Children Of Austerity
The new year will be quite challenging for Nigerians. They need no prophet nor soothsayer to predict this. The country's situation evolves from its reliance on a mono culture; oil. Politics is the largest and most productive industry in the country with being in government, the most profitable investment. With falling crude oil prices, the economy is bound to wobble, and unpalatable policy dishes served. Wisely, the Government benchmarked the 2016 Budget on a very low figure of $38 per barrel down from the $53 last year, and $76 for the 2014 Budget. Based on a 2.2 million barrels quota, it is hoping to make a daily income of $83.6 million or $30.514 billion in 2016.
Even at this quite conservative benchmark, the International Monetary Fund (IMF) is saying it is a foolish proposition as oil may sell as low as $20 which will throw the budget into a spin from which recovery will be difficult. The IMF may be correct because last November, OPEC pumped 1.7 million barrels above its ceiling into a market witnessing glut thereby pushing oil price below $37 per barrel. The seriousness of the Nigerian situation can be gleaned from the fact that oil sold at $112 in June 2014. It means there has been a two thirds drop in price.
The second challenge is the devaluation of the Naira that fell to a record N280 to the dollar at the parallel market before clawing to N268 on New Year eve. The implications for an import-dependent nation, are serious. It portends high inflation and devalued incomes. Parents with children schooling outside the country will need far more Naira to buy foreign currency as would those needing foreign medical treatment. To complicate matters, many of us cannot comprehend the staccato of policies on foreign exchange. I concede that economics may be a much too complex science for commoners like me to understand. So economics takes the form of belief; for every new policy, all that may be required of us is to say, Amen, God Almighty bless you!
A third challenge is the cost of petroleum products especially in the context of a generator-sustained economy. Again, it is another difficult terrain for commoners to comprehend. For instance, the sector is pronounced deregulated with subsidy, which may mount as a result of currency devaluation, being phased out early this year, yet prices are imposed. To add to the confusion of novices in oily matters like me, the prices are ministerial announcements while the law says the Petroleum Products Pricing Regulatory Agency (PPPRA) is required to meet, discuss the pricing template and agree on prices. I love action, not rigmarole, so I am beginning to sing the Nunc dimittis to the PPPRA; if it is scrapped there will be only a few teary faces.
Higher petroleum product prices will not only deepen poverty, but also endanger jobs. It is heartwarming that government has promised mass recruitment this year, but it is also wise to do everything possible to prevent mass job losses. One sure way of job losses is the continuous increase in electricity tariffs which has become a periodic ritual.
Before the new increases were announced, manufacturers in the country had cried out that energy consumes forty percent of production costs. After years of appeal, they had gone to court to stop further increases, but this has cut no ice with the Nigerian Electricity Regulatory Commission (NERC) whose sole duty seems to be making the electricity companies happy and richer with tariff increases while turning a blind eye to their inefficiency, stagnation and lack of investment in the sector.
We may also see the reintroduction of toll gates across the country. Whatever the case, Nigerians should brace up to pay more taxes. Since the 1990s when state governments abandoned tax to consultants, ingenious ways of inventing, increasing and imposing more taxes are being made. Now, everything is game including paying taxes for water not supplied. Ironically, it is the worker and poor that actually pay prescribed taxes. The rich and the powerful including giant oil companies have ways of dodging, or paying token. They have tax exemptions and waivers. They register multiple companies to beat the system.
It is during hard times the lowly paid, poor and vulnerable, need government support; it is the time to reduce or abolish taxes for them. Talking about the lowly paid; things may actually get worse with some governors renewing their agitations for a cut in the monthly National Minimum Wage of N18,000 which is less than $68. If they don't succeed, they may cut jobs or return us back to the era of unpaid wages.
None of these are strange to Nigerians born after independence as austerity measures have been imposed continuously by successive governments since the Muhammed – Obasanjo regime of the mid '70s. They may come in different slogans; Belt Tightening, austerity measures, Structural Adjustment Programme (SAP) Poverty Reduction Strategy Paper (PRSP) Appropriate Pricing, Deregulation, whatever guise, it remains a value deducted life. The post-independence generations, are essentially, austerity children. They are fed with nothing but 'palliative measures'
Ironically, with deepening poverty, we also witness the increasing number of billionaires. So we have a situation where those who are over fed, preach patience and sacrifice to the hungry. But why are we so blessed resourc wise and intellectually, yet cannot address the basic needs of our people? To paraphrase Chinua Achebe, why do we live on the banks of the ever flowing River Niger, yet wash our hands with spittle? WE CONTINUE TO DO THE SAME THING BUT ANNOUNCE THAT THE RESULT WILL BE DIFFERENT; THE KANURIS SAY IF YOU DIG A HOLE TO FILL ANOTHER HOLE, YOU HAVE ONE MORE HOLE TO FILL. We believe in the catechism of the international financial institutions; cut costs, abolish subsidies, government has no business in business, the private sector is the engine room of development, privatize, liberalize, borrow, devalue, trim public service.
Our elites for centuries have looked westward hoping to see a different horizon. They lift their eyes to the same gods of underdevelopment and austerity, and say, where will our salvation come from?
Written by Owei Lakemfa.