Last week, while writing on this topic, I stopped at the point where I said, “The man I will vote for must also promise me one thing about the cost of petroleum products and the role of subsidies.”
Fundamentally, the cost of petroleum products affects our pockets and limits our purchasing power, while subsidies can moderate their cost.
Without subsidies, a severe cost-of-living crisis can hit transportation, logistics, and private electricity generation. No one can escape its ripple effects in daily life.
Transportation is visibly affected. Private vehicle owners feel the pinch at the pump, while public transport fares rise sharply. Commuters, workers, students, and businesspeople spend large portions of their income to get around.
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This invariably affects food production because logistics become highly expensive. Because many farmers rely on tractors and other machinery, they must pay exorbitant rates for these services as petroleum costs rise. They, in turn, pass these high logistics costs on to consumers, driving up prices for staple foodstuffs in open markets. Food insecurity rears its ugly head in any nation that lacks food security.
Another factor that causes businesses to pass costs on to consumers is electricity generation. Because our national electricity grid is unreliable, many business owners and households depend on generators for electricity. These generators run on petrol or diesel. Small businesses such as tailoring shops, salons, local fabrication shops, mills, welding workshops, vulcanising shops, and others operate at high costs because petroleum products are expensive. Consequently, they must raise prices to cover operating expenses.
Heavy industries and manufacturing concerns face the same problem. Because their operating expenses are high, they may have to reduce their workforce and raise prices to stay in business. Steep operating costs worsen unemployment, multiplying idle minds on the streets and potentially contributing to rising crime.
Ultimately, the money in our pockets and the real value of our wages shrink. This affects savings, family welfare, and the ability to educate our children, as parents may no longer be able to seek quality education and instead settle for the cheapest option they can afford. Breadwinners may no longer consider the nutritional value of food but choose quantity to survive. Health-wise, substandard drugs and unregulated herbal medicines may become more attractive because they are what people can afford.
This reality can cause significant mental stress, reduce quality of life, and create numerous negative sociological effects. It may also lead to widespread public discontent, protests, and civil unrest as members of society express collective economic exhaustion.
My take is that I will not vote for a candidate simply because he promises to bring back subsidies. After all, under past subsidy-heavy regimes, we saw many of the problems outlined above. At the same time, it is not enough for me to refuse to vote for a candidate simply because he will not bring back subsidies; there are many countries without petroleum subsidies whose citizens enjoy high standards of living.
Therefore, what I will look for in the candidate who will get my vote is his plans to ensure Nigeria is not bedevilled by the problems outlined above, with or without subsidies.
To avoid this, we must strengthen our currency. And our currency can only grow stronger when we become more productive as a nation. We must produce what we eat and drink, what we wear, and what we drive. The candidate must steer us away from being primarily consumers and toward becoming producers.
Although the National Minimum Wage (Amendment) Act of 2024 makes it mandatory to review salaries every three years, rather than every five years under the previous law, our current minimum wage may be “very enough” if our currency gains significantly in value against the dollar.
An increase in wages that is not well thought out can make inflation spiral out of control, causing higher prices for goods and services to erode any benefit from the increase. A stronger currency is a better way out because it makes the money in your pocket more valuable.
I first wrote about salary increases in May 2018. I rehashed it later that year and again in June 2020. Because it is a topic close to my heart, I did another rehash in November 2022 and June 2023. Not yet done with the issue, I wrote another in October 2023 and on March 3 2024. Here is an extract from that March article, entitled Mr President, salary hike won’t resolve the present hunger:
“In 1972, when the Udoji Commission recommended, among other things, a Unified Grading and Salary Structure (UGSS) that embraced all posts in the Civil Service from the lowest to the highest, the naira was stronger than the dollar at about ₦60/$100. The commission increased the annual minimum wage from ₦312 to ₦720 (from a monthly ₦26 to ₦60). ₦720 was the equivalent of $1200.
“As of this writing, $100 was over ₦150,000! $ 1,200 would be about ₦1,800,000. This means the Udoji Commission’s minimum wage of ₦60 ($100 then) had more purchasing power than today’s minimum wage of ₦30,000 ($20 now). Then, imagine $100 as a basic monthly salary today! That’s ₦150,000.
“I have said it before, and I will repeat it now: ₦1 million as minimum wage will help no one as long as the naira is weak. Period.”
Another idea the government may explore is a drastic cut in the salaries and allowances of public officers, especially elected officials, political appointees, and heads of MDAs. These people collect mind-boggling salaries and allowances in millions of naira. The saved money can fund the salary increase. This way, we can mitigate any negative consequences.
I will vote for the candidate who convinces me that he has the “magic wand” to transform Nigeria into a productive country that exports finished products rather than raw materials. This is another way to strengthen our currency. He must also be prepared to fight for the naira and make us proud of it. That, in turn, will strengthen it.
In Saudi Arabia, you may be surprised to see some Arab shop owners refusing payment in dollars and insisting on payment in their local currency. We must learn to love and respect our own currency before others can.
I see no reason why the person I vote for should not be proud to wear clothes made from textiles produced in Kaduna, shoes made in Aba, and watches produced in Yola or belts made in Yobe. Why shouldn’t he, his cabinet, National Assembly members, military and paramilitary chiefs be driven in made-in-Nigeria cars?
Instead of sending billions in hard currency to Germany to buy Mercedes-Benz and BMW vehicles, and to Japan to buy Toyotas and Land Cruisers, thereby keeping those businesses afloat and their young people employed, why don’t we ask these companies to come and establish assembly plants here if we are not prepared to encourage our own manufacturers?
The money we send to these foreign companies keeps their businesses afloat, helps them expand, enables them to employ more of their citizens, increases production, and contributes to the stability of their national economies and currencies.
The candidate I will vote for should make these values his cardinal governance principles for Nigeria’s sake.
Concluded.
Hassan Gimba, ANIPR, is the Publisher and CEO of Neptune Prime.
