That electricity tariff upward review policy introduced earlier in the year in my view needs to be revisited and drastically reduced so that Nigerians can breathe, to borrow the phase made popular by Senate President Godswill Akpabio who used the term during a plenary session some time ago and drew flak from Nigerians who felt it was contemptuous.
The tariff increase is clearly responsible for the sky bound price of consumer goods because manufacturers are passing the cost to consumers.
One reality that is hugging the headlines is that major key stakeholders directly involved in wage payment –federal, state and local governments as well as the organized private sector had already spoken out boldly about their inability to bear the burden of 100% increase in the minimum wage N62,000 recommended by the panel empowered by President Tinubu to handle the negotiation.
Are they being listened to?
Also significant is the fact that the organized labor may be speaking or acting only on behalf of about 8% of Nigerian workers in the formal sector since scientific studies reveal that about 92% of Nigerians are in the informal sector.
It is remarkable that the category of workers referenced above may not be in sync with the organized labor in their demand for N250,000 that is because the decision to increase minimum wage have no direct effect on them since the 2019 minimum wage Act excludes them, especially if they are not working in firms that employ up to 25 people which is below the threshold of the law.
The informal sector is the category of employees that are engaged in working for medium and small scale enterprises. It also comprised of those who serve as domestic workers such as drivers, house keepers, cleaners, baby minders, gardeners or artisans. Bus drivers and conductors, plumbers, mechanics, carpenters, vulcanizers, barbers are also in that category of those who eke out their living based on how much they are able to earn on a daily basis. People in that category may not be interested in shutting down the economy even for one day.
Arising from the forgoing, the questions that I will pose below may appear to be insensitive. But we have to call a spade by its real name by asking how labor can be demanding half a million naira as minimum wage when our country is currently looking like a ship caught up in the high seas by a very rough weather wherein the usually robust and resilient vessel is being tossed up and down by the violent waves that have the capacity to wreck the ship if the captain of the vessel is not a dexterous sailor?
My assessment of the state of the nation as detailed above may appear embarrassing. But how else can one illustrate the challenging situation in a country where the value of her currency in terms of foreign exchange rate has been like a yoyo and general inflation is currently at an alarming 34% and food inflation hovering at 40%, echoes what happened to the economy of Germany in 1923.
According to records after Germany defaulted in the payment of World War one (WWI) reparations to the countries involved in the devastating war, many of them, particularly the likes of France foreclosed on Germany by taking over their factories resulting in massive disruption of production activities in that country.
Consequently, the German Mark deteriorated from 250 to 200 billion Mark between January to November of the same year.
In light of the above, in the interim and in order to be fair to all, there is need for us to take a critical look at the upside and downsides of the three immediate reform initiatives responsible for the economy going south.
As we already know, two of the reforms came through the pronouncement of President Tinubu on the day of his inauguration on May 29, 2023.
These are the removal of subsidy on petrol pump price and the somewhat floating of the naira which had hitherto been subsidized with the funds accruing from crude oil sale.
The 3rd factor is the hike in electricity tariff for consumers in the Band A region by as much as 225 points which was introduced about six months into the life of the current administration by the minister in charge of power, Mr. Adebayo Adelabu, and the regulator of the sector, Nigerian Electricity Regulatory Commission, NERC.
The other factors such as corruption and high cost of governance which are more entrenched as they have been bedeviling our nation are the other triggers for the current misery that has engulfed Nigeria.
For the sake of brevity, we will shift focus from the aforementioned matters that have been sufficiently deliberated upon and dwell on the the current crisis precipitated by the renegotiation of the minimum wage for workers in the formal sector comprising only public servant employees and private sector organisations.
As we are all well aware, minimum wage negotiation in our country has often degenerated into a hiatus of some sorts.
So it was a big relief when a piece of legislation was introduced in 2019 aptly tagged minimum wage Act to bring sanity into the management of government and the organized labor relationship.
To see how the organized labor and government can find a common ground on the vexed issue of minimum wage, it is proper that we examine the grouse of labor which are broadly categorized into five folds:
First, petrol subsidy was removed without punishing those committing the crime of round tripping and over invoicing. For example, smugglers and those manning the borders and looking away while tankers conveying millions of barrels of petrol cross into neigboring countries illegally are involved in the corruption conundrum without consequences.
