The native doctor
preparing an eye ointment does not use pepper as one of the raw materials!
( Ik Muo{2017}, Proverbs: The words of our elders; Gratias
Publishers, Ijebu-Ode)
I wish to confess once more that I am an ancient
economist, having graduated from the best Department of Economics in
Africa (University of Ibadan) in 1980. Since then, a lot has happened to
economics and economists and the environment has gone mad. However I still
remember the fundamentals as taught by Profs Edozien, Phillips, Mbanefo, and Drs Iwayemi , Ohiorenua, Olopoenia , Usoro et
al. I still remember because those were the days when students went to school
to study while teachers had the capacity
and willingness to teach. I still remember that whenever we were in the various classrooms and
libraries reading,( at times up to 12midnight), the lecturers were also in their
various offices reading, preparing for lectures and publications. The publish
or perish credo did not start today, except that the environment has
undergone such transitions, that it has become difficult to publish while at times, people publish and still
‘perish’. Anyway, let’s leave the good old days and talk about today, even
though old and the new are related.
Now, the proverbed that prefaced this
intervention warns that it is foolhardy for the native doctor to include pepper
in his eye-ointment mixtures. The same thing that English people refer as pouring patrol on a
raging inferno or adding assault ( abi na salt?)to injury. Well,
that is what this government has been doing since 29/5/23, when our dear BAT was seized by ‘courage from
above’ to announce in a cavalier
manner that ‘ fuel subsidy
is gone’. The courageous
announcement must have been facilitated
from above or else, the announcer, revelling in his snatch and run
‘victory’, should have given some thoughts to the local dynamics on
ground. However, he lacked the courage to banish other subsidies like 100-vehicle
convoy, cars of N100m+ for the ‘legislooters’ and contingent of hundreds, including Nollywood
celebrities, to the climate conference.
Anyway, price of fuel jumped from around N200 to N 750 today though it
is around N600 in Lagos; a rise of 200-300%.
The main issue however is that the courageous announcement pushed the prices of everything ( including body-no-be-wood) to the rooftops starting with transportation. A trip from Lagos to Onitsha that was N10000-N15000 now averages N25000 and Igbo-Ukwu to Onitsha now costs N1000+ as against N200 before the economic sun set at noon. I have just been told that a trailer load from the North to Lagos now lands at the cost of N2400000!! And that is why inflation is around 35% while food inflation is 40%. Of course, when the Monetary Policy Committee of the CBN increased the MPR to 24.57, it stated that the propelling force was the ‘continued rise in headline inflation driven largely by food prices because of supply shortages and HIGH cost of logistics and transportation’. So, the inflation, which the CBN is battling with is caused and sustained by the policies of the same government !
By the way, fuel subsidy
is back at about N1trn monthly and oil theft is going on like no man’s
business. I also bet that the fuel subsidy fraud is still is still raging
because na dem-dem. If not why do our people always set
oil-smuggling vessels afire if not to destroy evidences? It was also reported
the other day that the NNPC has a backlog of $3bn on subsidy payment, which it
is redeeming sluggishly. In effect, we are neither here nor there with respect
to this fuel subsidy monkey business but it has fouled the inflationary
terrain.
The same strange courage
let to the FLOATING of the naira a few days later and consequently it was depreciated to the tune of 98%in the
first 6 months ( as declared by PWC) and
a percentage that was difficult to measure in the subsequent 3 months, when 1$
exchanged for almost N2000! As this was happening, the rate of exchange
for clearance of goods also went mad,
increasing from N758 to N1356 within a space of 3 months. It has just been announced
with glee that Customs revenue increased
by 122% in Q124. Good. But this is not
because of increased efficiency and effectiveness or lower revenue sharing formular with rogue importers
and smugglers; it is because the government courageously more than tripled the
operative rate. Buyers and
sellers were thrown into a quandary as it was impossible for people to replace
the items they had sold at a profit. A young man who sold his wares with profit
at N700000 was asked to pay N1m to replace the same quantity of items. He
closed his shop out of desperation and confusion.
Anyway, the madness in the forex market is abating. On 8/4/234. The CBN sold Dollars to BDCs at N1101/$ but many analysts swear by the grave of their great-great-grandfathers that the appreciation of the naira is artificial. It has also been reported that our reserves have been repleted to the tune of $2.16bn in the from March 18($34.45bn) to April 15( $32.29bn) and that the Naira defence has also cost the CBN N1trn in interest on TBs in the first quarter of 2024. That is why it has been argued that the Naira appreciation is ‘inorganic and fertilised by ‘anabolic steroids’. Funny enough, when the Naira continues rebounding, prices of all items still remain high! But as we celebrate the rebounding of the Naira, we should do well to remember where we were before the enthronement of BATiocracy(circa, N450/N750). When the government, which is abolishing all subsidies, uses subsidy, further borrowing and propaganda to defend the naira, you can easily predict the outcome!
