• Friday, May 24, 2024
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Labour unions strike over petrol, electricity tariff hike, bad for economy


The Nigerian Labour Congress (NLC) and its affiliate organisations have resolved to proceed on a two-week strike to protest the removal of fuel subsidies which resulted in higher petrol prices and the hike in electricity tariffs. While we understand the outrage, we urge restraint considering that the country’s economic situation demands these policies and there are myriads of other issues demanding collective outrage.

Suffice to say, there are many reasons to be angry right now. Nigeria eerily looks like a rudderlesship in an open sea. Worse still, those who pretend to steer the ship behave as if the ship’s anchor is added for decorative purposes. It’s why this government is building a rail line to Niger instead of from Kano to Lagos or Onitsha; It’s why it is not treating the murderous herdsmen as a national security threat as if it’s not food security and national cohesion that are at stake; its why Emefiele’s CBN is playing kalo kilo with exchange rates as if it’s not the lives of people that are involved; its why the service chiefs remain in office while the country burns; its why electoral reforms have stalled even as elections have morphed into mini warfare.

Oh, there are many things to be angry about and Nigerians are justifiably outraged. These issues have a greater effect on their lives than what labour unions are protesting. The government has shut the borders for one year ruining small businesses and causing untold hardship. It is spending billions of dollars to artificially prop up the naira while keeping away foreign investors. It is not creating sustainable new jobs, it is not opening the country for investments or pushing for diversification of our exports. Despite all the noise about agriculture, it only contributes less than 2 percent of exports in 2019. This government thinks N30,000 N-power jobs or sharing N5,000 for market women or turning the Central Bank into a development bank are smart economic policies, when in reality they are the things you do when you’re trying to overtake Venezuela from the rear.

The APC-led government has multiplied poverty in the land, increased corruption and further damaged the country’s reputation. Nigeria is at the bottom of every social and economic indicator and the last place on earth to eradicate polio. While the government continues to fumble from one catastrophic policy to another, young people now believe the solution is to flee the country. This president may have fought hard to rule, the reality is he was never prepared.

However, the country is haemorrhaging and we need to stop the bleeding. This is what policies like fuel subsidy removal and electricity tariff review were meant to address. It is not sustainable to continue to spend trillions of naira yearly to subsidise petrol when our clinics lack face masks. Even rich countries do not subsidise electricity for their people and we are a dirt, poor nation despite the maddening binge on Chinese loans.

In 2016, we urged this government to remove fuel subsidies as fuel prices were below $30 and the price of refining products were at an all-time low. Several times, we urged this government to review electricity tariffs so the power sector can be viable. But in their characteristic arrogance fuelled by ignorance, they refused, egged on by a horde of nescient supporters. Now the cookie has crumbled and there is no way out.

Some of these same reforms we have consistently advocated for were implemented by Egypt around 2016 when its economy suffered a slump as Nigeria’s. It cut subsidies, floated the exchange rate, reformed the business environment and attracted foreign investments including in electricity generation.

The results have validated these reforms. In 2019 the economy grew by 5.6 percent up from 4.3 percent in 2016, according to the IMF. Income per capita reached $4689 per adult in 2019, according to Credit Suisse estimates. It is ranked 114th out of 190 countries in the World Bank’s “Doing Business” report, up from 131st in 2016. Unemployment fell from 12.6percent in late 2016 to 8.1 percent in 2019, its lowest level since 2011.

Buhari and his economic managers stopped short of full reforms. The government did a partial subsidy removal, fixed prices and called it ‘price modulation’. It devalued the naira but kept manipulating the rates. It shut borders and scared off foreign investors. Today unemployment has reached 27 percent from 14 percent in 2016, over 90 million are in deep poverty. The economy in 2016 contracted by 1.6 and grew by almost 2 percent in 2019 according to IMF figures.

It is the shame of a nation that after 50 years of discovering crude oil we import petrol from countries without oil. The refineries can’t refine enough petrol to keep the plants on and labour unions were among those who opposed its sale in 2007. Labour unions must get out of the funk that the solution is a large government. Nigeria has been unfortunate with governments that are terrible at governing and cannot be trusted with a business. The world has moved on and so should you.