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FUEL PRICE SHOULD COME DOWN, NOT JUMP UP – DR ABUBAKAR ALKALI

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Dr. Abubakar Alkali FUEL PRICE SHOULD COME DOWN, NOT JUMP UP - DR ABUBAKAR ALKALI

Dr. Abubakar Alkali demand fuel price to be down, not jump up.

When the great English Mathematician and Physicist, Sir Isaac Newton got hit on the head by a fallen apple as he sat under a tree to inspire his thought of the universal law of gravitation, he certainly didn’t take into account the pricing of fuel in Nigeria.

In his universal law of gravitation, Isaac Newton opined that ‘what goes up must come down’ but the current trend of astronomical, disproportionate and obnoxious price of fuel in Nigeria has proven that theory wrong. In Nigeria, fuel prices go up and never come down.

These prices not only go up alone, they drag with them the prices of almost EVERYTHING including Gari, rice, onions, tomatoes etc in the open market. Indeed, successive increases in the prices of petroleum products particularly petrol or premium motor spirit (PMS) have discountenanced Isaac Newton’s theory on gravitation.

In the chronology of fuel price increase since the oil boom, the price of PMS has been increased by the federal government 29 times with Gen Gowon making the first shot in 1973 to herald a wave of fuel price increases over 4 decades: 70s, 80s, 90s and the current decade. In the first fuel price increase, Gen Gowon increased it to 8.45K from 6K as the precious commodity went through a synchronisation of 29 increases (with very few de minimis decreases). From 6K in 1973, the price of PMS rose to N151.6k today.

Of course, no one will expect the price of fuel to remain permanent since 1973, however, everyone will expect that the government will consider economic indices such as rate of poverty, unemployment and inflation before making such increases. This has unfortunately not been the case as such increases do not take into account the high rates of poverty, inflation and unemployment. Often times, Nigerians simply wake up to be greeted by government’s announcement of arbitrary increases in the price of fuel. While ministers and other top government officials are making so much money from government, building palaces, houses and putting up lavish and extravagant weddings of their sons and daughters, the ordinary masses continue to live in abject poverty and penury.

Clearly, the latest increase in the price of petrol a.k.a premium motor spirit (PMS) from N145/litre to N151.56/litre (ex-depot) is ill-thought, insensitive, indefensible, inexcusable and unjustifiable in the face of the current economic indices and strangulations faced by Nigerians particularly occasioned by the COVID-19 pandemic.

There are discordant tunes regarding the increase in electricity tariff by Discos to about 70% despite President Buhari’s directive that the increase should be suspended until further notice. To increase electricity tariff and follow up with another increase in the price of fuel certainly doesn’t speak well of government.

Economic indices in Nigeria indicate growing high poverty index, unemployment rate, and inflation rate. The rate of poverty in Nigeria is alarming with 82.9 million Nigerians or 40.1% of the population living in abject poverty on less than $1 daily.

The poverty rate by states is scary as Sokoto state takes the gold medal and ranks as the poorest state in Nigeria at 87.73% which means only one person in the state can afford 3 square meals per day.

Inflation is in double digits (12.82%), so is the rate of unemployment (27.1%). To the average Nigerian on the street and rightly so, the meaning of government starts and stops with the price of Tomatoes, Rice, Onion, Gari etc. If these prices are stable and affordable, the average Nigerian will give a pass mark to the government. Clearly, the prices of these essential foodstuffs have jerked up in response to the current increase in the price of fuel.

Indeed, open market price of essential foodstuffs do not justify any further increase in the price of fuel:

A Mudu of Dangote Rice: N1,100
A Mudu of Ijebu Gari: N300
A Mudu of Brown beans: N500
A Basket of Tomato: N1,300
A Basket of Onions: N1,300
A 75cl Plastic of Cooking Oil- N650

These prices are on the high side especially when juxtaposed with the very low minimum wage for public servants amid the COVID-19 pandemic.

Yes, the federal government’s revenue has fallen and the economy is weak in the face of the global economic downturn to provide any subsidies for fuel imports. However, the solution is to cut down on waste particularly the humongous salaries and allowances of some senior government officials; senators, members of the House of Representatives, ministers, judicial officers and other top government officials to fund the subsidy regime and not to increase the economic hardship of Nigerians through increase in prices of fuel. By and large, there is the need to drastically cut down the very high recurrent expenditure in the national budget to a maximum of 40%. The 60% balance should be used for capital expenditure including funding any fuel subsidies where necessary.

