Occupy Nigeria 1
Nigeria’s political leaders probably did not expect this kind of response from the populace –mass protests, a national strike starting today that shut down major cities–when they decided, on January 1, 2012, to scrap fuel subsidies (as part of “reforms” to deregulate the oil sector).
The rationale was that by freeing money spent on the subsidy they could spend it on infrastructural improvements.
The problem is Nigerians people don’t trust the government or overpaid public representatives with taxpayers’ money. That the price of fuel doubled overnight increasing transportation and energy costs and food prizes. For a week now police have faced down mostly peaceful protests culminating with a national strike organized by the country’s major trade unions, the Nigeria Labour Congress (NLC) and the Trade Union of Nigeria (TUC).
Not even brief, though fatal, attacks by terrorist group Boko Haram (targeting Christians) could derail the protesters. (In some instances Christian protesters protected praying Muslims.) And in what is now a standard for political struggles on the continent, the Nigerian diaspora protested in a Western capital, this time in London. (The link provides video evidence; see also here.)
Nigerian entertainers have also been forced to take a stance; like Dbanj, Don Jazzy and Banky W. Seun Kuti (he was on Al Jazeera today discussing the fuel subsidy crisis) and Dede Mabiakwu (who played in Fela’s band) joined marches.
Producer Don Jazzy also came out in support of the protests. Even Chinua Achebe condemned the government. When popular Nollywood actress Genevieve Nnaji declared her support for the cuts, her fans tweeted their displeasure. The protests are probably the largest in any Sub-Saharan African country in a long while.
The real focus of the anger is Nigeria’s political class, especially President Goodluck Jonathan (known as “bad luck” to protesters) and finance minister Ngozi Okonjo-Iweala (she can’t hide her irritation with protesters). Okonjo-Iweala was lampooned by bloggers and on twitter. Protesters scoff at Jonathan’s responses — cutting ministers’ travel and salaries, introducing 1000 diesel buses. So has been the popular response to the Congress’s motion to ask Jonathan and his cabinet to reverse their decision on the fuel subsidy and calling for wider consultations around the reforms. Instead the national strike went ahead.
I’ve been disappointed by the intermittent coverage in Western media, mostly focusing on violence associated with protests or rationalizing the subsidy cuts. (Some media only covered Boko Haram’s violence last week.) “Expert” opinion in the West supported Jonathan and Okonjo-Iweala. Jeffrey Sachs, special representative to the UN on an official visit to Abuja, congratulated Jonathan on the decision. Not surprising since we know Sachs’s record on deregulation. By Sunday, however, the UN — probably aware of the record of Sachs’s recommendations — distanced itself from his remarks.
The Harvard MIT internet analyst Ethan Zuckerman, who has been writing on social media and protest, blogged on Friday that Occupy Nigeria was “a reactionary Occupy Movement,” dismissed their analysis of the situation as “oddly partisan” and had high praise for finance minister Okonjo-Iweala (he called her “internationally celebrated”). Zuckerman ended by writing: “Occupy Nigeria is a conservative movement fighting to keep a dysfunctional status quo in place, which seems at odds with other branches of the movement.” Nigerians were quick to challenge Zuckerman on his blog and on twitter — some ad hominem (sample comment: “you are obviously very clueless about Nigeria or Nigerians”), but others had more valid criticisms — his silence on the role of Western oil firms in the oil sector, misrepresentation of Occupy Nigeria, his support for deregulation, and his strange dismissal of the protesters as rightwing and reactionary. (Alex Thurston of Sahel Blog has a good takedown of Zuckerman’s positions here.) By Sunday, Zuckerman, stung by the criticism, backtracked on some of his views. A case of his own medicine.
I am hoping the coverage gets better. Al Jazeera English, while they have a correspondent there and made it their lead all day, have not shown the same round the clock dedication to live covering the protests as they have done in North Africa, though it has wide appeal. (To their credit, Al Jazeera’s “The Stream,” focused on Nigeria earlier today; guests included Seun Kuti.) Meanwhile, Nigerian sites in the diaspora like Sahara Reporters have presented comprehensive coverage. And Jeremy Weate of Naijablog has a great take on why now and speculates on how this will end:
… Nigerians have never been so united in years – last week, in the unofficially renamed Liberation Square in Kano, Christians guarded the space as their Muslim co-protestors prayed. In return, last Sunday, Muslims guarded Churches as others prayed inside.
What we are witnessing with Occupy Nigeria is a generational transfer, as young, social-media enabled activists gradually take over the baton from unionist stalwarts. Nigeria’s young population is increasingly letting go of the deferential attitude of their parents generation. In the south at least, young Nigerians are beginning to ask questions of the religious leadership that has been complicit with the status-quo. At long last, there is accountability pressure building up in the system.
