Kachikwu is not a magician!

The seeming arrogance behind the Freudian slip by the Minister of State for Petroleum, Ibe Kachikwu, that he was not trained as a magician to immediately end the current fuel scarcity and the backlash that followed it notwithstanding, the Minister, who is not politically suave enough to understand the art of speaking from both sides of the mouth, was actually telling Nigerians the painful truth about the current fuel crisis. All of a sudden, the Minister who left his very lucrative private sector job as Executive Vice Chairman of Exxon Mobil Africa, to help reform Nigeria’s opaque oil sector, has found himself turned into a petrol station attendant, constantly monitoring fuel distribution and dispensation, instead of focusing on more important tasks of thinking through and formulating policies and regulating the operators in the sector to ensure maximum value for the country.

Although we agree with many Nigerians that Kachikwu should have been more circumspect in communicating the difficulties the NNPC is facing, in ensuring adequate supply of petrol to all parts of the country, but the fact remains that the government should never have gotten itself involved in the first instance- in the business of importation and distribution of petrol, not to talk of it being the sole importer of petroleum in the country. As the Minister truthfully asserted, it is quite frankly sheer magic that the NNPC has been able to produce the amount of fuel at the stations because the NNPC simply does not have the capacity to be the sole importer of petrol into the country. Why make NNPC the sole importer of petroleum into the country, when it is very clear it lacks the capacity to meet the demands? In many respects therefore, the government is directly responsible for the fuel scarcity, which is presently bringing the economy to its knees.

The world over, it has been proven that governments are not particularly good at running businesses, and this is painfully too obvious in Nigeria.  Between 1973 and 1999, the Federal Government spent over $100 billion in establishing various business enterprises. Over 5000 board appointments were made almost biannually to man these enterprises with enormous patronage powers. Yet, the rate of return was less than 0.5% while they consume over $3 billion annually in direct and indirect subsidies. Yet, these enterprises could hardly provide the services they were established to provide and they became huge drainpipes of government revenue. Overtime also, the government found itself increasingly doing what it should not and have no capacity of doing, while failing abysmally to do what it should do. This made the case for the large-scale privatisation of state owned enterprises between 1999 and 2015.  A perfect example was in the telecommunications industry where NITEL – the government’s monopoly phone company – was only able to provide about 450 lines in 50 years. But with the deregulation of the industry, private sector operators were able to provide about 100 million lines in just ten years, while drastically crashing the cost of making calls.

We note with dismay the statist tendencies of President Buhari and his resolve to take Nigeria back to those years of government control of the economy and monopoly of supply and distribution of essential commodities in the country.  The government should focus more on its core and primary duties of providing peace, order and security, infrastructure and effective regulation and allow the private sector to be the driving force of the economy. We align ourselves with the position of the Lagos Chamber of Commerce and Industry (LCCI), which urged the government to totally deregulate and liberalise the downstream sector; get out of the business of fuel importation and restrict itself to the regulation of the sector just like what obtains in the telecoms sector. Like the Director General of the Chamber, Muda Yusuf avers, “we have major marketers, independent marketers, depot owners and so on, and these people can bring a lot of value…But because of the policy environment, there’s no breathing space for the private sector in the environment.”

It is very clear that government control of businesses is now anachronistic. The Federal Government must therefore stop impeding the growth and development of the downstream sector through unnecessary direct interference.