BANDWAGON EFFECT OF INCREASE IN PRICE OF FUEL
There is no emphasising the fact that
the good people of Nigeria cannot understand that on the one hand, salaries and other benefits of senior government officials are maintained or in some cases increased, on the other hand, the government says there is no money and prices of fuel products continue to be increased bringing about skyrocketing prices of foodstuff and other essentials amid devastating economic hardship.

One thing that has been a recurring decimal in Nigeria is disproportionate increase in prices of goods and services whenever the price of fuel is increased even marginally. A 0.2% increase in the prices of fuel products is usually greeted by a corresponding increase in prices of foodstuff by at least 20%. The government needs to be sensitive to this well-documented and established economic reality.

How could the good people of Nigeria understand that the country has no money to service petroleum subsidy but individuals who pose as ministers have enough cash to build palaces, mansions and out-of-the-world houses using public funds? There is so much paraphernalia and extravagant razzmatazz among senior government officials that it is difficult to believe that Nigeria has no money as one of the ministers claimed. Nigeria is simply not living within its means and the result is a widening income inequality as the rich get richer while the poor get increasingly poorer. This is one of the key reasons behind the current wave of the unfortunate high level insecurity in the country.

PETROLEUM SUBSIDY:
Although the federal government should not maintain a perpetual subsidy regime as a state policy, it can continue to use subsidy as a stop-gap palliative even if to assure the good people of Nigeria that it wasn’t their fault that the refineries are not working. The subsidy regime cannot be open-ended but how can anyone convince the good people of Nigeria that there is no money to fund subsidy when:

-The annual budget of the National Assembly is about N200 BILLION?

  • The average monthly take home of a senator is about N20 MILLION?
  • A governor is entitled to a so-called security vote of N350 MILLION monthly?
  • A minister builds a palace worth N5 BILLION?
  • The Independent National Electoral Commission (INEC) takes over N200 BILLION to organise a simple election?
  • A former assistant director of a pension fund is alleged to have helped himself with over N3 BILLION?

In the face of all these anomalies, government has a duty to find a way to fund the subsidy regime mean time so that the price of fuel can come down and with it, prices of foodstuff and the high cost of transportation. The way to go is to live within our means such that being a public office holder shouldn’t mean free access to government treasury but to serve the people.

FIXING THE 3 OIL REFINERIES
Without doubt, the holistic solution to the crisis of fuel and other white products is fixing the 3 refineries in Port Harcourt, Warri and Kaduna. It is not a matter for debate that government’s role is not to manage businesses but to create an enabling environment for businesses to thrive, compete and bring prices down.

After 25 years of government’s so-called turn-around-maintenance (TAM) since 1995 amid catastrophic running of the 3 refineries, it is crystal clear that government CANNOT effectively manage these refineries. The solution is to PRIVATISE these 3 refineries so that the private sector can take them over, fix them and manage them for maximum efficiency and effectiveness. As the great Aliko Dangote is building his refinery in Lagos and has developed enough capacity to fix and manage the 3 refineries, entering into a lease agreement with Dangote for the take over of the refineries may not be a bad idea.

Government cannot continue to keep these refineries as liabilities with a very huge wage bill in form of staff salary etc etc while importing fuel. It doesn’t make any economic sense.
Privatising these 3 refineries will potentially ensure in availability of fuel and other white products and aggressive market competition from modular and other refineries being built which will bring down the price of fuel. The earlier the federal government privatise the 3 refineries, the better for the national economy.

FUEL PRICE INCREASE AS A WAKE UP CALL
Despite the pains and anguish that comes with it, the increase in the price of fuel yet again, presents a rare opportunity for Nigerians to take stock of where we are coming from, where we are at the moment and where we should be going forward.

It is an incontestable fact that the current crop of conventional politicians CANNOT change Nigeria. At best, they can only maintain the current obnoxious status quo. The bulk of our ministers and other public office holders are only interested in a quid pro quo while posing as public servants. Many public office holders are in government to help themselves not anybody.

Nigerians must be wary and even careful at the kind of leaders they elect into office who either don’t care about the price of Gari in the market, don’t know what to do about it or both. The 2023 Presidential elections present the proverbial ‘last chance’ for Nigeria to get it right. Indeed, Nigeria needs a new crop of young, committed, patriotic and knowledgeable leaders to build the NEW NIGERIA of our dreams.

2023 is time for the young generation to take over government and enable them bring new ideas and new mentality into governance.

