, Nigeria is home to some of the killer diseases that have either been eradicated or brought under control in other parts of the world. Reports from the World Health Organisation indicate that tuberculosis incidence in Nigeria is among the highest in the world.

Similarly, diseases such as Cholera, Meningitis and Lassa fever continue to ravage many parts of the country. No fewer than 18 Nigerians die of TB every hour, according to the WHO, while Pneumonia, a disease common in filthy, overcrowded environments, kills 20 Nigerian children under the age of five every hour. But the rich and those in government dash abroad for treatment at the slightest inkling of discomfort. At 53.9 years, Nigeria’s life expectancy is below the sub-Saharan African average of 60.7 years.

The state of roads constitutes a disincentive to the free movement of goods and services across the country. Travelling becomes an ordeal for commuters, stuck in gridlock for hours on end. Yet, there are no adequate alternatives to road transport. The government holds on to the rail system, while travelling by air is hobbled by stifling operating environment. The government has to reorder its priorities, leave certain things to private capital so as to free money for social spending.

The government has to stop borrowing to build railway, float airline, lay petroleum pipelines and build more universities. There is the need to sell the refineries, liberalise the rail system as is the case with the telecommunications industry. If the NNPC is not kicked out of the downstream sector of the oil industry, private investors will be sceptical about investing there.

Since the United Kingdom Government, under the leadership of Margaret Thatcher, started withdrawing from providing certain services and sold off some of the public utilities, the Britons have been the better for it. Let the government in Nigeria withdraw from running business and face the serious duty of governance; the result will see Nigeria moving in leaps and bounds.

(The Punch editorial)

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