Some BAT-apostles have argued that the strengthening of the
Naira is genuine and caused by increased oil production, warehousing of oil
receipts with the CBN( where saints hold sway) and revocation of 4173 ‘shady’
BDC licenses. They also argue that the depletion of reserves was not in defence of Naira but due to the settlement
of outstanding debts to airlines… and this is when the Airlines have asked the
FGN to provide evidence that it has settled their outstandings. But Blomberg Africa has just declared that there
is a significant and positive relationship between the
strengthening of the naira and the depletion of our reserves, saying the rate
of depletion has not been seen in the past 4 years! I also have an alternative fact that crude oil production is down to 1.3mBPD
and that we have 30 cargoes unsold even as Dangote depends on imported oil. And
this is as Goldman Sachs has announced the
Naira as the best performing currency in April 2024. Well, time will
tell because as our people say, you cannot conceal pregnancy for long
And just the other
day, the Government increased the price of electricity by 300% ( from N66 to
N225 per KwH)for Band A customers, about 90% of whom do not receive the promised 20hrs+ of electricity daily. The
Minister announced the extant subsidy regime as unsustainable and justified
same by saying that Nigerians waste
electricity because it is cheap, which is why people just switch on
their fridges and freezers ad-infinitum. Probably, he learnt from OBJ who increased
fuel prices because husband and wife
would use separate cars and be just
driving about voo-voo-voo! He
has however apologised for ridiculing
Nigerians
Meanwhile, massive BANDisation
continues. Eko Electricity Distribution has just upgraded 33 additional feeders
to Band A. It is all about squeezing more revenue out of the helpless consumers
because as at last week, about 95% of
them did not receive the promised 20 hour light while 20% of the BandA
customers do not even have meters; they are still subjected to the
criminal estimated billing
thievery. The DISCOs complained that
technical glitches( this word again) prevented them from meeting
their power-supply obligations but such glitches do not prevent them from exploiting and extorting their customers. In
practical terms. N10,000 that used to buy
136 units can now only afford 41
units and an employee earning N30000 ( which some governors refused to pay)
will spend N33000 on power. How do we
even separate the people into various bands where people of different
socioeconomic characteristics live in the same vicinity? In my neighbourhood at Lagos, Ijebuode and
Igbo-Ukwu, there are people who can conveniently afford 1000/KwH but there are also
those who cannot pay N1/KwH! And what is the justification of a policy, which
prioritises power supply to the big
men while dumping the small men into the
dark ages? Why not increase the overall power supply? The Minister has
announced that as Naira appreciates further, the tariff would be reduced and
that about N1.5trn would be saved by what Chidi Amuta and Anselem Odinkalu termed tax on darkness and regressive taxation on the poor respectively.
Well, we have seen how the removal of fuel subsidy worked and surely, this one will
NOT be different. But this mindset is what my people call ogbalu ulu
agbahu oghom(he who counts the gains without considering the costs).
This policy will surely worsen the rate of inflation and, increase the economic
and social distress for some. As I write
this(15/4/22) power generation nosedived to 2775 mw from 4099; ( 32%dip) while we suffered a total system collapsed, 2.41am.
Again, this is another season of global darkness
for Nigerians who are paying more for DARKNESS. A video just resurfaced where Tinubu, as an APC candidate, promised us
adequate electricity devoid of estimated billing during the campaigns. He also
asked us not to vote him for the second term if he did not keep this promise.
But how can we punish him electorally for providing darkness when Akpabio has already assured him that he would
coast home to victory for a second term in 2027. This is somebody who has not
spent up to a year in office; who has not yet mastered the domestic geography
of Aso Rock!
The government also
explained that this hike ONLY affects
the Band-A customers and that the others should not complain. Somebody made a
mess of this argument when he or she posited that:’ If Cadbury is in Band
A and they enjoy 300% tariff hike, the price of Bournvita will go up and those
in Band Z where there are no
transformers will buy at that new prize. If this happens, they are the
ones paying the 300%. if they cant buy at the new rate, Cadbury would close
down, which will lead to unemployment and insecurity and the money made through
regressive taxation of the poor would not be enough’. And the countries
we are aspiring to be like are spending heavily on energy subsidy. In the US,
it jumped from $7.4bn in 2016 to $15.6 in 2022; China $2.2trn as at 2022 while
Italy approved $ 5.4bn to soften energy costs on 3/3/23.
