Attempts to fully deregulate the subsidized petroleum industry failed in January as a result of mass nationwide protests, with demonstrations, marchers, and strikes under the hash tag #OccupyNigeria, which begun over the hike in the price of fuel and the removal of the state subsidy at the beginning of January 2012. Protesters took issue with the subsidy removal that more than doubled the price of petroleum and caused the cost of basic goods to skyrocket, yet was promoted as a necessary austerity measure for the country.
The government produced estimates that 8 billion USD would be saved in the budget by removing the subsidy. All the while high ranking state officials continued their exorbitant expenditures, including the presidency, members of the national assembly, and cabinet. The expenditures were for salaries, allowances, and other budgeted items that were clearly not in the spirit of saving given that the state indicated in needed to save and cut costs. The prevailing 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 administrations claims that the 8 billion would be used to improve the standard of living for average Nigerians in various programmes but offered no specifics or itemized figures or estimates as to where the money would go. No official provided any detailed account as to precisely where the money saved from ending the subsidy would go.
Protesters were not convinced by these vague statements, neither were they moved by the administrations attempts to pacify criticism by announcing a slight reduction in salaries of those in the executive. Strikes and protests continued until the government agreed to restore the subsidy at a higher level of NGN 97 per litre. The standoff undermined the administration and caused many in the cabinet to lose credibility including the President, the information minister, the petroleum minister, and the minister of finance.
Decades of corruption in government and a lack of transparency was a major concern of protestors who used the Occupy name to identify with other protests movements throughout the world. The administration did not understand the distrust that people understandably have for government in Nigeria. The fact that they tried to sell the programme without providing any specific account, even from the ministry of finance, as to where the money was going was a tactic that was rejected by the masses. Going forward the lack of transparency surrounding the subsidy removal is not likely to work in the future. Nigeria is no stranger to nationwide strikes and protests. Long before the Occupy movements all over the world and the mass protests that occurred in Tunisia and Egypt, Nigerians have held nationwide strikes that have brought the country to a standstill and forced the government to back down on removing the oil subsidy. The administration has stated that it intends to phase-out the subsidy and has not given up completely on deregulating petroleum prices. If the administration moves again to completely remove the subsidy on petroleum it is likely that more civil action will take place. Labour remains adamantly against any increases in fuel and the masses, which started the protest without ever being prompted by labour unions appear to be in full support.
Since the protests, an investigation by the legislature has unveiled a 7 billion USD fraud in the subsidy program between 2009-2011, calling the program “fraught with endemic corruption and entrenched inefficiency.” Implicated are bureaucrats in the Nigerian National Petroleum Corporation (NNPC) and ministry of petroleum resources. The still ongoing problems of mismanagement in the NNPC regarding the subsidy program has led to a long awaited probe by the Economic and Financial Crimes Commission (EFCC) into the NNPC. A number of groups behind the #OccupyNigeria protests have indicated that if those responsible are not brought to book they will once again resume protests.
The issue with the subsidy program is the single greatest issue that has undermined the administration of President Goodluck Jonathan and many of his key reformers in his cabinet. If it cannot be resolved in the coming months in a way that pacifies the growing outrage over the outright theft by business and government officials associated with the subsidy program, the administration will not be able to regain the credibility it lost in the January #OccupyNigeria protests.
What is clear is that if not for the protests, the legislature and the Federal Executive Council (FEC) would not have taken the rampant corruption seriously and would not have taken steps to redress it. The threat and perhaps execution of further civic action may indeed be necessary to ensure a higher standard of governance including greater accountability and transparency.
Spero columnist David O. Kuranga, Ph.D. is the Managing Director and Principal of Kuranga and Associates Global Consultancy, a political and economic risk management firm that specializes in Africa. He is also the author of The Power of Interdependence with Palgrave Macmillan Press.