2023 is time for GENERATIONAL SHIFT from the old to the young generation

THE WAY FORWARD:
The government needs to step up its game towards diversifying the economy from oil to the non-oil sector to create jobs and boost the empowerment of citizens. The price of almost everything is connected to fuel prices because oil drives Nigeria’s economy. There is the need to free the Nigerian economy from the shackles and stranglehold of oil. The federal government should focus very seriously on building a strong TEXTILE industry that can serve as shock absorber to the economy amid global oil price fluctuations. Oil is a commodity of the past and is no longer dependable.

REVERT TO STATUS QUO- N145/litre
There is the need for President Buhari to as a matter of urgency order a reversal to status quo – N145/litre- in the face of the current economic hardship faced by many Nigerians.
Mr President can and should give the N145/litre palliative to the good people of Nigeria. Reversal of fuel price to N145/litter will restore some confidence about the seriousness of the current administration in tackling poverty which has now assumed the status of a pandemic in our dear country.

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Congratulations to Edo State Governor-elect Godwin Obaseki

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Edo State Governor-elect,

The chairman of the Kwankwasiyya Media Forum, Kano State, Alhaji Suleiman Adam, has sent a message of congratulations to Edo State Governor-elect Godwin Obaseki of the Peoples Democratic Party (PDP) on his victory in Saturday’s by-elections.

Speaking to the media on Sunday, September 20, 2020, Suleiman Adam expressed his happiness over the victory of Governor Godwin Obaseki in winning the Edo State gubernatorial election on Saturday, September 19, 2020.

He also commended the former governor of Kano State Engr. Dr. Rabiu Musa Kwankwaso, who went to Edo State to prove his mettle.

He also commended the people of the state for their support in making the PDP win the election.

He further called on the people of the state and all Nigerians to vote for Dr. Kwankwaso as president of Nigeria in 2023.

He finally answered the question asked by some people: Why is Rabiu Kwankwaso nicknamed (SHEIKH) when he is not an Islamic scholar?

He said: The word (Sheikh) is like a (Professor) in English, and the word is usually used for a person who has special expertise in a particular subject.

Kwankwaso is therefore worthy of being called (SHEIKH) because of his excellent political experience, which is unmatched by any other politician in Africa.

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Bearish sentiment strengthen at NSE amid weakening economic indices

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images 30 3 Bearish sentiment strengthen at NSE amid weakening economic indices

Nigeria’s stock market again closed lower for the second consecutive week with the trading pattern and negative sentiments revealing selloffs in banking stocks, which pulled down the NSE market capitalisation down by N14 billion week-on-week (w-o-w).

The negative performance was down to profit taking in the shares of Zenith Bank, Stanbic, Ecobank Transnational Incorporated (ETI) and FBN Holdings. This led to the All Share Index (ASI) falling by 0.08 per cent to 25,572.57 points.

Consequently, the Month-to-Date (MtD) gain declined to 1.0 per cent, while the Year-to-Date (YtD) loss increased to -4.7 per cent.

Performance across sectors was mixed although positively skewed as three of six indices trended northward. The Industrial Goods index led gainers, up 0.5 per cent w/w on the back of bargain hunting in CAP (+8.6 per cent). Trailing, the Consumer Goods and Insurance indices rose 0.1 per cent and 0.01 per cent w/w respectively due to price appreciation in Nigeria Breweries (+2.3 per cent) and Wapic (+12.1 per cent).

Conversely, the Oil & Gas index led losers, down 1.0 per cent w-o-w following sell-offs in Oando (-4.2 per cent)while price depreciation in FCMB (-6.4 per cent) dragged performance in the Banking index by 0.7 per cent w-o-w. Finally, the AFR-ICT index closed flat. Reacting to the market performance, analysts who spoke to Daily Sun, attributed the downturn to the weak macroeconomic state of the nation and added that profit taking is likely to persist as the month of September progresses in the midst of profit booking, mismatch of economic policies and negative macroeconomic indices.

This is coming on the back of persistent pressure on consumer prices in August 2020 as headline inflation rose to 13.2 per cent year-on-year (y-o-y) from 12.8 per cent in July, according to the Consumer Price Index (CPI) report published by the National Bureau of Statistics (NBS).

Investigations by Daily Sun show that this is the 12th consecutive rise in inflation and the highest level since March 2018 while the sharp increase in headline inflation was driven by a faster m/m inflation, which was up 10 basis points to 1.3 per cent, the highest since June 2017.

Chief Operating Officer, Ambrose Omordion, explained that the August inflation data came worse than expected at 13.22 per cent, thereby deepening the negative returns of many investment windows. Omordion noted that mixed (positive and negative) sentiments would continue to dominate the market as the month of September progresses in the midst of profit booking, mismatch of economic policies and negative macroeconomic indices.

