From: Zainab Mahmoud
Date: Fri, 6 Jan 2012 07:57:33 -0500 (EST)
To:
Subject: Greetings and questions, Thank you for reading.

Dear Sir,

Thanks for taking the time to read this, I know you are a very busy man and I hope you will reply even if briefly.

I am Zainab Mahmoud, 23, a doctor working in Ireland.
I stole your email address from email threads from my father (he does not know I am sending this!)

I have read a lot about the current situation in Nigeria re: subsidy, I have listened to your interview on BBC in support of it.
I, like many Nigerians, don't fully understand the economics of this.

My view is I agree that subsidy is not sustainable but what I know is lack of it is simply not 'survivable' for many Nigerians.
I also agree that subsidy should be on production and not consumption.

Correct me if I am wrong, but a lot of this subsidy goes to corruption.
So if we say NO to subsidy removal, it means we are fighting the battle of the corrupt. We continue to fee their pockets!
And if we say YES to subsidy removal and fuel prices double it means we have made the state of the corruption permanent and will continue to feed their pockets, only this time from our empty pockets!

You are respected by a lot, me inclusive, but,
Why isn't your stance stronger about making cuts in other areas like recurrent expenditure?
Why should Nigerians buy fuel at the same price as non-oil producing countries?

I want to make it as short as I can.
It took a lot of courage to email you directly but we don't get the information we need!
Our media is hopeless and our Minister for information even more so.

Thank you again for your time.

Sincerely,

Zainab Mahmoud.

From: Sanusi Lamido Sanusi
To: Zainab Mahmoud
Sent: Fri, Jan 6, 2012 1:47 pm
Subject: Re: Greetings and questions, Thank you for reading.

Zainab hi
Good questions. Actually I have been screaming about government recurrent expenditure and overheads since 2010-as well as the corruption in subsidy regime.

It was my criticism of overheads that led to my wahala with national assembly. And I keep fighting it. However if u look at the 2012 budget the entire recurrent exp of the executive arm is N1.8tr of which N1.6tr is personnel costs. So cutting this means paycuts and retrenchment and this is politically suicidal.

Cab subsidy be phased? Possible and maybe govt will reach that compromise but better to do it once and for all. I have advised a phased approach if that will give a political solution but don't know
Sent from my BlackBerry® smartphone provided by Airtel Nigeria.

From: Zainab Mahmoud
Date: Fri, 6 Jan 2012 14:36:15 -0500 (EST)
To:
Subject: Re: Greetings and questions, Thank you for reading.

Thank you very much for replying! I appreciate it.

Can I please take more of your time and make a few more points?

From what you have explained and the happenings it appears that the Government are not willing to make cuts in their expensive lifestyles but want the masses to take the burden of their mismanagement!
If the Government had suggested a phased approach alongside cuts in their 'overheads' I am sure it would have had a better welcome.

May be the protests need to take a new turn and push for cuts in recurrent expenditure.

If the subsidy is removed completely and petrol is sold at N141, doesn't that mean that Nigerians will continue to fund corruption endlessly because the true price of refining Nigerian oil cant be equal to the price our neighbouring non-oil producing countries buy petrol at.

Why cant we push for better border policies and sanctions on importation of petrol rather than worsen the already dire condition of the average Nigerian?



Can I get your permission to share this explanation with my fellow youths via twitter and facebook?(I will scribble out ur email ofcourse)

Sincerely,
Zainab Mahmoud.

From: Sanusi Lamido Sanusi
To: Zainab Mahmoud
Sent: Fri, Jan 6, 2012 3:00 pm
Subject: Re: Greetings and questions, Thank you for reading.

Well two things; in real (ie inflation adjusted terms) expenditure is coming down. Budget this year is 6pct higher than last year but inflation is at about 11pct.

Secondly I am sure we can get government to chip away at spending but in terms of materiality it will be symbolic. With a budget of about N5tr a N10b or N20b dent in spending makes a political statement but has little impact on such things like deficit/GDP, debt/GDP, debt service/revenue ratios, or reserves, exchange rates and inflation.

Fuel subsidy removal knocks off N1.4 tr which is equivalent 30pct of expenditure in 2011 and more than 100pct of capital budget and a third of total debt. I agree that we need both the symbolic and the material but in terms of macro level analysis items talked about-feeding in the villa or gardening are insignificant relatively speaking, which is not to say they shouldn't be looked at.

On borders in theory smuggling is illegal. In practice if you have money you can bribe officials on both sides and smuggle goods. A government subsidy of N80 for every litre is enough money cross the borders. Saudi arabia is surrounded by countries like bahrain and oman and yemen and kuwait all of which sell cheap fuel so no arbitrage opportunity. Once you have a huge price differential, goods will flow to the higher price market-legally or illegally. We learn this in price theory as a subject called price fixation. Prices below equilibrium always result in rent seeking and black markets or scarcity.
You may
Sent from my BlackBerry® smartphone provided by Airtel Nigeria.