Also culpable are immigration, customs and CBN officials who facilitate over invoicing in connivance with NNPC operatives as well as NPA officials that document and authorize the movement of the cargo from the ships to the depot are also culpable and have not been held accountable. How many of the corruption perpetrators in the civil/public service are on trial or jailed like politicians of which practically all past governors and a lot of ministers are currently in jail or are being prosecuted by the EFCC in court of law?
Number two, is the removal of subsidy on the naira resulting in the skyrocketing of the exchange rate from N360.00 in 2019 to N1,900 before dropping to the N1,500 where it is currently.
With multiple exchange windows, as alluded to by former CBN governor, Sanusi Lamido Sanusi, rent seekers who had access to the corridors of powers became instant billionaires creaming off on the difference between official and parallel markets rates which could be as high N300-400 as they engage in arbitrage without consequences since the currency speculators appear to be hand in gloves with the authorities.
The third, torn in the flesh of labor activists is based on its assessment that the hike in the cost of electricity tariff which manufacturers (the ones that have managed to stay afloat) are passing to consumers by selling their products at market reflective prices which have quadrupled and responsible for the rising cost of living.
The situation is made worse by the CBN hike in Monetary Policy Rate, MPC, resulting in banks charging frightening interest rates that have hit the stratosphere, rising to as high as 40%, which is a source of a sort of prickly heat for entrepreneurs who are borrowing from banks at astronomical rates to run their businesses. Why is government making life harder by intentionally raising bank interest rates, they wonder?
The fourth friction point identified by the workers union is the appearance of government not heeding their call for reduction in the cost of governance.
In the view of organized labor and the critical mass of Nigerians, government is living in opulence while the masses are being crushed by poverty.
They cite the splashing of N21 billion on the vice president’s residence, N90 billion to subsidize 2024 hajj pilgrimage and the legislative arm spending N160 million to purchase Toyota Sport Utility Vehicles, SUVs, for each member of 467 legislators, while shunning assembled in Nigeria alternatives, at such a critical time that Nigerians are suffering the worst misery since the civil war over 52 years ago.
Their complaint also include what they term unreasonableness of embarking on the N15 trillion coastal highway stretching from Lagos to Calabar.
Surprisingly, one issue that has not been noticed by the organized labor and not in their cocktail of complaints put on the table is the unbridled theft by international oil syndicates of our crude oil assets, which is the main foreign currency earner for our country.
It is easily forgotten that less than a decade and half ago, our country was producing 2.5 million barrels of crude oil per day. Currently, we are down to producing not more than 1.2 million barrels per day on the average due to a combination of policy inconsistency and stealing.
That bogey in Nigerian oil/gas space was identified by Mr. Patrick Pouyanne, the chairman of Total Energies, who stated at a recent event tagged Africa CEOs summit in Kigali, Rwanda, that it is the foot dragging in policy formulation as reflected by a debate spanning a period of about three decades before finally passing the much vaunted Petroleum Industry Bill, PIB, that cost Nigeria $6 billion investment in the sector as Total Energies had to invest the funds into Angola while Nigeria was literally dilly dallying.
The fifth grouse is the massive stealing of crude oil products by rupturing pipelines or diverting crude oil through hidden pipelines which is another point of colossal loss of income to the nation. Although a private security firm, Tantita, has been contracted by NNPC to stem the tide, a lot is still being stolen.
Now, the holy bible talked about how it would be easier for a camel’s head to pass through the eyes of a needle than for a rich man to enter the kingdom of God.
Given that huge ocean going vessels are deployed in stealing humungous quantities of crude oil and long articulated (trucks) that are used in smuggling large volumes of petrol out of our shores and land borders on a daily basis without being apprehended, then if the challenge of the head of a camel passing through the eyes of a needle referenced earlier were to be in Nigeria, God may be surprised to see many rich men in heaven. That is because Nigerians would have corrupted the gate keepers in heaven as the criminally minded ones amongst us often boast about their prowess in compromising the system by saying, ‘With special arrangement, they can see God.’
In light of the scenario described above, corruption is the real bane of our country, not subsidy per se because corruption pervades the system and might have actually become a popular culture in our country.
There is no need living in denial by pretending that all is well with our country in that respect. It is the reason that I devoted a whole chapter to the subject titled, ‘Corruption And Unending Fight Against It’, in my latest book: LEADING FROM THE STREETS.
Clearly, both politicians and civil servants are guilty of corruption, so the trouble with Nigeria is the leadership as the novelist, Chinua Achebe of blessed memory, noted in his famous book, The Trouble With Nigeria.
