Nigeria Matters

Now that fuel subsidy is gone

As promised by this administration in the 2011, that starting from January 1, 2012 fuel subsidy will be removed, that prediction has come and gone. Monday January 2, 2012, Nigerians woke up to find that fuel pump price has been increased (in fact, sky rocketed) to N144 per litre from the official price of N65 per litre. As some of us might have predicted before, that this subsidy removal is matter of do or die to this administration, that 2012 budget will be made so depended on it that without it the whole budget will (as it was presented) collapse, has come and gone. Already, Ghana and Cameroon has been coerced by IMF into doing the same, thus, Nigerian own did not come as a surprise to many global watchers of Africa, especially with the recent visit of IMF head to the country. Some analysts from Nigeria thought that this administration could not get the mind and energy to increase the price of fuel as much as it did yesterday. But, all these are now history, President Jonathan has shown us what he is capable of doing now, henceforth, any body who doubt Mr. Jonathan, do so at his own risk. With fuel subsidy cuts executed, other though economic decisions like hike in the price of electric power, increase in the costs of education and health, returns of toll gates, banning of importations of certain commodities will now look probable. With all these waiting for Nigerians this 2012, the road ahead is going to be tough, as Wahala dey wait.

Many people are now seeing the connection between December 31 2011, declaration of state of emergency in some of Nigeria’s most trouble spots, and this later day announcement of subsidy removal. As the state of emergency will help forestall any violent opposition that may come against the decision from these trouble locations. Nigerians, who are already paying the price of misrule and corrupt leadership, now have to bear with an inflationary 2012, that will wipe away all the salary increments that salary earners get in the year 2011 and 2010. For the majority that are in the informal sector, such as traders and labourers, hell await them as 2012 is going to be tougher than 2011. The cost of every commodity available in the market as from Sunday January 1 is going to increase making the temperature in Nigeria a bit hotter. As the Western countries have already gotten their own share of street protests in opposition to government draconian economic policies that continue to suffer millions of people, Nigerian authorities are making their own environment ready for their own occupy Aso Rock protests. As the Arab spring, inspired by a jobless and hungry Tunisian youth, continue to topple Arab regime, Nigerian authorities are preparing there own already ripe environment for the same protests.

There are theoretical and empirical evidences that point to a relationship between austerity and economic stagnation in one hand, and instability and social divisions in the other. For example, in Latin America over the period of their implementations of austerity measures the cases of violent protests, strikes, and attempted revolutions became common phenomenon. The same is true in Indonesia, especially, towards the end of dictatorship of Suharto, when he accepted IMF demand for him to introduce tough economic cuts. As an aftermath of these nation wide strikes, Suharto had to vacate his seat of power. Even in the history of Europe, major violent protests and revolts were recorded to have taken place during the period of economic stagnation and cuts. Unlike in the case of Ghana or Cameroon, the incidence of poverty in Nigeria is high, one of the highest in the word, these together with high level of youth unemployment make Nigeria unsuitable for this kind of fuel price increase. What this administration should have done, if at all it is very serious with subsidy removal, is to have done it in a gradual manner; in such a way that the impact will not be very hard felt by the Nigerian masses. As the effects of subsidy removal spread deep and wide, food prices are on their way to reach the top, this together with already anticipated increase in the global food prices will make the little savings Nigerians have made over the years to go into buying food. Though, the proponents of subsidy removal have argued that the removal and other structural changes this regime is about to embark on will spur economic growth; as in other countries around the world, but growth that undermine existing social institutions and increase inequality leads to increase instability.

Though, in desperation to calm the minds of agitated Nigerians who were shocked by this sudden jolt in the price of oil, Jonathan has appointed committee to manage the proceeds from the subsidy withdrawal, this will not change anything as Nigerians know quite well. In as much as corruption remains in these ministries where the committee is expected to channel the proceeds to, nothing will change (it is just business as usual). The other committee appointed to negotiate with opposing groups, should not have been there in the beginning, if at all the federal government has stick to it earlier promise of entering into nation wide discussions before introducing the price hike. As for the Labour unions, students groups, civil society bodies, traders association, transporters, and human right campaigners, we wait to see what their next action will be; already Abuja and it environs have started welcoming the echoes of these protest, as ‘Occupy Abuja’ has already started.

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