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Nigerian Economy And The Subsidy Removal -Nwobi

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President Bola Ahmad Tinubu

 

The economy’s key sectors suffer due to low earnings already consumed by inflated subsidy payments. The trade deficit of $20 million recorded in November 2022 from the low crude oil export receipts signals the urgency to jettison petrol subsidy, develop local production capacity and end fuel import dependency for a favourable balance of trade.

Fuel subsidy was riddled with corruption, manipulation and mismanagement. The N3.92 trillion allocated for petrol subsidy between January 2020 and June 2022, surpasses the combined federal budgets for healthcare, education, and defence throughout the 30-month period. Nigeria spent about 10 trillion Naira on petroleum subsidies between 2006 – 2018. It gulped N5.82 trillion 2021 – 2022 and N3.36 trillion being proposed for the first six months of 2023. These figures indicate a significant drain on the government’s finances, impeding its ability to invest in crucial sectors which could bolster economic growth and people’s well-being

Such a dilemma and tough decision. The government is confronted with either continuing the subsidy and deepening an unsustainable fiscal deficit or risk potential social and economic unrest by its removal. Notwithstanding, the subsidy had to go. Fuel subsidy removal could save Nigeria around N7tn annually which could be channelled to infrastructure, education and health.

Over the years, the Nigerian economy has been subsidised in various ways for many years and this includes fuel, education, electricity forex etc. Fuel subsidies began in the 1970s and became institutionalised in 1977 following the promulgation of the Price Control Act which made it illegal for some products (including petrol) to be sold above the regulated price. While the concept of subsidy itself is noble, its administration in Nigeria has been plagued with serious allegations of corruption and mismanagement.

Thirteen years after diesel was deregulated, kerosene subsidy was removed in 2016. However, the subsidy on Petroleum Motor Spirit (PMS) has proven to be the biggest challenge to the managers of the Nigerian economy. On an annual basis, a substantial portion of the national inflow is committed to funding the subsidy scheme. Of course there are good reasons for the astronomical growth in subsidy amount-price of crude oil in the international market, volume of PMS consumed albeit debatable, and Naira devaluation are some of the drivers. In view of the significance of the amount committed to funding the subsidy regime, I strongly believed that there is a need to have a close look at this scheme.

According to the World Bank, Nigeria’s total revenue in 2000 was USD10.8 billion. By 2010, this amount increased to USD 67.9 bilion. Yet the Nigerian government has spent over USD 30 billion on fuel subsidies over the past 18 years. This has had a significant impact on funds available for critical infrastructure and other essential sectors such as education, health, and defence. According to the Debt Management Office, the country’s public debt stock is being increased as the government had to borrow N1tn to finance fuel subsidy in the year 2022.

According to a report, households in the bottom 40% of the income distribution account for less than 3% of all fuel purchases. Furthermore, it is reported that three-quarters of all fuel sold in Nigeria is consumed by private firms, public transportation services, government agencies, and other businesses. Most vehicles used for carrying large numbers of people (such as molue) and goods are diesel powered which is already deregulated.

Again, household Kerosene which is mostly used by the poor is no longer subsidised, meaning that the poor are already to a large extent paying market prices for their fuel. This effectively means that the government is subsidising mostly those who can afford fuel (PMS) at market rates and not the poorest of the poor who need subsidy. This is one of the major problems with the way fuel subsidy is being implemented in Nigeria. For the benefit of subsidy to reach its intended recipients, the current structure will need to be reviewed and creatively restructured.

Nevertheless, there are always ways to make things better for ordinary Nigerians in the phase of hardship occasioned by the subsidy removal. The government needs to implement mitigating measures swiftly to protect vulnerable households from the adverse effects of fuel price increases, investments in health, education, and infrastructure to support the poor, as well as expanding safety net programs to shield vulnerable populations from the immediate impact of subsidy removal in addition to a fair and equitable transition to a sustainable and economically secure future.

Written by: Cosmas Chukwunonso Nwobi

Opinion

Desecrating Arewa’s rich cultural heritage

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By Tahir Ibrahim Tahir Talban Bauchi.

The imbroglio in Kano Emirate is serving as the crucible in which arewa’s rich cultural heritage is being desecrated. The biggest loser in the game of thrones in Kano is the Northern Emirate system, its pride, prestige, and rich traditional/ cultural heritage. Its dignity is being decapitated, its aura being eroded, and all it has stood for are being belittled into a chessboard for politicians to flex their war of attrition, with the traditional institutions as ready pawns for their never ending political vendetta. The Northern Emirate system was a highly revered institution which was respected by the colonial masters, placing Northern Nigeria on a very rich pedestal of ancient civilisation. It was a stabilising institution that ran the entire region with a system of governance, along with a taxation regime similar to the British monarchy. That was the genesis of the warmth and camaraderie that the colonial masters extended to the Northern Emirates, as against other regions in Nigeria. Today, all of the grandeur, color and influence of the Northern Emirate system is fast fading away, with the tossil for the Emirship of Kano almost serving as comic relief to the very hard economic conditions faced by the Nigerian populace.

‘Kanon dabo’, ‘Kano jallabar hausa’, ‘Kano tumbin giwa’, ‘Kano ko da me kazo an fika’: are all slogans that have exuded Kano’s excellence as a leading State in Northern Nigeria, be it in trade, education, or the prestige of its traditional institutions, that have towered above all of its contemporaries, both in the Sokoto Caliphate and the Kanem Borno Empire. In its prestige and glamor, it has also served as the hotbed of Emirate tussles from time immemorial. Most memorable is the deposition of the Emir of Kano Sanusi I by the Sardauna of Sokoto, and the creation of new Emirates of Gaya, Dutse, Rano and Auyo in Kano by Gov. Abubakar Rimi, and the upgrade of Kazaure, Gumel and Hadejia to first class emirs, equal in status with then Emir of Kano, Alh. Ado Bayero. The most recent was the removal of Emir Sanusi by Governor Ganduje, along with the creation of 5 other Emirates in Kano, of equal status.

The present storm was created by the removal of the Emir of Kano, Alh. Aminu Ado, and the installation or reinstallation of Emir Sanusi as the present Emir of Kano. The tussle has been made more complex by the roles of the Legislature and the Judiciary in the State, acting at cross-purposes, intruding in their seperate constitutional roles, making a mockery of both arms of government. As against popular opinion, the Executive arm of government in both the states and Federal Government, appear to be more clear-headed in actions and deed, compared to the ambiguity and controversy generated by the Legislature and the Judiciary. Statements and counter statements by the NBA Chairman, Kano State chapter, and other officials of the NBA, clearly defines that there is an encroachment of the duties and obligations of the two arms of government, and unless there is a clear disentanglement over who does or decides what, going by the rule of law, the Kano game of thrones would go on for a while. The court judgement, whether ‘jankara’ or not, has to be settled, for the pronouncement of the law by the State Assembly to finally rest. However, the frivolities of these kinds of court actions must be reigned in by the National Judicial Commission, NJC, so that courts do not entertain cases they have no jurisdiction over, or cases that seek answers that have already been provided by the Legislature, and the constitution. Most of such cases are judicial exercises in futility.

The APC led government of Kano used its powers to dethrone Emir Sanusi, and install Emir Aminu Ado. In the same manner, the NNPP led government of Kano used the same powers to reinstate Emir Sanusi and remove Emir Aminu Ado. Each of the emirs sided with the political party that gave them the throne and that is no secret. Once APC lost Kano in the Supreme Court Judgement that ushered in Gov. Abba Kabir Yusuf into power, it was a no brainer that ultimately, he would seek to reverse all the reversibles of the Ganduje led APC. This of course includes the reinstatement of Emir Sanusi. If the APC really needed to have Emir Aminu Ado on the throne, then they ought not to have lost the battle in the Supreme Court. Losing at the Supreme Court meant losing Kano, losing the government, and also losing out in the emirship tussle.

As it is now, the situation can best be described by the hausa proverb, ‘haihuwar guzuma, ya kwance uwa kwance’, directly translating as, ‘the delivery of an old cow is not an easy one, with both the calf and cow in critical condition’. The Northern Emirate system’s nose has been greatly bloodied, once more soiling its identity and heritage. The Judiciary and the Legislature have also been bloodied and ridiculed, with each taking obvious sides with no pretences. Both Emirs’ experiences of being enthroned and dethroned are debacles they’d rather not have in their reigns as emirs. Does it now foretell that once there is a change in the party that wins the elections, there will inevitably be a new Emir as well? Or perhaps worst still, if the Emir and the governor supporting the same party do not agree, then we should expect a new Emir within the same party? Kano and all interested parties should allow this matter to rest. It is an unnecessary distraction from the troubles bedeviling the North. Our energies should be channeled towards using the Emiral system to fight insecurity, as against being used as a weapon for political vendetta.

Tahir is Talban Bauchi.

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Opinion

US-Israel Decades Strategic Partnership

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Idris Sani Dagumawa

 

Idris Sani Dagumawa

The relationship between the two countries started 75 years back, where America declared their support for Israel 11 minutes, after the official declaration of Israel State. America supported since from the start. The idea of the formation of a Jewish state started in the late 1800, where it is called “Zionism”, a movement believed that providing a safe space for the Jewish community will bring the end of the suffering they faced around the world, fueled by the events in World War II. In 1948, the declaration of a Jewish state came to life, on the land that was previously own by the Palestine under the British control. America was one of the front liners to accept Israel as a state, because US at that time doesn’t have a defendable ally to do its bidding in the 1990s, so they needed an ally in the Middle-East, in that case having a strategic partner at that time has become imperative. And so far, the relationship has proven effective to the both countries and also serves their national interest, America has a major strong hold in the Middle-East where it can obtain its information from in the region and Israel has build its self to the one of the strongest country in the region in terms of economy, elite military personnel, science and technology, agriculture and many more, and I don’t see it ending in the nearest future.

Israel started gaining its momentum during the cold war, where the fight for influence between US and the former Soviet Union in the region emerges. After the declaration of Israel state 5 of the Arab League countries went to war with Israel, which it manages to engage while still lobbying for support from the Western state. It finally gets the support it needed in 1962 during President Kennedy’s administration, which in 6 days it regains its lost territories and concur some regions from Egypt, Syria, and Jordan. After that, Israel builds a fortress of information gathering, and obtained information from its neighboring countries and channel it back to America, which compensate the US handsomely.

Another gain for Israel is, they made alot of money from the US since the second World War, America gave money to Israel more than any other country. About 260 Billion Dollars in total which Includes economic aid, but now it gives money only for military purposes, 3.8 Billion Dollars is given annually as part of a deal sing by the Obama administration, it helped Israel build one of the strongest military in the world. But funds are given out with an agreement of, it has to be spent on American own companies in that way the money keeps going back to the US, it is kind of a gift given with right hand and collecting it back with left hand. But what makes the deal more favourable to Israel is, no any regulations so far is attached to how they use those military gears, we all know that there are rules and regulations surrounding how America’s fighting gears are to be used on only defensive purposes, but for Israel, it is a different approach where we seen alot humanitarian crises, war crimes, and human right abuses happening between them and Palestine. Israel is basically given a free pass on how it chooses to use it is military resources be it in a good way or otherwise.

Another factor to be considered is the internal politics of America, which basically a politician being a pro-Israel gives you an upper hand in getting elected into office. The existence of America Israel Public Affairs Committee (AIPAC) and others, which are pro-Israel lobby groups, and happens to be the one of the major campaign donors and sponsors for the US public elected officials. They promote policies that helps shape the future of Israel. What normally happens is when a policy is brought up, it is normally weight against America’s foreign policy if it favors, then they go for but if it is the opposite? it has to be dropped.

Lastly religious beliefs contributed alot in making the relationship better, where America’s big portion of voters are Evengelicans or “Born Again” Christians and they made up of quarter of the Americas population. Which in their believe, the issue of of Israel existence is not politically motivated but rather a religious one. But the recent October 7th war on Gaza, has started to change how Americans view Israel, and started to feel sympathy for the people of Palestine. Even the standing order of giving Israel free money to defend itself has started to see some resistance, because the tax payers are questioning the processes. Israel existence reduces the work load of the US in the Middle-East, they do almost all the heavy liftings.

Idris Sani Dagumawa is a Civil Engineer and he writes from Kano

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Opinion

Return of Sunusi: The dilemma ahead

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Mohammad Qaddam Sidq Isa (Daddy)

The return of Muhammadu Sunusi ll as Sarkin Kano is yet another manifestation of the influence of politics on the traditional Masarauta establishment, which, after all, has always been used and abused by politicians.

Since the British conquest of the Usman Dan Fodio Islamic sultanate in what subsequently became part of today’s northern Nigeria, the enthronement and dethronement of emirs (Sarakuna) have always been motivated by underlying political interests.

Throughout the colonial era, the British would only enthrone aspiring princes deemed the most loyal to the British colonial establishment as leaders of their respective emirates. This practice enabled them to maintain their colonial grip through those proxy-Sarakuna. And since then, successive generations of military and civilian administrators have followed suit, enthroning and dethroning Sarakuna literally at will.

The only shift in this regard is that, in the past, the influence of political leaders would mostly come to play only when a throne became vacant mainly due to the death of the Sarki, when the incumbent governor would influence the emergence of his successor, as it happened in 2014 in Kano that led to the enthronement of Sunusi. However, now that the trend is becoming systematic, it will indeed, if left unchecked, render the reins of Sarauta effectively tenured, subject to the tenure of the governor behind it.

After all, just like his enthronement in 2014 by then-Governor Rabiu Musa Kwankwaso and his subsequent dethronement in 2020 by then-Governor Abdullahi Umar Ganduje, Sarki Sunusi’s return to the Kano throne remains politically motivated within the context of the power struggle in Kano politics between Kwankwaso and Ganduje, two provincial vindictive enemies hell-bent on finishing off each other.

By the way, as a subservient Kwankwaso ‘boy’, Governor Abba Kabir Yusuf himself is a mere fighting tool in the hands of his godfather in the struggle.

Interestingly, Kwankwaso has tactically put his vengeful mission against Sunusi on hold for now, pending finishing off Ganduje and his legacy.

Sunusi incurred then-Governor Kwankwaso’s wrath as a then-Lagos-based bank executive when he kept dishing out disparaging criticisms against Kwankwaso and his government. For instance, in an article he titled “The Kwankwaso Phenomenon”, Sunusi described then Governor Kwankwaso as a “rural aristocrat” who “surrounds himself with provincials and places key posts in the hands of rural elite”. He also compared Kwankwaso’s government to “the classic comedy of the Village Headmaster in a village council”.

Kwankwaso got mad at Sunusi and demanded his sacking by his then-employer, United Bank for Africa (UBA). He threatened to stop his government’s dealings with the bank in case of non-compliance.

Anyway, now that Sunusi is back, it remains to be seen how it plays out between him and Governor Abba, considering Sunusi’s penchant for publicity stunts involving controversial utterances against government policies and wrongdoings.

As much as Sunusi is excited about his return to the Kano throne, the development represents a tricky dilemma for him that also tests his supposed commitment to outspokenness against government wrongdoings.

On the one hand, Governor Abba won’t tolerate his stunts in the name of outspokenness; no governor will, either. And unless he (Sunusi) has, this time around, decided to desist from his stunts to keep his throne, Governor Abba, under Kwankwaso’s influence, won’t hesitate to go to any extent, including dethronement, to deal with him.

On the other hand, his desistance from his stunts would undoubtedly mean the end of the reputation he has somehow earned as an outspoken critic of government wrongdoings.

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