"He who speaks without modesty will find it difficult to make his word good" - Confucius, 551-479 B.C., VANGUARD B00K OF QUOTATIONS, VBQ, p 162
A picture, indeed, is worth a thousand words. The photograph published on Friday, July 19, 2024 by the media told the entire story. President Tinubu was smiling broadly; all the Labour leaders looked as if someone had rubbed their noses in poopoo. Two of them, names withheld, looked as if they were holding back tears. Many great tragedies emanate from the deafness of those who started out as heroes who listened to the noise of ignorant people. Encouraged by the noise of their loudest supporters; believing erroneously, that "the voice of the people is the voice of God", they proceed to make utterances at the beginning of any confrontation as if victory is assured. The opponent(s) would have no choice but to surrender.
Like the Mafia 'Godfather', they were going to make an offer which nobody could refuse. That was the attitude Nigeria's Organised Labour adopted once negotiations started for new Minimum Wage shortly after Tinubu announced that "Subsidy is off" and let loose a chain of economic reactions which have pauperised Nigerians more in one year than at any other time in history. Let me state it, upfront, that Organised Labour has signed an agreement which has entrenched increasing poverty in the country. It was probably inevitable. But, when the facts finally sink in, Nigerian workers might wonder about the usefulness of Organised Labour. In 2019, when Buhari approved N30, 000, at N250/US$, that was 120 dollars a month.
On July 18, 2024, when Labour finally surrendered and accepted N70, 000 at N1, 400/US$, Nigerian workers had been condemned to 50 dollars a month. Remember that when Labour leaders announced their demand for Minimum Wage of N615, 000 per month, they immediately gathered all the ignorant people in Nigeria behind them - including, unfortunately, several in main line and social media. Suddenly, it became a "God-given" right for Nigerian workers to receive that sort of living wage; and anybody advocating caution and facing reality was talking nonsense. Even as late as last week, when even die-hard Labour leaders had quietly abandoned the ridiculous demand for N615, 000, Mr Ajaero, the Nigeria Labour Congress, NLC, leader, was still telling VANGUARD readers that N250,000 was their demand.
A lot more realistic than N615, 000, but, obviously, still a figment of his imagination. Reality is here; and it is in line with what I predicted in June this year in the article titled 'Unpleasant Surprise Awaits Nigerian Workers'. The minute Edo State workers accepted, with gratitude, the N70, 000 per month offered by the state, they inadvertently established the limit for other governments. Failure of Labour to persuade the Edo members not to accept a separate settlement doomed all their efforts thereafter. Now, everybody is stuck.
ONE BATTLE WON; SEVERAL STARTED
"The meek shall inherit the Earth; but, not its mineral rights" - Paul Getty, 1892-1976
Those insisting that governments and the private sector must pay living wage, whatever that means, are thoroughly self-deluded. No employer is committed to pay a living wage. They pay what they can afford or what will help them to survive or make huge profits. Sports teams readily offer a good example. Messi, Ronaldo and Mbappe line up on the field on the same team with players earning ten per cent of their take-home pay. The inherent and open disparity underlies the value of each player to the team's success and the owners' profitability. Basing their campaign on the imperative of paying a living wage by governments was wrong strategy. It ignored the ability of the employers to pay. And, by insisting that all governments must pay the same Minimum Wage, they placed the same burden on Lagos, Rivers, Delta among the rich states and Ebonyi, Nasarawa and Ekiti among the poorest states - making it easy for the states to gang up and beat down the agreed MW.
Even now, it is not clear if all the states will pay N70, 000. States which found it difficult to pay N30, 000 will find it almost impossible to pay the new MW; particularly when other entitlements like housing, medical and participatory pension allowances also rise in tandem with MW. Undoubtedly, all the governments are just now beginning to determine how much more will be required to run their governments and how to get the money. Increasing taxes, levies, tenement rates are frequently the favourite options; more efficient tax collection and blocking leakages will also help. But, retrenchment remains an option. Workers laid off would be the sacrificial rams for the benefit of those retained. None will be grateful to Labour for being rendered jobless in an economy where job scarcity is prevalent.
Inflation, now at 34 per cent, will move up a bit. One economic illiterate Labour leader once went on television to declare that wage increase will have no negative impact on inflation. He will have to write his own textbook on the principles of economics to prove that more money chasing few goods will not result in inflation. Everybody should therefore brace-up for higher costs of goods and services - particularly food stuff. Manufacturers, as well as other employers of Labour, are still counting the added costs of doing business which will occur as they are forced to respond to the challenge of MW. Certainly, salaries, wages will increase in the Organised Private Sector, OPS, resulting in higher prices of goods and services for those which can afford to raise prices.
Those that cannot increase prices face possible liquidation and lay-off of staff. Food, pharmaceutical and beverage sector is destined to shrink further. Breweries are particularly vulnerable right now. Millions of people are dumping beer and stout for other forms of pleasure. Finally, the only way governments will be able to pay the agreed wage is for exchange rate to go up to about N2, 000/US$. Mark my words. Labour leaders now have the unpleasant duty of explaining to the rank and file why they must accept N70, 000 after spending the last twelve months that nothing less than N615, 000 or N250, 000 will take them home. There will be other unpleasant repercussions arising from the new MW. But, that is subject for another day. We turn attention to other developments which will nullify the gains of MW for workers.
FUEL AND GAS
"Nigeria set to become net fuel exporter by December - NNPCL." (Report, July 16, 2024)
"Dangote Refinery not yet licenced - NMDPRA
...says products from local refineries inferior" (Report, July 20, 2024)
"Nigeria produced 236m barrels of crude in six months - NUPRC" (Report, July 19, 2024)
If you want to know why things will get a lot worse before they get better in Nigeria, then turn your attention to the Ministry of Petroleum Resources - where virtually nothing said by anybody can be believed. The three reports cited above came from the Ministry. The first is patently false because the Dangote Refinery is "about 45 per cent to completion" according to the NMDPRA which should know. It is unlikely that the refinery will be fully operational by December. Nigeria's scraps, called refineries, will also not be able to supply anything near 18 million litres a day - which is their full capacity.
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So, forget exporting fuel by December. NNPCL has never delivered on any of its promises in the past. They certainly will not in December. The second raises serious concerns. If NMDPRA is correct and Dangote products are indeed inferior, then Nigeria is in a heap of trouble. So much of our hope for recovery in the future hangs on that refinery. But, patriotism alone can never induce Nigerians to risk their investments in cars, trucks, generators and production lines on using inferior products by Nigerian producers of petroleum products. To some extent, the damage has been done. Consumers will accept Dangote products reluctantly for a long time to come.
The last report portends a great disaster if carried to the end of the year. Nigeria cannot continue to produce average of 1.3 barrels of crude per day until December and beyond without dire consequences. NNPCL's promise of 2 mbpd is just pure drivel. A nation producing 1.3mbpd in June does not race to 2mbpd by December. This means our fate as a nation hangs on knowing the truth about crude futures. My models for forecasting future trends tell me that our survival in the next twelve months hangs on three matters - management of rising insecurity, food supply and crude production. Of the three, crude production holds the key to progress. Without adequate crude production and export, we might as well prepare for the very worst.
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