24 January 2012
By Xan Rice
Since Goodluck Jonathan took office promising reforms, failure to stop an Islamist insurgency and protests are fuelling doubts
In the northern city of
, hundreds of Islamist insurgents attack, killing police officers at will, seemingly mocking a government that has vowed to stamp them out. Kano
In a park in the southern mega-city of
, a week before last Friday’s attack, the scene was more peaceful but in its own way equally troubling for President Goodluck Jonathan’s administration. Women inched through the crowd carrying soft drinks and beer. The air tasted of sweat and marijuana, adding to the festival feel. Yet this was no concert. Lagos
was paralysed by a nationwide strike over the removal of a longstanding fuel subsidy. Rage over the sudden doubling of petrol prices escalated into wider discontent over inequality and corruption. The 10,000-strong protest was something new, marshalling the middle class as well as the poor. The soundtrack fitted the angry mood. “International Thief Thief,” sang the crowd, as Fela Kuti’s anti-graft anthem boomed through loudspeakers. Nigeria
“We are here to protest corruption and being enslaved by our own leaders,” said Ayo, a civil servant in his 30s. “This is our chance to change
That was meant to be Mr Jonathan’s job. When the soft-spoken former state governor was elected last year to lead
Africa’s most populous nation and leading oil producer, he promised to transform not just the economy but also the lives of ordinary people, most of whom live in poverty. Nine months on, merely maintaining the dysfunctional status quo appears too much of a challenge. His security forces seem powerless to stop the onslaught by Boko Haram, the sect that has massacred hundreds and appears intent on provoking greater conflict.
Meanwhile, the president’s bungled attempt to remove fuel subsidies, a central part of his policy to deregulate the economy and entice private investment in a country increasingly seen as an attractive emerging-market destination, has raised serious questions about his capacity to push through reform.
After a week of mass action, culminating in a threat by oil workers to shut down the country’s output, “Badluck”, as some demonstrators were calling the president, was forced to back down, partially reinstating the fuel subsidy. Unions called off the strike but the public was not placated, since at N97 ($0.60) a litre, prices remained 50 per cent above their level before January 1. Such was the discontent in
that the army was sent on to the streets. Lagos
“In only nine months this administration has lurched from one crisis to the next – post-election violence, Boko Haram, and now the fuel subsidy,” says Clement Nwankwo, director of the Policy and Legal Advocacy Centre, a civil society group based in
, the capital. “A lot of people think that these are not just your normal unsolvable Nigerian problems, but rather problems with this government. It is failing on all fronts, leaving the country facing a very uncertain future.” Abuja
In the decade since the end of military rule, the national mood has often swung between extremes. Bouts of reform have revealed
’s promise as an engine of regional economic revival. At other times the country has appeared close to falling apart, its corrupt political system skewed to serving special interests and ill-equipped to meet public aspirations. Nigeria
The bombs and protests echo far beyond the country’s borders, a measure of its importance on the continent; as a global oil exporter; and increasingly as a potential investment destination.
Nigeria is home to 160m people – more than one in six sub-Saharan Africans – and on track to become the most populous nation after India and by 2050. It exports more than 2m barrels of oil a day to the China Americas, Europe and Asia, and has vast gas reserves.
While much of the developed world is in financial strife,
Nigeria’s gross domestic product is growing steadily at about 7 per cent; it could soon overtake as the continent’s biggest economy. After a difficult 2010, foreign direct investment is estimated to have reached $6.5bn last year, and by some forecasts could hit $9bn by 2013. South Africa
If the federal government was able to tackle corruption, iron out distortions in the economy that hold back the private sector and invest in rehabilitating infrastructure, double-digit growth would be possible, economists believe. With more in the coffers, the state might also begin to address better the regional and social disparities associated with the past decade of economic expansion.
Even Mr Jonathan’s critics acknowledge it made sense to tackle the fuel subsidy, which encapsulates much of what is wrong with the country. Despite being the world’s eighth-largest oil exporter,
has only four refineries, all state-owned and decrepit, operating at 25 per cent of capacity. To meet domestic fuel needs, the country must import petrol. To keep pump prices low – the one benefit Nigerians see from the state – the government pays favoured global and local oil marketers the difference between the cost of importing the fuel and the regulated pump price. That subsidy amounted to up to $10bn last year, more than double the figure in 2010 and equivalent to about a third of the total federal government budget. Nigeria
“Intellectually you can understand the reasons for getting rid of it,” says Patrick Dele Cole, a businessman and former presidential adviser.
However, withdrawing the subsidy in full rather than phasing it out was risky. Doing so without offering the public tangible results was asking for trouble.
Demographics played a role in the response. The population is young, with 43 per cent under the age of 15. Unemployment is 24 per cent and climbing, and much worse for school-leavers and twentysomethings. In a briefing paper this month, Financial Derivatives, a Lagos-based consultancy, wrote that
was “sitting precariously on socioeconomic gunpowder”. Nigeria
Meanwhile, mobile-phone penetration and internet access has grown fast, increasing frustrated young people’s awareness of government failures. During the fuel demonstrations, details of state waste spread by text messages and social media. It struck a nerve; when the annual presidential catering bill of more than $5.5m was queried by protesters, the detailed national budget was withdrawn from the government website. Spokespeople rushed to justify the expense, saying it included food for state banquets and visiting dignitaries.
