April 18, 2024

Electricity tariff hike: Civilised nations don’t pauperise their citizens, by Olu Fasan

Olu Fasan

Olu Fasan

A nation is civilised not because of its aesthetic, its beautiful architecture. Rather, a nation is civilised because of how it treats its citizens, because of the duration and quality of life of its citizens. That’s why social security or safety net for the poor is a badge of the heathy society. However, Nigeria creates billionaires but eviscerates the middle classes and makes everyone else poorer without meaningful state support. 

Former President Olusegun Obasanjo once bragged that he created many billionaires while in government. “My aim when I was in government was to create 50 billionaires,” Obasanjo said. “Unfortunately, I failed. I created only 25.” But how? Well, he banned imports of certain products, allowing some manufacturers to enjoy a protected domestic market and rake in billions; he granted waivers of import tariffs to favoured people, who imported large shipments of consumer products, such as rice, tariff-free and sold them expensively, thereby becoming billionaires; and he gave oil blocs to a select few, turning them into billionaires. It’s crony capitalism, a rentier state. Capitalism is rigged to favour a small elite.

A few years later, President Goodluck Jonathan was livid when the World Bank listed Nigeria among the five poorest nations. “If you talk about ownership of private jets, Nigeria will be among the first 10 countries, yet they are saying that Nigeria is among the five poorest nations,” Jonathan said, angrily. He was measuring the wealth of Nigeria and the prosperity of Nigerians by the number of billionaires who owned private jets. It didn’t bother Jonathan that while some Nigerians owned private jets, several millions wallowed in abject poverty.

Bola Tinubu, Nigeria’s current president, is following in the footsteps of his predecessors: making the super-rich richer, emasculating the middle classes and deepening the poverty of the poor. His removal of the fuel subsidy, without mitigating its impact on the poor, has had that effect. Now, hiking the electricity tariffs will have the same effect.

Of course, the fuel subsidy created billionaires through corruption, especially during the eight years of President Buhari’s acquiescent government. But instead of tackling the corruption and recovering public funds from the subsidy fraudsters, Tinubu scrapped the subsidy altogether. The scammers are enjoying their stolen billions while ordinary Nigerians face the inflationary pains of the subsidy removal. Former Governor Nasir el-Rufai of Kaduna State said this week that the Federal Government is now paying more for fuel subsidy than before the subsidy removal, which, without tackling the subsidy scams, would create more shady billionaires. Although government says it has saved trillions from the fuel subsidy removal, it has not used the savings to alleviate the cost-of-living pains of poor Nigerians beyond paltry “palliatives” of bags of rice. 

What about electricity subsidy? Since 1999, when Nigeria returned to civil rule, electricity generation and distribution have gulped about N10 trillion, which created crony billionaires. Yet, according to one UN-backed report, over 92million Nigerians have no access to electricity. Indeed, there are just 12 million registered electricity customers. Even for those 12 million subscribers(households and businesses), regular electricity is a mirage. Yet, the Tinubu government wants to raise electricity tariffs from N68/per kilowatt-hour to N225/per kilowatt-hour – over 200 per cent increase – for so-called Band A customers. But targeting the Band A users would further gut the middle classes and further immiserate the poor through pass-through costs. 

My interest here is not the details of the subsidy removals, but the fact that successive Nigerian presidents have violated the Constitution. Nigeria, constitutionally, is a welfare state, but successive presidents have ignored that. Recently, someone wrote a column saying Nigeria did not need a new constitution because the current Constitution includes a bill of rights and a charter of freedoms, such as the right to life and economic self-determination. I laughed. Which of those rights are justiciable? Any constitution that creates human and civil rights for citizens but also creates an extraordinarily powerful state and presidency that can get away with virtually anything is a bad constitution. The US constitution guarantees the rights of the citizens, including to “life, liberty and the pursuit of happiness”, and limits the power of the president regarding those rights. Furthermore, the American Supreme Court unwaveringly safeguards those citizens’ rights against state encroachment. That’s not the case in Nigeria, where the state’s unfettered powers trump the “rights” of the citizens.

Take section 16 (2)(c) of the 1999 Constitution. It states that the State “shall direct its policy towards ensuring that the economic system is not operated in such a manner as to permit the concentration of wealth or the means of production and exchange in the hands of few individuals or of a group”. Has that been the case? Oxfam’s Inequality Index 2019 ranked Nigeria 157th out of 189 countries where the gap between the rich and the poor has worsened, and ranked Nigeria 157th out of 158 countries on the Commitment to Reducing Inequality Index 2021. So, why have successive presidents ignored section 16(2)(c) of the Constitution, and why is the provision not justiciable?

Then, take section 16(2)(d) of the Constitution. It requires the State to “direct its policy towards ensuring that suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wage, old age care and pensions, and unemployment, sick benefits and welfare of the disabled are provided for all citizens”. Tell me, has any Nigerian government done any of these? Does Nigeria have “reasonable national minimum living wage”? Note the words “living wage”. The total remuneration package of a senator is about N15 million per month and Tinubu recently approved N65 million annual salary for the Chief Justice. So, why is section 16(2)(d) of the Constitution not actionable? Yet, the government is withdrawing all social subsidies!

As an economic liberal, I believe that market, not the state, is the best allocator of resources. But capitalism must have a human face. Adam Smith, the father of capitalism, who wrote The Wealth of Nations (1776), the bible of capitalism, earlier wrote The Theory of Moral Sentiments (1759), saying that “the source of our fellow-feeling for the misery of others is by ‘changing places’ in fancy with the sufferer.” Sadly, Nigerian leaders are not “changing places”; they are not putting themselves in the shoes of poor and vulnerable Nigerians. 

Yet, Nigeria is, constitutionally, a welfare state. If Tinubu can’t honour the constitutional obligation, he must not increase the misery of Nigerians by hiking the price of everything!