It’s been a week since Nigerian President Goodluck Jonathan moved to slash oil subsidies in West Africa’s largest oil producing country. Seven days on, and unprecedented protests have been the result. Nigerians argue that the increased oil prices will make overall living costs higher, particularly for food purchases as an estimated 160 million Nigerians live on less than $2 a day. With ongoing protests, it would seem that
finally Africans are realizing the power of mobilization and collective action.
“Either we deregulate and survive economically, or we continue with a subsidy regime that will continue to undermine our economy and potential for growth, and face serious consequences.”
Reading that, the economist in me thinks “He’s got a point.” Manipulating the economy to ensure lower prices doesn’t take away from the fact that in reality, prices are still high, and the government, or rather the people, are still paying the difference – an estimated 1 trillion Naira or $6.13 billion annually – probably through taxes and government revenue which could be invested elsewhere.
A few doors away in the not too distant past, Ghana’s President Kufuor’s government suffered an early demise due to perceived price hikes, corruption and a harsh economy during his tenure. True, removing protective measures usually affects the poorest in society first. But attempting to maintain those protective measures doesn’t bode well for an economy in the long run…does it?
Some might argue that Nigerians are making a big fuss over nothing: there are oil price hikes all over Africa and the world, its a norm, particularly with the current global climate.Yes and no. Firstly, Nigeria’s economy is heavily dependent on oil. Not only as one of its key resources, but also as the very elixir of the economy. Unlike Ghana which utilizes hydroelectricity as its main power source, Nigerians rely on oil to light their lamps, run their companies, and essentially power their nation.
How can it be that a nation which produces the most oil in Africa does not have a sustainable power structure and instead its people have to live (mostly) in darkness, or opt for using oil consuming generators for electricity (if they can even afford that)? That my friends, is the crux of the matter, and yet another African resource paradox. It’s also huge factor in why we’ve seen protests in Nigeria and not too long ago, in Senegal (another oil dependent nation for electricity), but not (yet) in Ghana.
According to President Jonathan’s TV address, Nigerian government officials will be seeing a 25% pay cut this year and international travel will be reduced. That’s all good and dandy, but I have to ask, why didn’t the government salary cuts come before the subsidy cuts? And even if it makes more sense to have the subsidy cuts first – in order to ensure that the entire cabinet doesn’t desert their posts- and especially with growing pressure from the IMF and other international actors, was there adequate public education or preparation before the cuts? What about safety nets for the poorest?
At the end of the day, I believe it comes down to planning and social welfare. Economically-speaking, the Nigerian government might be right, but maybe it could have done more to not only educate the public on its stance, but also to get feedback and draw up welfare programs to support the most affected before implementing the subsidy removal? With countries like the US and Germany exploring alternative power options like solar energy, what is being planned in Nigeria and Africa for the longterm?A nationwide protest is planned for tomorrow, Monday January 9 2011, and from all indications, its gonna be absolute shutdown in Nigeria.
One resists what one does not understand, and its about time African leaders quit playing their citizens like pawns in a game of chess and instead demonstrate transparency and accountability. And, ahem, it would serve Ghana’s political leaders well to take notes on how the showdown is going when it comes to Nigeria’s oil sector, considering Ghana’s recent foray into oil production.
Here are some videos that gives a good overview on Nigerians’ concerns about the subsidy removal and implications for the government and economy: