Joe Attueyi:
First, thanks for the correction. I mis-wrote; rather than correctly write that " our Economics 101 has NEVER taught anybody that when demand exceeds supply, HOARDING follows", I wrote it the other way around. (" when supply exceeds demand") My apologies.
Secondly, announcing in a well-thought-out manner precisely WHAT WILL BE DONE with the subsidy money saved AT THE VERY SAME TIME THAT THE SUBSIDY IS WITHDRAWN is the wise thing to do, rather than announcing it much later - as if it was an after-thought. That is probably what is delaying it in PMB's mind, whose primary constituency is the poor, whether we like it or not. If the middle-class or the elite turn the poor against him, no matter how momentary, PMB is bound to be a sad man! :-)
With respect to "Conditional Cash Transfer" CCT, ring-fencing the subsidy money saved for a certain number of years (say three years) is also wise, but unlike SURE-P - which was a ring-fence around money saved from international debt forgiveness to Nigeria, remember? - the effect must be visible and more direct both to those who spend money DIRECTLY on fuel, and those who do not.
For example, I read in Punch about CCT:
QUOTE
Meanwhile, another competent source told our correspondent that the Federal Government had already outlined the criteria for those who would benefit from its planned Conditional Cash Transfer scheme.
The CCT aims to reduce poverty by making welfare programmes conditional upon the beneficiaries' actions.
The government only transfers the money to persons who meet certain criteria.
The source said two major criteria that beneficiaries must meet were that they must enrol their children in schools while also showing evidence of immunisation of the children.
UNQUOTE
So clearly some CCT is already being mooted for ring-fencing around Education (which you advocate, but in some broader sense) and Health. Now, to include those who use fuel directly, one can do three things:
(1) do CCT to GOVERNMENT WORKERS - by enhancing their salaries by certain amounts (Levels 1-5 - A Naira per month, Levels 6-10, B Naira per month A > B, Level 11 and above, zero)
(2) giving tax rebate to PRIVATE FIRMS that show that they pay CCT to the low-salary workers in their companies.
(3) to the un-employed, some money (N5,000?) per month, with the promise to get you a job and get you out of the CCT scheme.
The idea behind the CCT should also be that you cannot enjoy it more than in one situatioin
- Education (reward for school enrollment of children)
- Health (reward for primary health care promotion for children)
- Government Worker (transportation contribution for low- and mid-level workers, direct payment into salaris)
- Private Worker (transportation contribution for low- and mid-level workers, tax rebate to firms that participate)
- Un-employed (safety net for the registered un-employed)
and that all be done ELECTRONICALLY to the greatest extent possible, with the BVN being the tracer, and with severe punishment for fraud.
And there you have it.
Bolaji Aluko
On Wed, Nov 18, 2015 at 3:47 PM, Joe Attueyi <topcrestt@yahoo.com> wrote:
Prof.,Just for clarity purposes I never claimed that ' when supply exceeds demand, HOARDING follows..' Actually if the supply exceeds demand why would anyone hoard?While I agree with rest of yours I must add the proviso: hoarding is a symptom of a deeper economic issue. Dealing with that symptom may sound 'populist' but it is not a sustainable solution to the root problem. How many staff are in DPR to go chasing hoarders all over Nigeria? Doesn't mean the symptoms should not addressed.Finally I think the policy paralysis around deregulating the down stream sector comes from this fancy idea of waiting for the palliative of 'conditional cash transfer to the poor' to be first put in place. As I have made known formally and informally to some in Govt propounding this policy, it may sound good on paper but will be a nightmare to implement. It will be so riddled with corruption IMHO. Regardless of how 'poor' is defined, we will end up with 100 million poor Nigerians. Then what?My suggestion has always been that the 'savings from subsidy' be ring faced and fully devoted to giving every Nigerian kid upto the age of 16 FREE QUALITATIVE COMPULSORY education. Emphasis on free, quality and most importantly compulsory. In one generation we will fundamentally alter the quality of our citizenry. Giving N5,000 a month to 'poor Nigerians' cannot achieve that.Anyway there is no perfect policy. We wait and see how the Govt proceeds. They could prove me wrong. Wouldn't be the first timeJoe
