Let us have fuel scarcity
Think of what will happen if Nigeria was to go through another round of fuel scarcity today. First, you will start seeing all sorts of able bodied young men standing by the side of the roads with jerrycans in their hands selling petrol. Most people call them touts but when the last fuel scarcity earlier this year got so bad, a friend of mine said he had started referring to them as ‘fuel and hydrocarbons consultants’ when he realised he could no longer move around without them. When there’s no fuel scarcity, these young men (and women) are not to be seen selling fuel by the side of the road. It is therefore clear that fuel scarcity creates jobs.
Second, we know that the vast majority of crime in Nigeria is committed by young able bodied men with nothing but time on their hands. We can certainly say that there is strong overlap between demography of fuel consultants and those who commit crime. But such young men are not omnipresent. They can only be in one place at a time which means that if they are standing by the side of the road selling fuel, they cannot be somewhere else committing crime. We can also conclude that fuel scarcity reduces crime in society.
Third, petrol station attendants are some of the least paid people in Nigeria. If we are to be honest, it is not a very nice job and no one is really doing it because they have a passion for squeezing nozzles. Furthermore, no one really likes or trusts them – motorists assume attendants are out to cheat them by pumping air into their tank or trying to avoid giving them their change. But when there is fuel scarcity, the lowly petrol station attendant is exalted. They make a lot of extra money and they suddenly command the respect of motorists and have dignity. Indeed, when there is fuel scarcity, being a petrol station attendant becomes one of the most sought after jobs. From this we can conclude that petrol scarcity boosts the income of the poorest in our society and gives them respect and dignity.
So what are waiting for? Here we have an opportunity to create jobs, reduce crime and boost the income of the poor. The President should not waste time in sending a Fuel Scarcity Bill to the National Assembly. By making petrol scarce, the government can fulfil one of its biggest campaign promises – creation of jobs.
If you think this is a ridiculous idea, I invite you to tell me how it is different from Nigeria’s current policy on cement and various other things that have been banned or protected ostensibly to boost local production. By making anything scarce, you can create jobs. If water becomes scarce, it will create jobs for able bodied men who can push water carts around. If you make forex scarce, you will create plenty of jobs for people who sell forex in the blackmarket. And so on.
Yet, making things scarce to create jobs and wealth sounds ridiculous as an idea precisely because it is. Scarcity raises the price of those things – no economics degree is required to figure this out. No one wants that. Motorists are forced to pay far more for their fuel than in normal times. Transport costs go up and the reduced productivity drags down the economy.
Everyday in the papers, there is one government minister or the other telling us that Nigeria ‘loses’ one large amount of money every year importing something that can be produced locally. When you hear this, you know a ban is coming. The idea that you can ‘lose’ your money by exchanging it for a product or service you want is one of the rare and special laws of economics the Nigerian government espouses. That it may not be a good idea to make Nigerians poorer by making products scarce with a ban on imports is not something that concerns policymakers at all.
There are times when it makes sense to protect a local industry to give it time to grow. But this is only half of the story. The other equally important half is that it is industries that should be protected and not companies. That is to say, robust internal competition must be ensured if an industry is protected from outsiders. Without this, all that will be done by banning things is to create scarcity and transfer of wealth from Nigerians to the favoured company. A recent World Bank report titled ‘Breaking Down Barriers: Unlocking Africa’s Potential through Vigorous Competition Policy’ showed how Nigerians (and Africans) are forced to pay three times the world price of cement because of the scarcity created by governments. Africans are overpaying by $2.5bn every year for a product that was invented by the Romans before Jesus Christ was born.
The idea that you can ban and protect your way to economic glory is now the equivalent of scripture that is never challenged in government circles. But which country charted a path to economic development in this way without ensuring internal markets and competition? If you find such a country, do let us know.
This country of 180 million energetic souls has an economic engine that is yet to be switched on. To unlock the animal spirits and idle oomph in the economy requires clear headed thinking. How can the latent energy of the Nigerian people be harnessed to get the country going?There are many ways this might not be done. But a government that thinks it knows best and sets out a narrow vision for the country (from which deviation is not permitted) is unlikely to be the one to do the unlocking.