Subsidies removal: When the MILT Acceptance Value is pushed beyond the elastic limit

One of the achievements of former President Buhari was his ability to increase our MILT Index and MILT Acceptance Value (MAV) as he successfully pushed more Nigerians below the poverty line. But removing the fuel subsidy as he was leaving the office without any provision that will neutralize the effect on the purchasing power of the people is pushing MAV beyond the elastic limit. That is the liability left for the 5 days old new government.

MILT (Manage It Like That) is a Nigerian phrase popularised by Editi Effiong that means take it as you see it, any complain makes no difference. The MILT Index (MI) is a measure of average periodic exposure to MILT within a location and ranges from 0–100, where 0 = excellent and 100=terrible. The MILT Acceptance Value (MAV) is the amount of MILT a person is ready to accept. We have a high MAV which is close to 100 because our MILT Index is exceptionally high (about 99/100).

Fuel is now N540 per litre and the implication is staring at our faces as we watch the effect on our purchasing power. I bought 37 litres of petrol for N20,000 yesterday. My main issue with Nigerian government policies that impose economic hardship on the people is the promise of "relieve after the hardship" that never comes through. At the end of the day, there is an apology, Nigerians will be expected to MILT, raise their MILT Index, improve their MAV, and move on. The ruling class has no problem with the aftermath of their miscalculations, the billions they made or making from the government can take care of them and their family.

We had this subsidy discussion on this space sometime in June 2022. The discussion was prompted by Atiku's policies and stand on fuel subsidy. While I insisted that there is nothing wrong with fuel subsidies but that we need to fight the corruption surrounding subsidies, some friends, especially Atiku supporters said subsidies must go and NNPC should be privatised. They were unable to project the current impact of the subsidy removal on Nigerians. Now that the fuel subsidy is gone, the same advocates of its removal are now shouting Tinubu! and that the manner in which Tinubu announced the removal was wrong. How do you announce what is not there?

During the campaign for the 2023 general election, all the major contenders for the number one position promised to remove fuel subsidy: Peter Obi, the supposed Labour candidate, called fuel subsidy "organised crime", Atiku called it the cankerworm that has held us down for years and promised to privatise the NNPC, and Tinubu saw it as anti-growth and anti-development. The solution to a headache is not in cutting off the head. But all the major candidates during the campaign want to cut the head of the subsidy and we were all clapping for our respective candidate.

Meanwhile, they seem not aware that there was no subsidy to remove. Not even his party's candidate. As they were busy campaigning, Buhari and his men had their plan for fuel subsidy concluded. He was preparing to leave the office with the subsidy. The Buhari government did not make provisions for fuel subsidies beyond the end of May when he was leaving. Tinubu eventually won and took over to inherit a budget without fuel subsidies.

Buhari technically removed the fuel subsidy for the next government to implement. In the inauguration speech, President Tinubu said the fuel subsidy is already gone and no subsidy to remove. As the inauguration was ending, the filling stations that had fuel in the morning locked up in the evening. That is typical of Nigerians. The devil in us at work. Taking advantage of situations to cash out. The next day after the inauguration, the unprepared Nigerians saw petrol prices move from N210 to N540 per litre. The fuel that was already imported into the country and most likely subsidized is now sold at an unsubsidized price.

The reality was that Tinubu did not remove any subsidy. Buhari had already done that before handing over to him. Whether subsidized fuel is sold at an unsubsidized price or not, the new reality is that there was a headache with fuel subsidy and instead of looking for the right medication to treat the headache, the head has been cut off. We just need to learn to live with this current reality.

Electricity is nearly deregulated but still in a state of coma despite the high tariff. So, if your house or your business needs electricity beyond the few hours that GENCO, TCN, and your DISCOs can provide, you need to power your Gen with the fuel of N540 per litre.

Life in Nigeria gets more interesting by the day as our shock absorber gets stronger. We'll always cope and MILT. The fertilizer subsidy is gone. We saw the impact on the price of farm produce. Electricity subsidy is nearly gone. We saw the impact on our income. Fuel, diesel, and kerosene subsidies are gone. A lot of Nigerians now cook with firewood and charcoal from deforestation. The current reality is the fuel subsidy that was actually removed by the former president, Buhari. The next to go is a subsidy for education. We have seen up to a 100% increase in fees and that will get worse the next year. However, salaries remain and a further reduction in purchasing power of the people.

As a matter of fact, most Nigerians have no problem with subsidy removal. The government can remove subsidies on everything. But what life do you expect a Nigerian earning the minimum wage of N30,000 to live? Put yourself in his shoe. Remove all the subsidies but ensure that an average Nigerian can survive with it.

The minimum wage is N30,000 per month and a lot of state governments pay workers less than the minimum wage. In states like Kogi state, some workers are paid less than N10,000 per month. I can't understand why the political class feels we should be able to cope. You can't pretend not to be aware of the income of the people you are leading.

There are proposals from people that think they are intelligent that people should stop complaining and look for extra sources of income to survive. That is a good proposal. I hope that our boss will close their eyes to our level of commitment to our primary assignment as we invest some time in secondary sources of income.

Dear advocates of subsidy removal, there is nothing to endure for future relief as the subsidy removal will decrease the purchasing power of Nigerian workers. The cost of transportation has doubled since 31st May, where will the relief come from? From trekking to work? We were told that just like the telecom industry, deregulation will create competition that will bring down the prices of petrol. No matter the competition from the removal of the subsidy, as long as the naira keeps depreciating against the dollar, the price of petrol will always go up. Diesel used to be N280 per litre after deregulation. It is currently about N750 per litre.

Dear President Tinubu, you can continue from where Buhari stopped and remove anything called Subsidy, it won't be a problem to the people if you give Nigerian workers a living wage that will enable an average Nigerian to afford a decent life. The Nigerians earning a living from the informal sector rely on workers' salaries. If we use all our money to buy fuel to burn, there will be very little left for them. Nigeria is already the poverty headquarters of the world as former president Buhari succeeded in pushing more Nigerians below the poverty line from 2015 to 2023.

You definitely don't want to make it worse. 30k minimum wage to live a life that the subsidy removal has imposed on us is a disaster waiting to happen. Achieving a 100% MAV is dangerous. Don't let it explode. The whole idea of subsidy removal is to save the huge money being spent on subsidy fraud. Great idea. A part of the saved money should be channeled towards increasing the salaries of workers by at least 100%.

Nigeria is always said to be broke and needs every available cash. Crude oil theft seems worse than fraud in oil subsidies. Don't forget to end that organised crime that has lasted for ages.

By

Prof. Abdelghaffar Amoka Abdelmalik

Copyright © Amoka, 04/06/2023