2023-06-13 16:22:52
President Bola Tinubu broke his silence on Monday, two weeks following announcing the end of fuel subsidies in Nigeria. A necessary “sacrifice”, according to the new head of state, who promises in return massive investments in public services.
Nigerians are called upon to tighten their belts, waiting for better days. New President Bola Tinubu urged his compatriots to be patient on Monday (June 12), nearly two weeks following announcing the removal of popular state fuel subsidies. A decision that had caused the prices of gasoline, transport and foodstuffs to soar.
“I assure you that your sacrifice will not be in vain,” he said in a speech on Nigeria’s National Democracy Day. “The government I lead will repay you with massive investments in transport infrastructure, education, regular electricity supply, health care and other public services,” he said.
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For Nigerians, nearly half of whom live below the poverty line, the blow is hard but was expected. Elected on February 25, Bola Tinubu announced as soon as he took office on May 29 the end of fuel subsidies, which cost the state billions of euros and forced it to borrow massively to maintain gasoline at low prices. artificially low prices.
“It was a campaign promise from all the main candidates in the last presidential election. According to them, the fuel subsidy system was no longer sustainable and was a mess for the country’s economy,” says political scientist Dele Babalola , researcher at the University of Canterbury Christ Church, UK.
The price of social peace
Since the early 1980s, this question has come up regularly in public debate. Especially since the bill continues to increase for public finances, once morest a backdrop of declining oil production linked to chronic under-investment and widespread smuggling.
In 2022, the Nigerian National Petroleum Corporation (NNPC), the national oil company, spent nearly 10 billion euros in import subsidies. The state, which is supposed to reimburse the loss of earnings to the company, can no longer keep up and now owes it 5.7 billion euros.
“The truth is that now the government can no longer afford to pay for fuel subsidies,” NNPC director Mele Kyari recently commented.
“The problem stems in particular from the fact that Nigeria does not have enough refining capacity and exports its crude oil to then buy it back in the form of refined products”, recalls Dele Babalola, who underlines the urgency for the government to invest in the country’s aging oil infrastructure.
Despite their disproportionate burden on the economy, fuel subsidies remain popular among Nigerians, who see access to cheap gasoline as one of the few benefits they derive from the oil windfall.
>> See also: “Where is the money ?” : Inflation and cash shortages hit hard in Nigeria
In Nigeria, the first pump subsidies were introduced in the 1970s in response to the first oil shock. The military government of Olusegun Obasanjo then formalized these subsidies by enacting the “Price Control Act” in 1977.
But faced with the increasingly exorbitant cost of this measure and the numerous subsidy frauds, several civilian and military governments then tried to put an end to it, but each time ended up backing down under popular pressure.
In 2012, the country was shaken by several weeks of strikes and violent demonstrations, which left seven dead and many injured and forced President Goodluck Jonathan to give up cutting off the subsidy tap.
In 2021, Nigeria adopted a “Petroleum Industry Act” organizing the deregulation of the market and putting an end, in theory, to subsidies. But the government of ex-president Muhammadu Buhari had nevertheless continued to finance this aid to keep prices low for consumers.
“A consensus” on the end of subsidies
Since Bola Tinubu’s announcement on May 29, fuel prices have tripled in Nigeria. This surge hits the wallet of a population already overwhelmed by inflation of around 20%, sporadic shortages of gasoline and incessant power cuts.
If this measure recommended by the World Bank and the IMF was necessary to promote the development of the most populous country in Africa, critical voices believe that the government has not sufficiently prepared the ground to limit the consequences on the most modest .
“The Nigerian authorities must urgently adopt measures to protect the rights of those most affected by the removal of fuel subsidies, and prioritize the fight once morest hunger, high unemployment and the sharp deterioration in the standard of living”, assures Amnesty International in a press release.
“The end of subsidies was necessary but it requires tact. The government must also tackle food inflation and offer alternative means of transport”, judges the entrepreneur Oluseun Onigbinde interviewed by the online newspaper Premium Times.
For the moment, President Tinubu has not made any major social announcements to accompany the end of the fuel subsidies, apart from the signing of a law granting zero-interest student loans subject to means testing.
Even if the concessions are limited, the country seems to keep its calm. No major demonstration is scheduled and the unions, which are demanding wage increases, announced on Monday that they were suspending a call for an indefinite strike to continue consultations with the government.
“There is a consensus that has formed in Nigeria on this issue. Because of corruption, it is no longer possible to give cash to the entire population,” said Dele Babalola. “For Nigerians, if the end of subsidies really does improve education, health care and transport… then they will be ready to follow.”
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