Those involved in the fuel protests believe it could prove a defining moment in the country’s history, one that could push the government to become serious about reform or act as a springboard for further unrest.
“For the first time, ordinary Nigerians have seen their power,” says Nasir El-Rufai, an opposition politician who acted as an “informal adviser” to some of the leaders of Occupy
, which helped co-ordinate protests. “The government was forced to promise to look into oil fraud and waste, which has not happened before. Whether it has the political will to do so, I’m not sure.” Nigeria
Indeed, any proper investigation could be embarrassing for Mr Jonathan and some of his ministers. Last week, a parliamentary committee probing subsidies said that while 59m litres of imported petrol were discharged in
by vessels daily, domestic consumption was only 35m litres. “This, of course, amounts to overpayment; or in other words, sharp practices,” said Farouk Lawan, the committee chairman. There are reasons to suspect some of this cash may have been used for electioneering. Nigeria
Compounding Mr Jonathan’s problems is
’s ailing fiscal health. Foreign exchange reserves have halved to $33bn since 2008; windfall oil savings have been depleted; and while public debt is manageable it is growing with little to show for it. The running costs of government are swallowing more than 70 per cent of the budget, leaving little for investment in infrastructure. Nigeria
is very vulnerable to oil-price fluctuations,” says Samir Gadio, emerging markets strategist at Standard Bank. “If prices collapse to $60 – even $80 – it would be disastrous.” Nigeria
Mr Jonathan’s advisers say he has not had time to prove himself, and that his policies are designed to eliminate the very waste that is testing public patience. “The president cannot just wake up and arrest everyone who imports fuel. Investigations have to be done and that takes time,” says Ken Saro-Wiwa Jr, a presidential aide. “We cannot wait for zero corruption before beginning to transform the country.”
Still, Mr Saro-Wiwa Jr acknowledges that the protests have “changed the government atmosphere”. “People have brought out facts and figures, and have analysed budgets. The government has to pay attention to that.”
It is perhaps Mr Jonathan’s misfortune to be held accountable for failures that owe much to his predecessors, who ensured a few can afford to spend like billionaires while most live on less than $2 a day. The poverty is especially acute in the mostly Muslim north, which is under-represented in the administration of Mr Jonathan, a Christian. Resentment there plays into the hands of Boko Haram, whose influence has spread far from its original base in northeastern
. In turn, the Islamist violence is dividing Nigerians and threatening the integrity of a federation composed of more than 200 ethnic groups. Maiduguri
“You see the economic growth projections, but when you translate that to the living conditions in
you wonder what it means,” says Mr Nwankwo. “With the fuel subsidy protests, there was a controlled rage. But if people get the sense that the government is impervious to public pressure, they will change their behaviour and the consequences in a diverse country like ours will be explosive.” Nigeria
Yet with public attention focused on the failures of the state in a way not seen since the dark days of military rule, Mr Jonathan could harness the pro-reform constituency to prove his many doubters wrong.
“I think the combination of the fuel-subsidy demonstrations and the violence in the north should provide an opportunity for President Jonathan to step up and claim a place in history,” says Lamido Sanusi, the central bank governor. “It is up to the leadership to take advantage of this rather than be overwhelmed by the pessimism that is setting in.”
Oil revenues: For corruption, read political survival
’s oil industry tend to focus on the conflict in its Niger Delta heartland or the riches of those few who reap its rewards, and the carloads of cash by which foreign companies have been known to secure business, writes Tom Burgis. But oil money also funds a patronage system that perpetuates poverty and violence. Nigeria
The International Monetary Fund estimates the Nigerian government will bring in $80bn over the five years to 2013 as its share of the proceeds from sub-Saharan Africa’s biggest oil and gas industry, which supplies the US, Asia and Europe.
If history repeats itself, much of that will disappear – with the prime culprit being Nigerian National Petroleum Corporation. Insiders describe the state-owned oil company, the joint venture partner to Royal Dutch Shell, ExxonMobil and other foreign operators, as a collection of fiefdoms. Each has political masters to enrich and contracts to dispense.
Vested interests have hampered the progress of a Petroleum Industry Bill that aims to overhaul NNPC, create an independent regulator, foster a greater role for homegrown oil groups and reverse under-investment. Officials and industry executives accuse one another of preferring the opaque status quo.
Lamido Sanusi, the reformist central-bank governor, says a failure to diversify the economy lies at the heart of
’s travails. “That’s not to say that the political system is not corrupt all over,” he says. “But the most critical element is the poor infrastructure that makes it difficult for industrialisation and job creation to take place.” Nigeria
The oil money that does reach the federal budget trickles down in unpredictable ways. In early 2010, when Umaru Yar’Adua, the president at the time, lay dying in Saudi Arabia, traders at Lagos’s electronics bazaar said business had slumped not because of the worldwide economic crisis but because there was no one in the presidential villa to funnel oil revenues to the contracts on which whole communities indirectly depend.
Political scientists see a clear link between corruption and violence, from the thugs who terrorise voters in the delta to the ethnic hatreds many politicians nationwide use to galvanise allegiances based on oil money. Yet Timipre Sylva, governor of the delta state of Bayelsa, says simply of the way he diverts public money to shore up support: “You will read that as corruption, but me, I probably will read that as political survival.”