Here are my thoughts on the removal of petrol subsidies:
President Tinubu and Dangers of Subsidy Removal
By Farooq A. Kperogi
It’s either President Bola Ahmed Tinubu and his inner circle didn’t read my April 29 column titled “Six Agenda Items for Tinubu’s Success” or they did but dismissed it as the impractical, high-flown, indulgent musings of an idealistic diasporan Nigerian. The fifth item on my list concerned petrol price hikes amid the current agonizingly biting poverty in the land.
I wrote: “I know that there is now an artfully manufactured consent, particularly among the gilded classes in Nigeria, about the undesirability of ‘fuel subsidy.’ I don’t care what it’s called, but any policy (call it deregulation, subsidy removal, appropriate pricing, etc.) that results in an arbitrary and unbearable hike in the price of petrol without a corresponding increase in the salaries of workers and an improvement in the living conditions of everyday people will sink Tinubu.
“Resuscitating existing refineries and creating conditions for robust private sector investment in building new ones are obvious, well-worn solutions to the existing order, which have been floating around for years. Any serious government would make this happen.
“No responsible government shies away from subsidizing the production and consumption of essential commodities for its people. I have lived in the United States, the belly of the capitalist beast, for nearly two decades, and I can tell you that governments at both federal and state levels heavily subsidize petrol consumption—in addition to agriculture.
“When gas prices increased dramatically a few months ago here, both Joe Biden and state governors granted tax holidays to oil companies so they could lower the cost of petrol. Biden tweeted daily about the reduction in gas prices that his policies enabled. Americans call high petrol prices ‘pain at the pump’ for a reason.
“The surest way for a government to lose legitimacy here is to allow petrol prices to go up without doing anything about it. That’s why America’s 50 states collectively spend $10 billion a year to subsidize petrol consumption.
“I know Tinubu, Atiku Abubakar, and Peter Obi said they would ‘remove fuel subsidy’—a code for they’ll increase petrol prices— if they’re elected president, but I can assure Tinubu that if petrol price hikes deepen people’s misery, he’ll have a tough time governing.”
America and Nigeria share one thing in common: they both lack a well-developed, subsidized public transportation system. America’s lack of a public transportation system is informed by the rugged individualism of its culture (in my university, for instance, 99 percent of students have their own cars even though the university has an intra-campus shuttle system), the territorial vastness of the country, and the relentless lobbying of airlines and car manufacturers.
Nigeria’s lack of a public transport system, on the other hand, isn’t a choice. It’s a consequence of deliberate neglect by successive governments who don’t give a thought to the comfort and well-being of the poor in society.
Nevertheless, the effect of high petrol prices is similar in both countries: it ignites inflationary conflagrations, wrecks the economy, deepens misery, and inflicts several negative domino effects.
That is why, in America, politicians are often acutely sensitive to fuel price hikes and go out of their way to keep prices low—even at the expense of other priorities. A January 3, 2012, TIME magazine report noted, for example, that American “politicians’ refusal to increase gas taxes in line with inflation and construction costs starves needed infrastructure of funding.”
Sounds familiar? The recurrent excuse governments in Nigeria advance to increase fuel prices is that the government needs money for “infrastructural development.” But no sensible government starves its people to death because it wants to build infrastructure. Only the living use infrastructure.
At N550 per liter, the price of petrol is now officially lower in many states in the United States than it is in Nigeria. Nigerians are now paying nearly the equivalent of $4.70 per gallon of petrol (using the official exchange rate). If we use the black market exchange rate, it’s much higher than that.
In the state of Georgia where I live, the average cost of gas per gallon is $3.4, about a dollar cheaper than it is in Nigeria. Given that the federal minimum wage in Nigeria is still a miserable N30,000 per month, which is equivalent to about $65 per month, I don’t see how this makes sense. Plus, transport fares and the cost of goods have already skyrocketed to unmanageable degrees as a direct result of the new petrol price regime.
