The Fuel Subsidy Removal Protests for Dummies

Naijablog

9 January 2012

The Fuel Subsidy Removal Protests for Dummies

Jeremy Weate

On the first day of the indefinite general strike organised by a coalition between two of the largest unions in Nigeria – the TUC and the NLC – and a cluster of smaller unions and social media-based activists and organisations, some external observers have expressed surprise at the intensity of resistance the “Occupy Nigeria” campaign has mounted against the removal of the fuel subsidy on January 1st and the size of the mass demonstrations taking place. From an outside perspective, it might seem like a dust-devil has been whipped up without why in the desert.  In case there’s still any confusion, allow me to explain why there is so much anger and resistance.

The answer begins with a question: would it be acceptable to citizens of affluent countries that the price of petrol doubles overnight without any warning? Perhaps Jeffrey Sachs would be alone in his view, or perhaps he only prescribes a certain type of medicine for African countries. Perhaps the view from Sachs' brain is that Africans can get by on generic drugs long past their sell-by date.

Aside from Sachs' development fantasies, the lived reality of citizens of the Nigerian state is that it provides little or no security, no infrastructure, no education and no employment opportunities (apart from mostly McJobs in the civil service).  Everywhere in Nigeria, the basic elements of civilised existence have to be taken care of house-by-house, compound-by-compound.  You must sink your own borehole for water, buy, install and fuel a generator for power, hire security guards to keep the wolves from the door, pay school fees to ensure your kids get a half-decent education because the public school system is in perpetual meltdown. And to earn enough money to get through the day, you must hustle.

The breakdown of a standard tax and political representation based social contract between citizens and the state in Nigeria is almost entirely a result of the past few decades of the so-called ‘resource curse’.  Earning billions of dollars each year from crude exports, the Nigerian government has no need to rely on tax from individuals or local companies; tax and royalty payments from the international oil companies (as well as historically, loans from international financial institutions) have been sufficient to fund the annual budget at all levels of government.  For the past few decades, cheap fuel has therefore been the only form of social contract between ordinary Nigerians and the state and the principle lever to control inflation during times of rising oil prices.  With most Nigerians subsisting on US$2 or less, subsidised fuel has also been a survival mechanism, making life only just bearable.

It was therefore highly surprising to Nigerians to find out that the fuel subsidy had been removed on January 1st and that the price regulating body under the Nigerian National Petroleum Corporation (NNPC) – the PPPRA – had more than doubled the price of petrol overnight.  No one had been given warning.  The expectation was that the subsidy would be removed at the earliest in April.  The strong suspicion is that following on from Christine Lagarde’s visit to Nigeria in late December, the government had accelerated its plans.  From the views of key government figures, it’s easy to see how Nigeria acceded to IMF pressure with little or no resistance.  The Finance Minister, Ngozi Okonjo-Iweala, has repeatedly stated that removing the fuel subsidy would only hurt the affluent car-owning population, forgetting how central the price of fuel is to almost every basic aspect of life here.   Meanwhile, the Governor of the Central Bank, Sanusi Lamido Sanusi, has stated that removal of the subsidy would only have a short-term inflationary effect.  With opinions like this, the IMF was walking into an open door.

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