In the short term, following on from the next few days of protest and shut-down, it’s hard to imagine anything other than a policy reversal, and a planned withdrawal being announced, in step with a clear programme of projects that must be delivered before any further withdrawal of subsidy is implemented … Even at this very late stage, President Goodluck could become a hero of the process. Come what may, underlying events this week a deeper shift is at work: a new generation of Nigerians well versed in events to the north in Tunisia, Egypt and Libya is demanding that the terms of the social contract in Nigeria are re-written, in favour of increased accountability in political leadership.
by Sean Jacobs - AFRICA IS A COUNTRY
According to President Jonathan, in 2010 $13billion was spent to
purchase fuel for self-generation of electricity in Nigeria. That’s
about 6.7% of the 2010 GDP. Not only has the demand for fuel for
self-generation of electricity, since then, grown but the subsidy
removal has now doubled all those costs. What would be the impact of
that on inflation and ultimately on the GDP as the costs of
self-generation of electricity goes over 10%? Everyone seems to be
taking subsidy removal as an economically sound recommendation without
any attempt to assess the particulars.
The Governor of the Central Bank of Nigeria displays acute symptoms of
tunnel vision in basing his assessment of the impact of the subsidy
removal on the insignificant weight ascribed to fuel for
transportation in the Consumer Price Index. Sanusi seems incapable of
seeing both the forest and the trees. As far back as October 2011,
about the time the Jonathan govt. began to suggest that it would
remove the subsidy, I looked at possible scenarios after a removal of
the subsidy, exploring the possible impacts on the individuals earning
the proposed, new minimum wage (of course, over 90% of the working age
population won’t be so fortunate to as to earn even that measly sum of
about $110).I used the CPI weights for my projections, and it didn’t
look pretty then. Needless to say, subsequent events have more than
confirmed my calculations. This has given me cause to wonder what
those making policy in Nigeria with the better data that they must
have do to earn their keep.
Implementing that new minimum wage was one of the triggers for the
removal of the fuel subsidy.And, I wonder how the economic hit woman
who has nothing to recommend her beyond being a career technocrat and
‘world renowned Economist’ proposes to solve the problems and fiscal
strains Government would encounter on the expenditure side when actual
prices are higher than budget projections. Okonjo-Iweala should
already be familiar with such fiscal strains. The removal of the fuel
subsidy will do worse to the economy than the benchmark oil price
‘peg’ that undergirded the 2005 & 2006 budgets and which caused so
much deficit financing. It got to a point in 2006 that a supplementary
budget was sent to the National Assembly and the Executive would have
continued to press for the approval of that supplementary budget if
the IMF hadn’t prevailed on them to withdraw it at the time.
It isn’t only the people that would experience hardships due to
inflation; Government would, too, in translating its capital vote in
to projects and in working to hit its developmental targets, and since
it’s the self same, long suffering people who were meant to benefit
from those projects and safety nets, that would be ‘double wahala for
deadi-bodi.’ The government seems oblivious to the fact that it is
sawing off the very branch on which it is currently sitting by
removing the fuel subsidy. I guess I must sound ridiculous myself for
pretending the Govt. has any intention to serve the people in any
meaningful way, quite sad but true.
The IMF has been leaning on Nigeria to deregulate and privatize for
over a decade, and the Fund began to see some adoption of the
strategies it suggested with the return to civil rule in 1999.
Although the state had not, and still hasn’t, provided adequate Power,
the IMF continued to urge deregulation beginning with Telecoms,
instead of with Power. Banking has also followed, along the path of
restructuring, and the field of Retail has seen an opening up of its
gates to all comers. Cement manufacture, a major sector of the
Construction industry also saw major privatizations.
In this period of privatization and deregulation, Nigeria has seen
remarkable GDP growth. Some of that, of course, is due to rising oil
prices. But all that growth has not automatically translated into
Human Development. Growth has, however, resulted in Telecoms, Banking,
Retail and Construction expanding and demanding more fossil fuel for
self-generation of electricity. Herein lies the contradiction in
prescribing the standard medication of deregulation and privatization,
beginning with Telecoms, without first attempting a sound diagnosis of
the particulars of the Nigerian condition.
It fascinates me to no end when recommendations are made for the
privatization of Nigeria’s public institutions where the assets and
revenues have, for all practical purposes, been privatized through
Corruption. There usually is no sign of an awareness that what is
being suggested is a second order action which obeys a different set
of rules from the privatization of ordinary, inefficient public
agencies. A case for deregulation and privatization can be made but I
doubt those should be the priority in Nigeria. Even so, the order in
which the present strategy has been executed is clearly unsustainable.
Furthermore, a sound economic case for the removal of fuel subsidy
still hasn’t been made for Nigeria.
