Friday, January 13, 2012

Engaging the Propaganda

A thousand and one lies indeed start appearing to be true, unless tackled. Been watching the Channels debates lately as the subsidy protests take over the nation, and here are the delicate under bellies of the government's half truths:

1. Deregulation is good in telecoms, Banking etc. It will be good in Petroleum Too – By NESG Chairman, Fred Nweke (Former Information Minister) & Others

Response: Well, not exactly. Deregulating the marketing of petroleum (which is usually money losing) and not the upstream production (where the easy money is) is analogous to government owning MTN and Globacom, but privatizing sale of recharge cards! Our right to subsidized petroleum is a derivative of government’s insistence on managing that asset directly in trust for the people: who demand it cheaply. Moreover, in developed countries (like the US) where the price at the pump is deregulated, if you find oil in your backyard you also own it. In these countries as well, important resources like food are subsidized. What has the Nigerian government done for you lately?

2. Subsidy breeds corruption and the cabal benefits – By Governor Sanusi
Response: This argument is basically saying the government cannot deal with corruption or is not willing to confront their buddies that are the “cabal”. Was Femi Otedola (the Diesel Prince) not the biggest sponsor of the President’s ambition in 2011? What happened to prosecution, forensic accounting, investigations, trial of these cabal for anti-market tactics, fraud, forgery, tax evasion and perhaps treason? Guess the President does not take his Chief Security Officer role very seriously!

3. Oil is lower in surrounding markets and if lower in Nigeria it will lead to leakage – Minister Okonjo-Iweala
Response: This argument is preposterous. If this were true, then refined oil prices will be the same around the world except for islands! Think about it, every nation have a border and oil prices vary widely across them because those borders are monitored for smuggling. If the government cannot do its job, with simple technology, why should the people pay? Moreover with 75% spent on overhead, we still cannot find people to guard that border to avoid seepage? Moreover, these surrounding countries don’t produce oil. Cameroon that produces mere 85,000 barrels per day, subsidizes petroleum with up to $100 million per year. 

4. Only the Middle & Upper Class benefit– Governor Sanusi & Minister Okonjo-Iweala
Response: This argument is bogus. The price of energy affects everything in every economy and more so in Nigeria. In the US, for every 15 naira rise in energy price at the pump, the GDP is reduced by 0.5%. In Nigeria it will be worse since we are not just poorer (by many thousands) but also depend on it not just for transport but power and cooking because our government is inept! The price of everything, on everybody is going up.

5. We are borrowing money to pay subsidy – President Jonathan & Mrs. Okonjo-Iweala
Response: This is a big fat lie. The NNPC pays money for the current subsidies from sale of crude oil directly to PPRA before the balance is deposited in the Federation Account. Albeit illegal, this is what the Senate found out. How then can it be said to be borrowed? If Nigeria is borrowing, it is only because our political class of less than 10,000 people arrogates 30% percent of the budget for itself, allocates 45% for its work force (of about 350,000) and asks the rest of us (149.5 million) to make do with 25% of the budget which never gets to us!

6. The money saved by subsidy will be spent on job creation and infrastructure – President & Ministers
Response: Again, the previous point they make is the answer to this. Where will this be saved if the money is borrowed? See, we received the 2012 budget and they did not indicate any subhead as SURE Projects or whatever that is called. Fact is the SURE Initiative was an afterthought. Evidence is slowly emerging that document was put together hurriedly by his spin doctors, in the last few weeks to the end of the year before GEJ sprung us a surprise of the year. By the way, how can a government with 4.3 trillion and no evidence of good spending convince 1.3 trillion will make a difference? Or a government that cannot even organize a medal ceremony be trusted with huge infrastructure projects? The best way to restore the economy is to increase the buying powers of the people not reduce it by 1.3 trillion naira that will go into foreign accounts! Tax cuts not increases!

7. 25% cut in salaries of political officers is sharing the pain- President Goodluck Jonathan
Response: For one, let us be clear here: basic salaries amounts to nothing to political officers. They make more from security votes and allowances than anything else. They get enough freebies from us including free fuel and house helps; they basically dash away their salaries. Also, the President has no such powers to reduce salaries of political officers. They are set by the Revenue Mobilization and Fiscal Commission (RMAFC) which sends it to the National Assembly for approval. The President also did not reflect this reduction in his budget. Nice! 