The truth is that subsidy could have been managed responsibly as it is actually a tool for moderating or balancing an economy and society to mitigate spikes because even if we talk about free economies driven by market forces, the reality is really that there is no such things as absolutely free economy devoid of intervention or modulation.
Typical instances of subsidies are the Dole system in the United States of America, USA, which pays unemployed people some money to tide them through until they find work. That is subsidy on consumption and the type which is offer of student loans for people who want to go to college but can’t afford it, is subsidy on production.
In my view, the response to organised labor’s questions Nos. 1, 2, and 3 regarding President Tinubu’s termination of the subsidy regime without devising a plan to ease the ensuing pains is that, had he announced the end of the subsidy until, say, six months after taking office, the same forces that forced his predecessors to refrain from taking the risky action might have taken him hostage, and Nigeria would still be under the yoke of subsidy regime.
Regarding the current government’s failure to punish corrupt people who committed crimes such as gaming the subsidy system, based on the experience of the previous administration, which made anti-corruption the focal point of its leadership, the reality is that focusing governance on anti-corruption may be popular, but it causes mass hysteria, resulting in even genuine investors fleeing our country.
That is largely why our country had a twin recession during President Muhammadu Buhari’s eight-year tenure. No responsible leader would be careless to fall into a similar trap.
Regarding the CBN raising MPR, as earlier stated, government is attempting to contain inflation. If the rates had not been raised, the inflation level may have doubled. Economists can agree or disagree about that strategy. In the instance of apparent wastage of funds by government, several of the initiatives that workers and Nigerians have derided are carryover decisions from previous governments. Take the vice president’s residence for instance. It certainly was not built in 12 months.
Based on my own experience, when I first entered Delta State’s cabinet to serve as a commissioner over 20 years ago, government policies are like locomotive trains. Once they leave the station, they do not stop travelling until they reach their predetermined destination. They are also similar to cultural and behavioural patterns that are difficult to break overnight.
So, from the proposed purchase of a luxury yacht for the president, two new aircraft to add to the presidential aircraft fleet, a new residence for the vice president, humungous sum of money set aside for funding for Muslim pilgrimage and the huge amount of money that 469 federal lawmakers spent on importing SUVs for themselves, which are giving labor activists indigestion are actually obscene given the essential realities of hunger and starvation crushing a critical mass of Nigerians, government appear to be insensitive to the plight of a critical mass of Nigerians being crushed by hunger.
In fact, some of these extravagances are what I would like to refer to as guilty pleasure. But the majority of the policies predate the current administration in terms of when they were initiated and the challenges were also not anticipated at the time they were proposed.
That is why I have been making the case that Nigerians should give the Tinubu administration, which is now in its infancy (just a year old), enough time for his policies to unfurl, blossom and mature. It is the crux of the argument I made in my column a couple of weeks ago when I evaluated the government after one year of a four-year tenure, which is 25% of 100%.
Fortunately or unfortunately, the administration is presently developing its budget for next year, for which President Tinubu will be taking full responsibility, and it is what Nigerians will be using to fully and properly review the administration after 24 months, which would be halfway through the 48-month period. If the identified profligacy in the 2024 budget re-occurs in the incumbent’s 2025 budget, Nigerians will be justified in condemning him.
The story of the Cow Family does not end there.
It is important to note that it is a period of high inflation in Germany resulting in a revolt that threw up Adolf Hitler of the holocaust fame as leader of Germany. We all are aware of his tyrannical rule and the legacy that he left for mankind.
So, we should be careful of what we wish for ourselves.
Bringing back home here in Nigeria, we may recall after military president put the IMF loan proposal to a debate and Nigerians opted for the alternative, SAP, which he commenced its implementation, he derailed from pressure from impatient Nigerians, buckled and stepped aside. The pressure is similar to the type currently being put on President Tinubu by some perhaps skeptical and clearly partisan Nigerians to scrap the policies that have moved them away from their comfort zone.
We all have full knowledge of who took over the reins of governance from Gen. Babangida and ruled in a manner reminiscent of Adolf Hitler of Germany and brought similar infamy to Nigeria— Gen. Sani Abacha.
Again, Nigerians should be careful what they wish for, always lean on history to appreciate what it teaches and imbibe the culture of patience because governance is not a sprint but marathon.
That is my humble counsel which I hope I have been able to illustrate very well with the Cow Family anecdote.