I caught rumblings of the fuel subsidy removal affair while on my holiday travels, but only in the past few days have I gained a sense of just what a delicate moment in time this is for Nigeria.
Dr. Ngozi Okonjo-Iweala, for whom I've always expressed much admiration, wasted no time after being installed as Finance Minister and over the past quarter, working tirelessly to convince the Federal Government of Nigeria to eliminate the subsidy on motor fuel forthwith. The subsidy was removed as of the first of this year, triggering immediate protests. This is not the first time the government has tried to eliminate the subsidy, and it has always backed down due to popular response, but this time the government seems determined to hold its ground, and Okonjo-Iweala has been quite tough in defending her position. She points out that Nigeria is in danger of financial meltdown to rival that of Greece because of the unsustainable borrowing, much of which goes straight back out of the country in subsidy payments.
The protests across Nigeria have looked to build on the extraordinary scope of popular actions in 2011, in which Time Magazine famously dubbed the protester Person of the Year, including the use of social media, where on Twitter they have adopted the hashtag "#OccupyNigeria." Of course the "Occupy Wall Street" protests that have lent vocabulary to so many subsequent protests were against policies that support the so-called "1%" of people who make fortunes off globalized finance, while most of the U.S. is facing a harsh recession. There were actually plans for similar "Occupy Nigeria" protests even before the motor fuel subsidy removal, but the popular response against the fuel subsidy provided a spark that no protest organizer could possibly pass up.
I do think this convergence of events has led to an unfortunate side-effect. Rightly or wrongly "Occupy Nigeria" has become seen as a vehicle for protest against subsidy removal rather than a protest against the corruption and mismanagement that in effect creates Nigeria's version of the "1%." The danger, however, is that I think most commentators would agree that at some point the fuel subsidy does need to be eliminated, and the real problem is not the subsidy elimination but the likelihood that the cash that the government would save thereby would just also be siphoned into the pockets of Nigeria's "1%".
Prof. Adeola Adenikinju of the University of Ibadan has been one of the most sensible commentators on the issue, which should not surprise anyone, as there are fewer more coherent discussions of the fuel subsidy conundrum than his 2009 presentation at OECD's Global Forum on Trade and Climate Change. That presentation, "Energy pricing and subsidy Reforms in Nigeria", should be required reading for anyone pondering these current events. He argues convincingly the economic case for subsidy removal, but he also admits the considerable present obstacles. He concludes:
Nigeria needs to keep to a formula based approach for determining fuel prices in the short term, while expediting actions in respect of putting in place a vibrant domestic refining industry.
This is where I think even the brilliant Okonjo-Iweala has missed the road, and at the same time I think the "Occupy Nigeria" crowd must learn the lesson of the accusations of incoherence and unthinking populism leveled against "Occupy Wall Street." Okonjo-Iweala is all about GDP growth, and that one measure can be a powerful blinder for economists. I remember watching her famous TED talk headlined "Want to help Africa? Do business here" and thinking: "OK I can sympathize with the desire to focus on foreign development as a vehicle for recovery on our continent, but isn't it even more important to focus on domestic industry?"
Why must we slaves to the mechanisms imposed by the IMF and The World Bank when China shows that there is more than one way to turn around an economy? We are coming from a similar historical and demographic place with the immense damage caused by Chairman Mao not so different from that caused by decades of African despots and colonial meddling. Yes, I do realize that the biggest issue with that thinking is that no African nation has the combination of ruthless and effective leadership of Deng Xiaoping. Surely there is a middle path, an African path.
I can hardly think of a more apt fulcrum for weighing out such a middle path than this fuel subsidy crisis. Imagine a timetable that clearly leads up to later subsidy removal through a series of confidence-building measures, some of which Prof. Adeola Adenikinju outlines in his presentation. Even Okonjo-Iweala has been forced to articulate a bit better the material gains to the people she expects from the savings from subsidy removal, mentioning health and social welfare programs, urban mass transit and more, but coming as it has, after the fact of the precipitous subsidy removal decision, this satisfies no one.
Unfortunately present discussion has sometimes broken down into he-said-she-said, for example whether subsidy removal was supposed to wait until April, or claims that Okonjo-Iweala has threatened to resign if any compromise is made on subsidy removal. All this heat without light is not helping matters at all. Even shotgun measures such President Goodluck Jonathan's pledge this morning to slash government salaries by 25% are not enough to grow from this crisis into a pattern of long-term solutions. A continued loss in confidence the current president and his talented Finance Minister could play into the hands of the many darker interests in the nation who have been the main actors in the historical sabotage of Nigeria's welfare. I to truly fear the emergence of some player, perhaps even an agent of the "1%," who claims the populist card against the current government and ends up taking Nigeria even further into the dark ages.
Jonathan and Okonjo-Iweala need to repeat their decisiveness in applying the fuel subsidy removal policy, but this time they must rapidly decide on reform of that policy. They need to articular a clear timetable and plan to tackle corruption, addressing the fact that declared government salaries are a fraction of the mismanagement problem. They need to take firm steps to shore up the domestic, refined petroleum industry. They need to deliver credible assessments of the effectivity of the social welfare institutions that Okonjo-Iweala is promising to support with proceeds from subsidy elimination. A solid, independent advisory panel of the likes of Prof. Adeola Adenikinju and former Petroleum Minister Professor Tam David West, among other specialists, could draw up such a timetable for government approval, acting under the highest standards of transparency.
Would such a course be an easy one? Of course not. But I suspect it would be less difficult than navigating the economic (inflationary pressure) and political (popular revolt) perils of the present course.
Above all, I do hope that the government and its security apparatus sees fit to let the protesters have their say. I'm very troubled by reports of hardships suffered by the protesters, and I hope that we can show the first glimmers of a new, modern Nigeria in the treatment of dissent. President Goodluck Jonathan is no Bashar al-Assad, and shouldn't even take a step in the direction of the Syrian crackdown. I do find myself hopeful that of all the post-war Nigerian governmental regimes, Jonathan's is the most likely to act with the necessary balance and prudence to turn this crisis around and start on the long, hard road to recovery for our nation.