My belief in the efficacy of market forces as the cure for voodoo economics remains unshaken. And so I welcome the Petroleum Industry Act (PIA) which came into effect this Monday. What irks me is its lateness in coming, and what I dread is its shoddy implementation.
Twenty wasted years are enough proof of our lawmakers’ diligence. It was in the same year, 2001, that they set out to review the 1999 constitution which everyone agreed was riddled with flaws – it’s a constitution that lies in its very first sentence. Twenty years and several billions of naira after, the National Assembly is still “on top of the situation” or the situation is on top of the legislature.
But has the long wait really ended? Procrastination is the thief of time. Even after the PIA’s enactment, minister of state for petroleum resources Timipre Sylva told us that fuel subsidy and the current pump price of petrol would stay “for now”. In other words, the government won’t obey its own law “for now”. A pronouncement by President Buhari on Wednesday wasn’t emphatic either. A nine-member steering committee led by Sylva has been given one year to work, suggesting that the new law may not be fully implemented until the panel concludes its work. So, the PIA may remain in the cooler — the law exists but its implementation has to wait. This is lawlessness.
Just like America’s misadventure in Afghanistan, Nigeria’s romance with “guided deregulation” of the oil and gas industry for 20 years may be ending badly for the country. We knew that fuel subsidy was not sustainable. We knew that state-owned refineries wouldn’t work efficiently. And we knew that public funds were being looted in the guise of subsidy and turnaround maintenance of refineries. Now we’ve been forced by threats of total economic collapse to do what we should have done 35years ago. How long shall we tolerate ineptitude?
Deregulation or liberalisation was a pillar of the Structural Adjustment Programme (SAP) introduced by the Gen. Ibrahim Babangida regime, but the policymakers chose to whitewash a fraud while killing Nigerians in instalments. Although the military leaders then told us they had rejected a loan of the International Monetary Fund (IMF), they accepted the global financial institution’s conditionalities through the backdoor. Corruption stepped in to distort SAP’s implementation. Yet, if the IMF prescriptions had been followed faithfully since 1986 when SAP was born, our water would have found its level well before the end of the 20th century.
Here’s a good piece of news for the Niger Deltans and other Nigerians who have expressed discomfort with the PIA: it’s not what you think. Sylva was right when he said it’s better to have 3% of something than 100% of nothing. It’s not statistics that matter; what matters is delivery of tangible benefits. NNPC boss Mele Kyari, who speculated that with 3% the local oil-producing communities would share $500m (N250bn) each year, was simply dreaming – he’s counting his chicks before they’re hatched. So it’s better we wait for one year – or two years – to see what will trickle in. If foreign investors refused to come, who else would contribute the 3%? In Nigeria, pessimists are almost always right – few things give cause for optimism these days.
Before the start of World War II, U.S. President Franklin D. Roosevelt’s government implemented “The New Deal” to bail Americans out of the Great Depression. Nigeria’s “New Deal” is likely to emerge from the ashes of a raw deal. The PIA is not a raw deal perhaps. But I don’t see it regaining the “$50bn worth of investments” lost in the past decade to delays, as President Buhari declared on Wednesday, or supporting “the nation’s economic recovery and growth plan” until we achieve political stability as well as security of life and property.
Nonetheless, I believe in market forces, the vagaries of demand and supply. In 1987 we thought all hell had been let loose as the dollar exchanged for N10. A few years later, it hit N22. Nobody dreamed it would ever reach N160. But it did — and that was the rate at which the current government met it in 2015. I don’t know the rate today, but the rumour is that a dollar fetches more than N500. And I bet you won’t get the American currency with N1,000 by 2023, the exit year of this administration.
That shouldn’t evoke fear anyway. Things won’t get worse than they are now. There will be no apocalypse when a litre of petrol costs N300. Life will still go on if the pump price hits N500 or N700 per litre. So bring it on! What may change is people’s lifestyle. We’d be forced to travel less and use internet services more. Thanks to lockdowns during Covid-19, many meetings are now conducted online. Business executives don’t need to book flights from Lagos and other state capitals in order to attend meetings in Abuja or London or Dubai. And why have we stopped trekking short distances? The medics say it’s good for our health.
When fuel stations don’t get much patronage, they may reduce prices or even close shop. When we stop asking for dollars and pounds, their rates of exchange will change in favour of the naira. When there’s no demand for foreign goods, warehouses will fill up – and smugglers or genuine importers will consider changing their business models. When schools charge high fees, withdraw your kids and put them in schools that take much less. If imported food becomes too expensive, learn to eat village food or grow your own food or eat less. And learn to first satisfy needs before wants (luxurious items). Market forces? You can’t alter the course of nature.
Let’s stop worrying about events of the future, for water will always find its level. Most Nigerians are down already and need not fear any fall. We haven’t died since 1981 when unimaginable things started happening through “austerity measures”. Who knows, the tonic needed to jumpstart the economy may lie in implementation of legislations such as the PIA.
*Nwamu, a serial entrepreneur, writes from Abuja.
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