Not only was the petrol subsidy a scam that benefited elites, it mortgaged Nigeria’s future: oil was burnt up with nothing left behind.
Nigeria is being gripped by the power of the street. Around the world the street has discovered its power, but it can dance to many different tunes. In North Africa it has been a force for good: brave young people have struggled to topple dictators. But in America, the rise of the Tea Party showed that many people could be seduced into demonstrating against their own true interest. Poor people were on the streets urging tax cuts for the rich: a nonsense that could only happen because of slick campaigning by well-financed special interests. Where on this spectrum does Nigeria fit? Well Nigeria is not North Africa. Far from being ruled by an unelected autocrat, Nigeria now has the most legitimate government in its history, recently empowered by a decent election. Instead, the current protests closely resemble the sad folly of the Tea Party: poor people tricked into lobbying for greedy elites. Start from the maths. The petrol subsidy was costing $8bn a year; in other words it was costing the average Nigerian household over N750 per week. Was the ordinary household getting benefits of anything like this amount in return: of course not. Most of the subsidy did not reach ordinary households. Much of it was captured wholesale by corrupt elites who shipped cheap petrol out of Nigeria and resold it. Even in respect of the cheap petrol that stayed in the country, the benefits accrued disproportionately to the rich. Owners of big cars were gaining much more from cheap petrol than the mass of ordinary Nigerians who do not own a vehicle. What the street should be focusing on is not the restoration of the petrol subsidy, but on how better to spend that N750 per week so as genuinely to benefit ordinary people. Not only was the petrol subsidy a scam that benefited elites, it mortgaged Nigeria’s future: oil was burnt up with nothing left behind. As oil wealth is depleted, the Government has a responsibility of custody to the next generation. Some of the revenues from oil must be invested in infrastructure and other assets. This is a responsibility that previous Nigerian governments failed to meet. At last Nigeria has a government which is taking its responsibility to the next generation seriously. Ask yourself who will be the biggest beneficiaries of that new policy? The answer is, obviously, the young. Yes, Nigeria’s young people should be taking to the streets, joyously celebrating the new responsibility. Instead, they are in the vanguard of protest, demanding a return to plunder. This is the Tea Party Mark II: people tricked into lobbying against their interests. But Nigerians can take comfort from what has happened to the Tea Party since those heady days when it swept the streets of America. After a few months, many ordinary people wised up and the Tea Party has fizzled. In its place a much smarter counter-movement has built up, of ordinary people demanding that the rich should pay more tax, not less. Their slogan, ‘we are the 99 percent’, could equally well be the slogan of the counter-campaign that Nigeria now needs. The elite-favouring scams, the neglect of the future, these are the practices that have privileged the 1 percent at the expense of the 99 percent. At last they are being consigned to history. And that is not the only reason why ordinary Nigerians should get back off the streets of protest: disorder is an opportunity for the most dangerous groups in society. During disorder, Boko Haram and political opportunists come out of the woodwork and pursue their own mischief. Nigerians know all too well what social disorder delivers: the reaction should be ‘never again’. Nigeria’s business community has a stronger interest that any other group in economic responsibility and social order. It is also the group best-equipped to distinguish between populist rhetoric and sound argument. At times such as this, business leaders cannot abrogate their responsibility for social leadership: the loudmouths of the street and the seductive songs of opportunists must be countered. Speak out; speak up; speak now!
Here is Joachim MacEbong’s reply, first posted on his blog
There is an ideological similarity between the Tea Party and the protests in Nigeria, but it is not in terms of ignorantly protecting the rich. If anything, Occupy Nigeria is in part a reaction to those who have fed fat of the corruption that the government has allowed. The similarity is in terms of advocating for smaller government at all levels. Nigeria’s 2012 budget is the sort that will make even those who can tolerate larger government choke.
That is where it ends, thankfully. There are no ‘well-financed special interests’ in this case, and there is a growing awareness that the protests of the last one week are about more than petrol subsidies. It is about reviewing the social contract between the Nigerian government and its people. Paul Collier calls the Goodluck Jonathan administration as the most legitimate in our history, and the 22 million people who voted for that government – along with millions who didn’t – want the corruption that has overtaken our nation to be confronted. They want a vastly smaller government. They want electricity, which will make them less reliant on petrol for generators.
In a nation without a lot of basic infrastructure, the classic argument that subsidies disproportionately benefit the rich is less convincing. A lot of people like barbers, tailors and owners of small shops, to mention just a few, use petrol in productive activity. There are also transport costs, which doubled in the days after January 1st. The SURE programme, which the government is trying to ramp up support for is vague, and largely a duplication of other capital expenditure. There is no mention of the effects of sharply higher petrol costs on Small and Medium Scale enterprises, which is a surprisingly neglected group in all this debate.
Economic theories do not and can not exist in a vacuum. People are not cells in a spreadsheet. Removal of petrol subsidies will be painful whenever they are implemented, but there must be measurable evidence that government is moving from promises to action. Since 1999, Nigeria probably has more promises per capita than any other, but desperately little to show for it. The message is clear: No more promissory notes. You cannot talk about ‘responsibility to the younger generation’ while spending $1m to water a garden, taking delegations of several dozen on foreign trips and paying out outrageous allowances to under-performing public officials.
There has been an attempt to tag protesters as a mindless lot who are puppets on strings, but nothing could be further from the truth. A lot of young professionals are out there, and they have made it their business to educate everyone else on the issues. A lot of interest has been generated in the process of petrol importation, the oil industry as a whole, and the cost and structure of government.
The message about going ‘beyond subsidy’ has spread horizontally, among the people on the streets protesting, and vertically, to those who have the ears of this administration. In an interview a couple of days ago, Atedo Peterside, one of Nigeria’s top bankers said: ‘This is not just about fuel price. They want good governance. Don’t insult the intelligence of protesters’. This is exactly what Professor Collier’s article does, perhaps unintentionally. The assumption that those who oppose subsidy removal have been ‘tricked into lobbying against their own interests’ by ‘political opportunists’ is a dangerous inaccuracy, and for the avoidance of doubt, let me state that most people agree that subsidy removal sounds good in theory, but when confronted with a corrupt and wasteful leadership, it amounts to pouring water into a basket.
Collier has long insisted that bad governance is most to blame for global poverty, and that is the same thing wrong with Nigeria, whether under democratic or military rule. From a protest over removal of subsidy, it has become a protest over the cost and quality of governance, as well as accountability at all levels. Seen in that light, yes, Nigeria should be ruled by the street.