But I’ve stopped bothering myself about this. There is now a decided discursive shift in Nigeria in favor of endlessly higher petrol prices. I won’t take Panadol for other people’s headaches. If Nigerians think higher petrol prices are the way to go, or that eliminating subsidies is a bold and commendable decision, so be it.
Even if Tinubu hadn’t been president, the two other alternatives to him said they would “remove subsidies” on “day one,” as Tinubu did. So, Atiku and Obi supporters lamenting Tinubu’s action are being two-faced.
The Nigerian Labour Congress that’s threatening to go on strike to protest the removal of “subsidies” is even more duplicitous. It never opposed Peter Obi, the candidate that ran on its platform, when he espoused extreme neoliberal policies, including saying “fuel subsidy is an organized crime” that he will remove “immediately, if I am elected president.” Had Obi won and removed petrol subsidies, what would NLC have done since it didn’t oppose his manifesto?
In 2016 when Buhari increased petrol prices, his supporters actually came out to protest in support of the increase and against those who were opposed to it. For the first time in Nigerian history, there were no strikes or protests in response to the increase—and subsequent ones. I called it self-annihilating stupidity then.
Perhaps I was wrong. It’s probably better to call it rational stupidity— on the model of “rational ignorance.” Maybe, just maybe, people are tired of the ceaseless elite blackmail that tells them they do not deserve being shielded a little from the negative consequences of the unchecked rapacity of the market.
And this is the cumulative result of sustained government propaganda over the years. People in power have gone on rhetorical overdrives to demonize “subsidy,” to make it into what American scholar Richard Malcolm Weaver, Jr called a “devil term.”
When you demonize a good word, strip it of all its affirmative associations, you prepare uncritical minds to accept actions that are inimical to their own interests. In their book Manufacturing Consent: The Political Economy of the Mass Media, Edward S. Herman and Noam Chomsky perceptively show how the ruling elite in the United States contort the English language to blackmail the poor.
Institutional benefits for the poor are ridiculed, and terms like “social welfare” are now invariably said with a tone of disapproval. But welfare packages for the rich and the powerful are called “bailouts” and have a tone of approval about them.
Just like the American ruling elite have deployed the media to demonize “welfare,” the Nigerian ruling elite have also succeeded in manipulating the public into seeing “subsidy” as unalterably bad, as an “organized crime,” to quote Peter Obi.
But what’s wrong with “subsidy”? At its root, subsidy, derived from Anglo-Norman French subsidie (ultimately from Latin subsidium), means “assistance.” In modern usage, it means “a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.” According to Investopia.com, “subsidy is usually given to remove some type of burden and is often considered to be in the interest of the public.” What’s wrong with that?
Up until Muhammadu Buhari came to power, “subsidy” used to be a positive word in Nigeria. In fact, during the 2012 mass revolt against petrol price increase, a protester in Kano inscribed these pithy, profound words on the back of his shirt: “Subsidy is my soul.”
Of course, subsidies are the soul of poor, struggling people, not just in Nigeria but all over the world. Every government in the world, especially in the West, subsidizes basic goods, including petrol and agricultural products.
One of the sneaky ways Nigerian political elites hoodwink people into thinking that subsidies are bad for them is to associate subsidies with corruption. But that’s a false association. There is nothing in subsidies in and of themselves that makes them corrupt. Corruption is incidental to subsidies and can be eliminated if there’s a will to do so.
Jettisoning subsidies because it is riddled with corruption is similar to the proverbial throwing the baby out with the bathwater. Any government that can’t eliminate corruption and ensure that people who need subsidies get them has no reason to exist. But, apparently, many Nigerians think otherwise. So, let’s see how, to quote J.M Keynes, “the nastiest motives of the nastiest men somehow or other work for the best results in the best of all possible worlds.”
Read more at https://www.farooqkperogi.com/2023/06/president-tinubu-and-dangers-of-subsidy.html
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