David O. Kuranga, Ph.D., the author of this editorial, is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. Dr. Kuranga maintains an active blog and is the author of The Power of Interdependence with Palgrave Macmillan Press.
Attempts to fully deregulate the subsidized Nigerian petroleum industry failed as a result of mass nationwide protests, with demonstrations, marchers, and strikes under the hash tag #OccupyNigeria, which began after the removal of the state subsidy and the accompanying price hike in the beginning of January 2012.
Protesters took issue with the removal of the subsidy that more than doubled the price of petroleum and caused the cost of basic goods to skyrocket in the west African country. The government promoted the move as a necessary austerity measure for the country, estimating that $8 billion USD would be saved in the annual state budget by removing the subsidy.
All the while high ranking state officials, including the presidency, members of the national assembly, and cabinet, continued their traditionally exorbitant expenditure patterns. The expenditures were for salaries, allowances, and other budgeted items that were clearly not in the aforementioned spirit of saving. The popular view was that the president was out of touch and did not care about the plight of average Nigerians.
To defend the programme, the administration released statements that the $8 billion would be used to invest in health care, infrastructure, education, improving the downstream refining capacity to reduce oil imports that would all help ordinary Nigerians. Members of the cabinet came forward to defend the administration and support the programme. The Minister of Finance also reiterated the administration’s claims that the money would be used to improve the standard of living for average Nigerians in various programmes, but offered no specifics, itemized figures or estimates as to where the money would go. In the end, no government official provided any detailed account as to precisely where the money saved from ending the subsidy would go.
#OccupyNigeria protesters were not convinced by these vague statements, nor were they moved by the administration’s attempts to dilute their criticism by announcing a slight reduction in salaries of those in the government executive. Strikes and protests continued until the government agreed to restore the subsidy at NGN 97 per litre, a higher level than the original subsidy. The standoff undermined the administration credibility, particularly that of the President, the Minister of Information, the Minister of Petroleum, and the Minister of Finance.
Decades of corruption in government and a lack of transparency was a major concern of the protesters, who used the Occupy name to identify with other protests movements throughout the world. The administration did not appreciate the depth of the distrust that ordinary Nigerians have for their government. Trying to sell the programme without providing any specific accountability for its logic, even from the Ministry of Finance, was a tactic wholeheartedly rejected by the masses.
Subsequent efforts of the government to act without transparency now seem less likely to work. Nigeria is no stranger to nationwide strikes and protests. In 2010, long before the Occupy movements and the “Arab Spring” uprisings in the Muslim world, Nigerians held nationwide strikes over previous attempts to remove the subsidy that brought the country to a standstill and forced the government to back down.
The administration repeats that it has not given up on deregulating petroleum prices. But this is dangerous terrain, for future efforts to alter or remove the subsidy on petroleum are likely to trigger more civil action. After all, it has worked before. Labour remains adamantly against any increases in fuel prices and the masses, which started to protest independently of the unions, appear to be in full support.
Since the protests, a legislative investigation has unveiled a $7 billion USD fraud in the subsidy program between 2009-2011, calling the program “fraught with endemic corruption and entrenched inefficiency.” Bureaucrats in the Nigerian National Petroleum Corporation (NNPC) and the Ministry of Petroleum Resources were implicated. The ongoing mismanagement of the subsidy program by NNPC has also led to an official probe by the Economic and Financial Crimes Commission (EFCC). Groups behind the #OccupyNigeria protests have indicated that if those responsible are not brought to public account their protests will resume. Ultimately, the subsidy program is the single greatest issue facing the administration of and his key cabinet reformers. If it cannot be resolved in the coming months in a way that pacifies the growing public outrage, the administration will not be able to regain credibility it lost in the events this January.
What is clear is that if it were not for the protests, the legislature and the Federal Executive Council (FEC) would have continued to ignore the glaring issues of corruption and would not have taken steps to redress it. The threat of further civic action may indeed be necessary to ensure a higher standard of governance including greater accountability and transparency.
Kuranga and Associates Global Consultancy is a political and economic risk management firm with a principle practice area of Africa. To learn more about Kuranga and Associates go to www.kaglobal.net. © Copyright 2012 David Kuranga. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without prior permission of the author, who takes full responsibility for the views expressed herein.