Fuel Subsidy: This PMB administration must not PANIC But.. Bolaji Aluko

Devaluation without addressing the fundamental problems for the very devaluation will lead to more devaluation - and no one has addressed HOW the devaluation itself ADDRESSES the fundamental problems.

The other fact of the matter is that both DEVALUATION and FUEL PRICE INCREASE tremendously INCREASE the cost of governance in a Nigeria where OFFICIAL ENTITLEMENTS coupled with PROFLIGACY are the order of the day - unless these are curbed through ENFORCED DISCIPLINE by government itself. For example, with fuel price increase, ALL those OFFICIAL CARS that you see on the road - for Ministers, PermSecs, Directors, VCs, Military, etc. - will have INCREASED fuel bills; in one estimate, fueling of official cars in Nigeria normally takes ONE-THIRD of ALL fuel charges in the country; add profligacy and outright theft can push that percentage up. Travel abroad (for official duties, training, etc._) and Importation of goods (cars, military equipment, etc.) for OFFICIAL duties will INCREASE in cost due to any devaluation.....
It will be the case of the dog chasing its tail.

The PMB administration must NOT be panicked into doing the same thing over and over again and expecting a different result - and it is already showing some sign of such panicking. Some PAIN must be absorbed while the FUNDAMENTAL reasons for both devaluation, fuel price increase, etc. are addressed - namely


1. MONOCULTURAL DEPENDENCE on raw materials - of which oil is merely the main example - which makes
the country vulnerable to the vagaries of international price fluctuations and raw material substitution


2. LACK OF DOMESTIC PRODUCTION of essential goods, which drains foreign reserves


3. EASE OF INSTITUTIONAL CORRUPTION, which distorts income distribution in the country


4. OFFICIAL ENTITLEMENT and PROFLIGACY at all governing levels, which distorts budgetary allocations in favor of recurrent expenditures rather than capital ones.


5. INSECURITY - Boko Haram, Niger-Delta Militancy, kidnappings, etc.

6. OVER-CENTRALIZED GOVERNANCE - the Federal dominating the states, and the states dominating the local government, leading to a violation of the principle of "subsidiarity" , which means that nothing should be done by a larger and more complex organization which can be done as well by a smaller and simpler organization. In other words, any activity which can be performed by a more decentralized entity should be. This principle limits big government and enlarges personal freedom.

Clearly, the PMB should work towards:

1. DIVERSIFICATION, which it has committed itself to (in agricultura, solid minerals, culture and tourism, etc.)
2. IMPORT SUBSTITUTION, which is obtained through LOCAL INDUSTRIALIZATION
3. TIGHTENING OF FINANCIAL OVERSIGHT of PUBLIC FINANCE, which it has begun with introduction of
TSA/IPPIS/GIFMIS/BVN, etc.
4. OFFICIAL DISCIPLINE, which it has begun with its first budget
5. ENSURING SECURITY, which effort so far has yielded some fruits.
6. TRUE FEDERALISM, to which it should move towards faster in consonance with its manifesto.

It should not expect that IMPACTS will be felt in six months or one year, until the IMPACT of its first budget starts being felt.

This PMB administration must not PANIC.


And there you have it.



Bolaji Aluko