According to him, this is against the backdrop of the fact that the capital wave in the financial market may persist in the midst of relatively low-interest rates in the money market, high inflation, negative Q2 GDP of 6.1 per cent and unstable economic outlook for the rest of 2020 as government and its economic managers are going front and back with mismatch polices and implementation.

“Also, investors and traders are positioning amidst the changing sentiments in the hope of improved liquidity and positive economic indices which may reverse the current trend. We see investors focusing on portfolio adjustment and rebalancing by targeting companies with strong potentials to grow their Q3 earnings and dividend on the strength of their earnings capacity as the year last quarter is at the corner.

Again, the current undervalue state of the market offers investors opportunities to position for the short, medium and long-term, which is why investors should target fundamentally sound, and dividend-paying stocks for possible capital appreciation for the rest of the year”, He said.

For their part, Cordros Capital, said, “In the absence of a positive catalyst, and given the still uninspiring macro story, we guide investors to trade cautiously in the short term. However, we expect the market might benefit over the longer term on compelling valuations and as investors seek alpha-yielding opportunities in the face of negative real returns in the fixed income market”.

Meanwhile, a total turnover of 1.139 billion shares worth N12.692 billion in 17,109 deals were traded by investors, in contrast to a total of 1.226 billion shares valued at N10.842 billion that exchanged hands last week in 19,529 deals.

The Financial Services industry (measured by volume) led the activity chart with 870.300 million shares valued at N7.863 billion traded in 9,427 deals; thus contributing 76.43 and 61.95 per cent to the total equity turnover volume and value respectively.

The Industrial Goods industry followed with 62.689 million shares worth N1.162 billion in 1,557 deals while the ICT industry recorded a turnover of 50.859 million shares worth N2.552 billion in 619 deals. Trading in the top three equities namely FBN Holdings Plc, Guaranty Trust Bank Plc and Access Bank Plc. (measured by volume) accounted for 353.048 million shares worth N4.018 billion in 3,095 deals, contributing 31.00 and 31.66 per cent to the total equity turnover volume and value respectively.

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CIS, others, to float Securities Institute

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images 31 3 CIS, others, to float Securities Institute

The Chartered Institute of Stockbrokers (CIS) in collaboration with three other professional bodies has signed a Memorandum of Understanding (MoU) to establish Chartered Institute of Securities and Investment Management (CISIM) to bring securities dealers and investment managers in Nigeria under one umbrella.

The CISIM’s Bill, which is currently with the National Assembly, will replace the Chartered Institute of Stockbrokers Act 105 of 1992 when passed into law. At the last count, apart from the CIS, the three other professional bodies that signed the historic MoU are the Association of Investment Advisers and Portfolio Managers (AIPM) The Fund Managers Association of Nigeria (FMAN), Association of Issuing Houses of Nigeria (AIHN) with ASHON’s Chairman, Chief Onyenwechukwu Ezeagu, as an observer.

The Chartered Institute of Stockbrokers Act 105 of 1992 , which established the CIS provides that individual operators that deal in securities, including Stocks,Treasury Bills, Bonds, Commodities etc, shall be trained and certified by the Institute. At the moment, certain gaps in the Act are exploited by some individuals to deal in securities without any form of certification and requisite training.

Therefore, the CISIM Bill when passed into law, will bring capital market professionals under a common objective without encroaching on one another’s business, make regulation easier, and enhance global competitiveness.

“We share common goals and there is a need for standardization to enhance our advocacy. The Association of Investment Advisers and Portfolio Managers (AIPM) subscribes to the ideals of the proposed Chartered Institute of Securities and Investment Management (CISIM) in Nigeria.

“ Our collaboration will bring about rapid development of the entire financial system. Nigeria is in dire need of funds for infrastructure development. Substantial part of the fund can be mobilised from the capital market. We implore the National Assembly to hasten the passage of the Bill in the overall interest of the economy “, said the President, AIPM, Prince Abimbola Olashore.

Commenting on the MoU, CIS President, Olatunde Amolegbe, said the proposed bill was nothing unusual, and commended the professional bodies that signed the MOU for sincerity and unity of purpose.

Amolegbe explained that the Securities and Exchange Commission (SEC) and The Nigerian Stock Exchange (NSE), the apex regulator and Self-Regulatory Organization (SRO) respectively, regulate stockbrokers but the ISA provides for individual operators that deal in securities to be certified by the Institute while their organisations are regulated by SEC and the NSE .

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