From: Zainab Mahmoud
Date: Fri, 6 Jan 2012 15:09:22 -0500 (EST)
To:
Subject: Re: Greetings and questions, Thank you for reading.

Thanks again!

The economics of it appear complicated and I will be lying if I said I understood all that.

How do you explain this to the average Nigerian who earns the minimum wage of N18000 and because of subsidy removal is now expected to spend N15000 on petrol?
Subsidy is not sustainable but lack of it isn't either!

From: "Sanusi Lamido Sanusi"
Date: Fri, 6 Jan 2012 20:30:02 +0000
To: Zainab Mahmoud
ReplyTo:
Subject: Re: Greetings and questions, Thank you for reading.

The short term impact at the micro level is reduction in disposable income after fuel and transport costs, as well as a fall in real income due to inflation. Painful.
If the fiscal space freed up leads to improved power, infrastructure and productivity then we get growth, jobs and industrial development in the medium to long term.
Success depends on implementation of sound policies and improvement in governance and accountability. What I think is that Nigerians intuitively understand why this has to be done but don't believe government can deliver on the promise so they may end up with pain without gain. I don't blame them as the record of govt has been poor. Its up to govt to prove them wrong.
Sleep well continue tmrw have bad migraine
Sent from my BlackBerry® smartphone provided by Airtel Nigeria.

From: "Zainab Mahmoud"
Date: Fri, 6 Jan 2012 20:31:42 +0000
To:
ReplyTo: zainabmahmoud@aol.com
Subject: Re: Greetings and questions, Thank you for reading.

Thank you very much,

Allah ya kara sauki.

Via BlackBerry® from Vodafone

Cab subsidy be phased? Possible and maybe govt will reach that compromise but better to do it once and for all. I have advised a phased approach if that will give a political solution but don't know

J12:

He still doesn't make sense.

alanbolo:

In as much as the subsidy removal will favour Nigerians in the long run. . .

Success depends on implementation of sound policies and improvement in governance and accountability. What I think is that Nigerians intuitively understand why this has to be done but don't believe government can deliver on the promise so they may end up with pain without gain. I don't blame them as the record of govt has been poor.

ypzilanti:

Personally, my suggestion is that government should shave about N30 off the subsidy amount and demonstrate its ability by using the saved amount to lay railway tracks from the South West of Nigeria to the South East of Nigeria. Also do same from North West of Nigeria to North East. This can be finished within two years.

Government should then lease the use of the tracks to a reputable firm for a lease period of 20 years and recoup all the money spent on the tracks. See there? It did not cost a thing!

Simultaneously, offer bank guarantees to reputable companies that want to build refineries in Nigeria (only companies that have built same in other countries) sign MOUs to the effect that subsidy will be removed within two years time. To convince them further pledge to buy all refined products at prevailing market rate where subsidy is not removed. In two years come back to the Nigerian people and present your achievement, announce other great projects and remove the remaining subsidy.

Kindly repost the idea if you agree, or tell our president if you have his ear, before he runs the country into a ditch.

ypzilanti:

Personally, my suggestion is that government should shave about N30 off the subsidy amount and demonstrate its ability by using the saved amount to lay railway tracks from the South West of Nigeria to the South East of Nigeria. Also do same from North West of Nigeria to North East. This can be finished within two years.

Government should then lease the use of the tracks to a reputable firm for a lease period of 20 years and recoup all the money spent on the tracks. See there? It did not cost a thing!

Simultaneously, offer bank guarantees to reputable companies that want to build refineries in Nigeria (only companies that have built same in other countries) sign MOUs to the effect that subsidy will be removed within two years time. To convince them further pledge to buy all refined products at prevailing market rate where subsidy is not removed. In two years come back to the Nigerian people and present your achievement, announce other great projects and remove the remaining subsidy.

Kindly repost the idea if you agree, or tell our president if you have his ear, before he runs the country into a ditch.

mikeansy:

Bullocks!!!!

Reading that e-mail all I see is a CBN Governor too scared to say what he thinks and yet lacks the courage to resign. How can the country succeed when everybody is living is so much denial.

He is scared of saying we need to cut recurent expenditure!
He says he proposed phased removal of subsidy and nobody listens
He agrees with the Nigerian people that the Government he serves can not be trusted.

Where is the courage? Mr Central Bank Governor there is something called to "RESIGN" instead of speaking from both sides of your mouth!

Success depends on implementation of sound policies and improvement in governance and accountability. What I think is that Nigerians intuitively

understand why this has to be done but don't believe government can deliver on the promise so they may end up with pain without gain. I don't blame them

as the record of govt has been poor. Its up to govt to prove them wrong.

velo10:

We know removal of the fuel subsidy is good. However, Nigerians don't deserve to suffer for awhile for government to fulfill its agendas. Fuel-subsidy should be reduced not removed. The Nigerian government should use funds from the reduction as a litmus test to prove its efficiency in developing the economy. Right now nobody trusts this government and we have a right not to.