Brazil which also has to grapple with the challenges posed by a
population of over 100million, just like Nigeria, learned the hard way
under Henrique Cardoso that deregulation and privatization are not
magic cures. By the way, Brazil imports about 60% of the gasoline it
consumes locally, similar to Nigeria, but Brazil plans to build 5
refineries, through Petrobras, solely or in joint ventures. The
Nigeria Govt hinges its own hopes for the development of new
refineries on private investment.
There’s already a marked excess capacity for refining globally. Demand
in the first world for petroleum products is already showing the
impacts of recessions, ageing populations, environment friendly
legislation and sentiments, the improvements in the fuel efficiency of
autos and the exploration of alternative energy. Oil industry players
are declaring losses on their refining businesses, closing down
refineries, selling off their refining businesses all due to the
dwindling margins. The UK, Total, Shell, the list goes on, and even
the most cursory research will confirm this.
China, Brazil, the Middle Eastern oil exporters are the ones buying
and building refineries and they are all doing it with heavy
government investment. The Jonathan Govt. which has argued that the
subsidy is the reason why there have been no private investment in new
Nigerian refineries seems to have missed all this.
Considering that other oil producing countries that have withdrawn
their fuel subsidies used to subsidize their citizens’ consumption of
petroleum products to prices below the cost of refining locally and
that Nigeria is subsidizing for the cost of NOT refining, one wonders
what basis for comparison even exists. If the 4 refineries worked the
subsidy would not even be necessary. And one may want to consider the
substantial value of lost GDP that the failure of Govt to operate the
Nigerian refineries optimally has been costing the people of Nigeria.
What Sanusi interprets as an arbitrage opportunity that fosters
smuggling and which he says highlights the difference between Nigeria
and Saudi Arabia, Saudi being surrounded by other oil exporters, is
actually the existence of a legal, ready market for petroleum products
refined locally in Nigeria. Saudi ought to be jealous.
I know that if the local refineries met local demand, the pump price
of gasoline would be, at least, 38% less than the price of subsidized
fuel. And since the Govt (PDP has been in power for over a decade;
Jonathan as an individual has been in leadership for 4 years, 7 months
and over 15 days to date: first as VP, then as Acting President, then
as President, then as elected President) has due to malversation and
ineptitude failed to justify the large sums invested in turn around
maintenance of those refineries, and none of the defalcators have been
brought to book– not for once has the Attorney General of the
federation gone to court to seek to recover funds lost to such black
holes or to repudiate the claims of the creditors of odious debts. In
short Govt. wishes to sweep Corruption under the carpet, finding it
more convenient to inflict hardship on the 99%– the symptoms of Moral
Hazard are everywhere apparent.
I’d just venture a few more words on Development as I’ve focused
largely on issues relating to governance and GDP Growth. The Subsidy
Reinvestment and Empowerment Programme (SURE) which has been proposed
would annually appropriate sums that the programme’s Board and
secretariat cannot disburse effectively. Annual budgets have been
seeing less than 60% disbursements, that’s through the channels of the
bloated, grasping Ministries, Departments and Agencies. The SURE
programme with a staff strength that is a negligible fraction of MDA
staff strength would successfully disburse, over say 40 months, a sum
that would be about 83% of the 2012 budget?
There are no mechanisms for accountability integral to the SURE
programme design. The Monitoring & Evaluation is to be contracted out
to an ‘independent body.’ The programme most surely would duplicate
constitutional channels, leading to more wastage. The SURE document
itself is a remarkable development document that has not the requisite
log frame nor does it provide the projected cost implications of its
12 or so schemes. All these are warnings. The by now familiar M.O. of
Corruption and waste.
Based on Govt’s own numbers, the formal sectors, including both the
private and public, accounted for the employment of less than 5million
people in 2002. Let’s be generous and assume that privatization and
deregulation have raised that number to 15million in the past 9 years.
That’s still 15million jobs to support a population of over
160million! Since most of the poverty indices would be based on the
formal sector numbers which are more easily acquired and tractable is
it any surprise that close to 70% of the Nigerian population are held
to live in poverty when the population is supported by a formal
workforce of less than 10%?
It’s not in question that the informal sector is what has kept the
real Nigeria humming along. That’s where most of the large number of
unemployed, working age youth have been earning some kind of income.
Indeed, it’s what’s compensating for Govt’s long standing failures to
create or facilitate the creation of jobs. And, based on my knowledge
of a large number of the micro-enterprises that sustain both the rural
and urban poor, Gasoline is a significant input in the many varied
forms of production. These are people who have evolved means of
livelihood in adaptation to that lack of infrastructure.
What then is this case for the removal of subsidy? That crude oil
receipts do not cover the subsidy for the fuel on which the whole
economy runs?