Sent from my iPhoneJoe Attueyi:First, let us be clear: our Economics 101 has NEVER taught anybody that when supply exceeds demand, HOARDING follows. No, it simply says that the price of the good generally INCREASES - if the price is not REGULATED.Now HOARDING by DEFINITION is both causative - if there is no scarcity, it causes it, if there is some scarcity, it exacerbates it - and speculative, in the expectation that the hoarder will get more money IN FUTURE for the same quantum of good, either because he does not wish to lose money (because he bought the goods at a lower price before now) or he wants to profit even the more later on (if in future he re-sells for higher than he purchased before.)Whether for causative or for speculative reasons, hoarding has a NEGATIVE connotation, and is not acceptable sociological behavior - even if understandable - and cannot be looked upon favorably by any government, especially if the item being hoarded is an essential commodity (like petrol) and is not a luxury item.Now, if a law or edict against hoarding has been enacted, for impunity not to follow, then I support punishment of the hoarder, by some amount commensurate with the value of the hoarded amount, say twice or three times the amount seized, wherein the amount seized is SOLD at the price that the goods should be normally sold for, but what is obtained from it is used to partially offset the fine. I absolutely do not support the populist measure of giving the seized good away for free, because it will not only cause a stampede - because there certainly will be more people wanting the free good than there is of the good - but it will also lead to some ARBITRAGE by some of the lucky free-loaders: they will go and sell it for a consideration backdoor. That in itself is not acceptable.In summary: Minimize scarcity; discourage hoarding and punish it, but don't cause citizen stampede or unsavory arbitrage.WIth respect to fuel supply at the moment, subsidy will eventually go, but a safety net must be put in place first for the most vulnerable in society before that hard pill is swallowed. I support the Government's cautious measure on this particular line, and when subsidy is finally lifted, i believe that the Nigerian people will understand, and will be better able to absorb it. For example, some conditional cash transfer should accompany it.And there you have it.Bolaji AlukoOn Wed, Nov 18, 2015 at 12:52 PM, topcrest topcrest <topcrestt@yahoo.com> wrote:Folks,Any time Imperial Ltd wants to 'lick arse' he restricts his postings to Yan Arewa forum.UmarYou asked:What do you expect the govt. to do?That is a very good question actually. though I have answered that question severally I have no problem answering it again and again. Per chance someone with authority to do something will read it and do something.1. Those of us who were of age in PMB's time as military head of state can relate to the attempts to break down warehouses and deal with hoarders "..who continue hoarding the product at the expense of the citizens of the country.". We do not have to be economists to know that it does NOT work. It did not work in 1984. It will not work in 2015.2. To solve a problem you have to have a correct analysis of what the problem is. Fuel consumption is a demand and supply thing. If the market is flooded with fuel, only a mad man will be hoarding it. If the market is UNDER supplied with fuel the price of fuel will rise. Which is what we are currently experiencing. How many people are employed in DPR and how many fuel stations can they go to?3. What is the solution: Make fuel freely available to meet the demand level. The Govt has 2 alternatives to make fuel available.A) Continue to fund the fuel importers / NNPC under the so called 'subsidy regime' so they can import enough fuel to meet local demand orB) Deregulate the fuel market so that Umar and Imperial can compete with Oando and Zenon in importing fuel into Nigeria. Competition between Umar and Imperial and Oando and Zenon will make fuel available and stabilize price at the place where demand and supply intersect.Government has been doing (A) for a long time. I suspect that they are beginning to realise that they cannot afford to keep subsidising the importers. Having not paid the importers, the importers have slowed down importation which is causing scarcity. Pursuing 'hoarders' will not solve the fundamental problem of scarcity.Reasonable folks ought to be urging the Govt to deregulate the sector. It will save the Govt the 'subsidy' it currently pays ( we just paid N400 BILLION! http://www.dailytrust.com.ng/news/business/subsidy-fg-approves-n413bn-for-oil-marketers/117950.html ) WHICH MONEY THEY CAN USE in other more important areas of our lives like educating our children and it will turn that area of our economy into a business that will create jobs not one dependent on 'allocations'Let me know if you require further clarificationsJoe
---In YanArewa@yahoogroups.com, <imperial_ltd@...> wrote :What else do you expect from an irredeemable Jonathan supporter ?
Sent from my iPadOn 17 Nov 2015, at 23:35, Umar Aliyu umaraliyuesq@... [YanArewa] <YanArewa@yahoogroups.com> wrote:What do you expect the govt. to do?do you want the govt. to Sidon look and the hoarders to continue hoarding the product at the expense of the citizens of the country or what do you want the govt to do in the circumstances.Pls educate us.
Sent from my iPhone
On Nov 17, 2015, at 11:13 PM, Joe Attueyi topcrestt@... [YanArewa] <YanArewa@yahoogroups.com> wrote:"I have instructed DPR that if they discover any fuel station involved in hoarding, they should sell the products for free to customers around there," he said.This reminds me of 1984 when Buhari & Idiagbon were knocking down warehouses for hoarded essencos! What a country!Joe
Sent from my iPhone
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