On Jan. 1 Nigerians awoke to find that the price of gasoline had gone from just N65/litre to a minimum of N138/litre. Since the beginning of this week, hundreds of thousands of angry protesters have taken to the streets all over the country; several are dead. Apart from nationwide protests, the country faces continuing Boko Haram threats, sectarian violence. Many fear Nigeria is on the precipice of total collapse.
The government’s handling of the gas price subsidies inspires little confidence in its leadership.
More than 80 percent of Nigerians live on less than $2 a day, according to the latest data from the World Bank. With the minimum wage for salaried workers at 18,000 Nigerian naira a month, or about $110, it is already an almost impossible task for teachers, nurses and other professionals to make ends meet. Of course, life is even more difficult for the vast majority of the non-salaried workers in the informal sector..
Although most of its citizens are poor, Nigeria is resource rich. It is an OPEC member and almost all of the country’s foreign exchange earnings come from the exportation of oil. Nigeria is Africa’s top oil producer, producing more than 2 million barrels a day. Nigeria also has vast amounts of natural gas, semiprecious stones, coal, tin and other natural resources.
Nigeria is a classic case of the “resource curse” – a country that generates huge amounts of wealth, but where the vast majority of citizens face a daily battle to put food on the table.
So where does all the money go? It’s true, as Nigerian politicians like to point out, that the country’s population – an estimated 155 million – dwarfs that of every other country that depends almost exclusively or overwhelmingly on crude oil exportation. But corruption and mismanagement have a great deal to do with the fact that most Nigerians do not have access to basic services, such as decent roads, well-equipped schools, hospitals and clinics adequately stocked with medical supplies.
According to the government, it is precisely because it wants to improve the quality of life for Nigerians by embarking on major improvements to infrastructure and services that it wants to remove fuel subsidies so it can raise revenue.
Although it is a major oil producer, Nigeria imports much of the gasoline its citizens use. Nigeria exports millions of barrels of unrefined petroleum and then turns around to buy some of what it just exported, but in the form of refined petroleum (gasoline). Why? The government maintains that Nigeria’s oil refineries are currently unable to operate optimally.
According to the government, fuel subsidies are being financed by loans. About 25 percent of the national budget goes to fuel subsidies. Whatever happened to Nigeria’s foreign reserve, excess crude account?
The government position certainly appears plausible and rational, and many Nigerians agree that any fuel subsidies must be removed. But even those who support the government position feel that the manner in which it has been implemented – with no consultation and in one fell swoop rather than gradually – is indefensible.
Others are adamantly opposed to the removal of subsidies, arguing that the vast majority of people will be too adversely affected, and that the government must find other solutions.
There is still another camp, which insists that the government does not in fact subsidize gasoline. Prof. Tam David-West, a former minister of petroleum, insists that government claims of subsidizing imported petroleum are fraudulent and that, in fact, Nigeria’s refineries produce slightly more than total domestic consumption.
Given the history of corruption in Nigerian governance, it is hard to know where the truth lies. A related factor is Nigerians’ total lack of trust in government officials. On several occasions in the past Nigeria announced a huge foreign exchange reserve or surplus earnings from oil, only for citizens to be told a few years later that the money was “missing”. A question asked by Mal. Nasir elRufai was, “If the government does save millions of dollars from the removal of gasoline subsidies, where is the assurance that the money will not be declared missing some years from now?” as it has been the usual happening.
An even more pertinent question: If the economy is in such dire straits, why did the government not take steps to practice fiscal responsibility by reigning in its own “wasteful” spending? Even though Sanusi Lamido, the Central Bank Gov. claimed Nigeria is not broke, not even close to that. A call echoed by the former world bank employee, now Nigeria’s finance minister, Ngozi Okonjo-Iweala.
Nigerian politicians are among the best paid in the world. Nigerian senators, for example, purportedly make more than a $1 million a year. Nigeria’s senate president makes a whooping N600m annually, that’s approx. 8x the earnings of Barack Obama. When top government officials travel to conferences overseas, the Nigerian delegations are routinely among the most bloated. In 2010, the government earmarked more than $150 million to buy new aircraft for the presidential fleet. Nigeria’s presidential fleet (6 to 12 planes, depending on the source) is among the largest in the world, larger than the fleets of the presidents of the United States and Germany; the prime ministers of Britain and Japan do not have planes designated for their sole use. Even more shocking, the 2012 budget includes roughly $6.5 million to provide meals for the households of the president and vice president, and millions of dollars more for the purchase and refurbishment of furnishings.
In response to the enormous and continuing opposition to the removal of fuel subsidies, President Goodluck Jonathan announced a 25 percent reduction in salaries of top government appointees, the scaling back of trips overseas for government officials and a drastic reduction in the numbers of delegates on such trips. These cuts are considered by many to be too little too late.