8. The protests are sponsored and being used to discredit the government – Reuben Abati & the Statehouse Press Folks
Response: No, it is the policy that is sponsored: by World Bank and IMF types. The protesters need no sponsors like the President and his cabinet does; we have our minds. Being an opposition politician does not disqualify anyone from voicing their opinion against arrant policies especially popularly unpopular ones (emphasis mine). What is the point of being in opposition anyway?


t said...

DonCasiragi, I'm too tired to study your post now. But I see problems:
More deregulation is better than less deregulation. It's better to disincentivize the cabal by removing the subsidy bureaucracy than to continue to try and fail to tackle them directly. Nobody is saying the government, the PDP, are not corrupt. You are corrupt too, I'm sure, and if you were based in Nigeria and not the US, you might have become a real mafia don (why not if you're free to do so?) No be fight, I may be wrong and you may not be corrupt at all.
Nweke's first name is Frank.
Nuff respect.
Today Friday January 12th 2012 in Nigeria, the mood is how to douse the tension and move forward, so not focused on fundamentals, but on crisis management and peaceful solutions.

t said...

OK, I have to refute these for the record:
3. Transport cost. You have to model this of course.
4. Yes, petrol through transport affects all food and industry, but not 100% (estimated 30% feedthrough to petrol-based transport and 0% feedthrough to diesel-based transport)
5. Yes, Recurrent expenditure is too high and the budget structure structure is poor. Then we beg the big boys for our small crumbs. Agreed. Did you also know that subsidies were collected on all sorts of fluids besides petrol - classic transport-subsidy cheating tricks.
6. I wouldn't worry about this because I don't know.
7. ALlowances are calculated as percentages of basic salary, so in the civil service, if I lower your salary by 25%, I have automatically lowered allowances by the same 25%. But to agree with the spirit of your point, most of the money goes through things like constituency allowance, not the usual pay.
8. I didn't join any protest because I knew it would be a tower of Babel with many different motivations.

It's good that everyone is getting democratic, insisting on participating in our governance. I hope that Nigeria progresses positively, no matter what happens on this issue.

After I read your previous post "instead of removing subsidy, do this" that the difference we have on this issue is that you have seen a system that works while relying on many moving parts and integrity, whereas we need a system that doesn't have many moving parts because of corruption. For now.

I hate to seem political on this li'l ol' business blog, but this has been a week of passion for Naija people :)

t said...

A clarification and a correction to my first comment:
1. More deregulation is better than less deregulation.
2. It's better to disincentivize "the cabal" by removing the subsidy bureaucracy than to continue to try and fail to tackle it directly. (weirdly enough, I just ran into an argument about enforcement vs. incentive in Foreign Affairs. Not saying you shouldn't seek legal redress/justice/punishment where it does work...)

Busanga said...

My dear Lady T, sorry for the late response. Been busy trying to get our organization back to speed after our collective solidarity with the Nigerian people.

Again, I think the government of Nigeria is trying to pull a fast one on us on this one. I am all for complete deregulation, but partial one only means transferring money from the pockets of the poor to the rich. Nothing more, nothing less. If the entire industry is subsidized, such that I keep my oil in Ekiti or a land I buy in Warri- then we can discuss deregulation of my PMS prices. But in so far as I do not have property rights (cannot realize market value) over crude oil over crude oil found in my back yard, why then should I pay market price for its refined derivative? Get it?

Who is this cabal you speak of? Do you realize the current GMD of NNPC just bought a $1million mansion (yes, at Sienna Plantation..and I picture evidence if you want it) here in Houston? Did NEXT not report on the Allison Scam that was going on? No..there is no cabal but those in the presidency. They are just gluttons that want more from the poor to transfer to their swiss accounts.

t said...

taw, ba damuwa. I say invest our money, not share our money. You say share our money, not chop our money. That's the colour of it, right?

For now, I still don't really get your argument.

As for the cabal, it's just as real as it's fictitious. Monsters usually are. We point at them and more fingers point back at us :)

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