Chidi Amuta was miffed by
the timing and method of the tariff-hike announcement when he put it thus: To
greet Nigerians for the sacrifice of lent and the rugged self-denial of
Ramadan, the government casually
announced a stratospheric increase in electricity tariffs. There was no
dress-rehearsal. No previous warning. No enlightenment to psychologically
prepare the populace for yet another
unplanned tax. It was announced in a typical military ambush fashion. The new
tax on electricity would seem to come from the same package as the earlier
petroleum subsidy and currency devaluation. No feelings. No compassion. No
regard for those who( would bear the burden). And incidentally, these
triple-barrelled courage-driven policies
are the focus of this intervention, especially as they were announced like-play, like-play(
despite their obvious weighty potentials) and
have wrecked havoc on the inflationary ‘ecosystem’
Some people (I no
dey among) have argued that the tariff hike was to extend a life-line to the DISCOs who have
forced us to dance disco with darkness.
One FS Yusuf, a mischievous,
‘tribalistic’ fellow, and a member
of ABV( Anti BAT Vanguard) has advised APCians
to scan their APC membership
card number onto the payment platform
and they will be automatically switched
on to band zero( free electricity
or rather free darkness as the case may
be).
My friend Dr Agu
Onwuzuruoha has described the policy as an exemplification of ‘Pie in the
Sky Economics’, which is purely illusory . He also accused the BATified policy makers of running a ‘gung-ho economics’(wetin be this one?) and ignoring the law of unintended consequences,
which turns economics into drama. The Minister of Power has also hinted that
the 300% hike would be extended to others because this one is just a test-run. By the way, a father asked his intending in-law to prove his ability to maintain the daughter
and he replied: ‘I am in Band A!’
Last 2 weeks, the CBN increased its MPR by 200
basis points to 24.75%. The argument is that it tightens the money supply and
thus minimises the flow of cash and gives a dirty-eye to
inflation. This textbook economics prescription also offers a one-sided perspective. As someone
has argued, what we suffer from is not inflation or stagflation but ‘greedflation’. And thus, basic
economic policies, which might work in sane climes, hardly work in Nigeria.
Strange ones like the last currency recolouration, when people
were buying Naira in the open market, might work. However, increasing the
MPR to 24.75% will not just reduce the cash in circulation; it
will also increase the cost of production, which will be surely passed on to
the rest of the society and this is a recipe for inflation. Furthermore, even
when it reduces the cash in circulation, it will also reduce the ability of
businesses to thrive and this will adversely affect employment and economic
growth. As I write, there are reports that banks have started ‘advising’ their customers of
their new improved interest rates, following the hike in MPR by
the CBN
Under TINUBUNOMICS 101, you have a situation
in which electricity tariff per month is
N175000, with N100000 for fuel( for just one car), cooking gas at N30,000( two
cylinders), fees at federal government colleges at N100,000 but minimum wage is
30,000, which many governors have refused
to pay. And then we have taxes upon taxes upon taxes in an environment where
businesses are struggling and there is a migration of many into the poverty
band. Referring to the sayings
of our elders with which I prefaced this intervention, I ask again: how
can somebody preparing eye ointment include pepper as one of the ingredients?
How do we quench an inferno with fuel? As a townsman and friend will always say… I come
in Peace! Those drawing the list of members of ABV( Anti BAT Vanguard) and emergency tribalists, should please count me out. And the government is proposing
a toll fee of 3000 (per gate?) on the contentious Calabar-Lagos coastal
highway, which was awarded without competitive bidding and to a company which
has incestuous relationship with Oga at the very top. Anyway, the
people will ultimately bear the brunt When will the poor breath?
Todays
realities
Meanwhile, there is need for a special
economics framework for Nigeria. The banks exist to serve other sectors of the economy. But while the real ‘real sector’ is comatose, reporting
unimaginable losses, with shareholders fund being wiped off, the banks are
making Guinness World Record profits. Zenith Bank has just declared N796bn Profit
Before Tax, UBA, N757bnPBT and GTCO609N PBT. Is it a reflection of the Nigerian
reality where agberos like MC Oluomo are bigger than transporters( vehicle
owners) or where our servants in the
NASS are bigger than some states? I just asked an innocent question
As for those who feel non-pulsed because the hole through which water entered the
boat is not at their end… I have NO comments.
The Eagle has Landed.
Ihuowelle
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