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The euphoria that has greeted the statements, pronouncements, policy decisions and appointments of Nigeria’s President, Ahmed Bola Tinubu, has been quite momentous. For a President that was elected by the narrowest margin of victory in the democratic history of Nigeria, the accolades and garlands that have trailed his less than one month tenure in office are a combination of low expectations of the majority of Nigerians and Tinubu’s picking up of the bar of leadership from where Muhammadu Buhari, his predecessor, had sunk it below sea level. Tinubu’s decisive, firm, courageous and conciliatory approach to governance has restored some level of confidence in the Nigerian people in their government.
In picking up the bar of leadership and hitting the ground running, Tinubu has been firm in affirming some of his key promises, including removal of petrol subsidy and floating of the naira in his inauguration speech and has gone ahead to implement them decisively, to the applause of Nigeria’s international development partners. And in keeping with his promise to run an inclusive government as a necessary measure to ensure national unity, peace and prosperity, Tinubu’s appointments so far are a fair reflection of Nigeria’s ethno-geographic and religious plurality across its six geo-political zones, to the commendation of many Nigerians. His most commendable appointment has been his inclusion of the South East region of Nigeria, after eight years of exclusion in the top leadership of Nigeria’s security and intelligence community, by the appointment of Admiral Ikechukwu Ogalla as Chief of Naval Staff.
Tinubu’s early demonstration of common-sense approach to governance in a country that has been traumatized and dehumanized by eight years of former President Buhari’s inept, incompetent, divisive and nepotistic leadership style has endeared many Nigerians to their new leader. Where Buhari talked down on Nigerians with haughty arrogance, Tinubu is talking to Nigerians with warmth and uncommon humility. Nigerians from all sections of the country are now seeing their leaders and representatives gaining access into the inner recess of the seat of power to commune with the President of the federal republic in a manner they didn’t see in the eight years of Buhari’s administration. The new lease of life that Tinubu’s discharge of the most basic responsibility of his high office has brought about in Nigeria is such that Nigeria’s President can be said to be enjoying and unexpected honeymoon with the Nigerian people after a rancorous wedding ceremony that was the 2023 presidential election.
However, this honeymoon may be coming to an end sooner than expected as Tinubu’s neoliberal economic policies pauperize the already impoverished people of Nigeria. While his removal of petrol subsidy was in fulfilment of his campaign promise and indeed that of his co-contestants for the office of the President of Nigeria, the negative impact of this policy decision has clearly unravelled the national consensus on subsidy removal as an error of judgment. For many years, neoliberal economic experts and Washington consensus pundits have waged a propaganda war on subsidies on energy products and services, including petrol, diesel, gas and electricity, describing such as a wasteful drain on national resources and a disincentive for foreign investments in the oil and gas sector.
The arguments on subsidies on petrol was taken to new heights of absurdities when it was described by otherwise critical economic thinkers as “subsidizing consumption” rather than production. Then it became a scam and organized crime that must be dismantled “immediately” through the removal of subsidy from petrol. There were also claims that petrol subsidy didn’t get to the poor but only favoured the rich and, to get Nigerians to append their signature to their economic death warrant, successive Nigerian governments and their anti-subsidy cohorts justified their position on the fact that Nigeria was subsidizing neighbouring countries because of smuggling of the products out of the jurisdiction.
When a lie is told over and over again it becomes true, says Nazi Germany’s propaganda in chief, Josef Goebbels. So, after many years of emotional and psychological blackmail by those they trusted and relied upon as sources of economic enlightenment, Nigerians finally succumbed on the eve of the 2023 presidential election when they voted for the removal of subsidy on petrol. But the morning after, when the effect of 250% increase in the price of Nigeria’s most important energy product hit hard, the reality of a drastic reduction in an already low productivity and prevailing low standard of living has served as a shock therapy that has jolted Nigerians from their state of collective ignorance into asking the right questions as their honeymoon with Tinubu comes to an end.
For a government that is struggling to shore up its legitimacy, now is the time for the Tinubu administration to sit back and reassess its economic policies and begin to adjust to more pragmatic solutions to the myriad of problems it inherited. In the first place, the removal of subsidy should never have been a campaign promise by any knowledgeable and serious-minded presidential aspirant in Nigeria as that is actually a promise to abdicate one of most important responsibilities of government, which is energy security. And because energy security entails the availability and affordability of energy products and services, subsidy is an integral part of it. Subsidy on energy is an acceptable best international practice to ensure energy security world over and that was why the global community spent about $1 trillion in 2022 subsidizing a range of energy products and services for their citizens.
The United States of America spends about $50 billion annually subsidizing fossil fuel energy derivatives, including petrol and diesel for its citizens. In year 2022, China and Russia spent $130 billion and $30 billion to subsidize energy, respectively, for their citizens because energy security is prioritized as a matter of national security. Currently, the UK has a $100 billion rolling subsidy scheme [energy price cap] for energy consumers in the country, just as Germany is proposing to spend €5 billion in 2023 to subsidize energy for manufacturers, and Norway has extended subsidy on electricity for its citizens into 2024. While Nigerian government officials and their cheerleaders are applauding a policy that is impoverishing the people, other oil-producing countries like Saudi Arabia, Kuwait, Angola, Venezuela and Iran are providing generous subsidies for a range of fossil fuel energy derivatives like petrol, diesel and cooking gas for their citizens as benefits of their natural endowments with hydrocarbons.
Unlike the aforementioned countries, Nigeria is finding it difficult to meet its obligation of energy security to its citizens because of corruption, low productivity, insecurity and mismanagement of its oil and gas assets and resources. It was the problem of corruption and mismanagement that needed to be fixed, not the removal of subsidy. Nigeria’s economy, being largely informal, is dominated by small and medium-scale enterprises and, because of epileptic power supply, these business rely on petrol to power their premises and drive their logistical needs, the reason petrol is the most important energy product in Nigeria, which makes its subsidy a subsidy on production and not consumption, as erroneously postulated. And any marginal increase its price per unit is going increase the cost of production, with hyperinflation imminent, just as the erosion of purchasing power will reduce demand for goods and services, resulting in massive job losses.
The biggest challenge ahead for Nigerians is that the price of petrol will likely increase as continuous importation will further depreciate the floated naira against the dollar and this may grind the economy to a halt, with prospects of social unrest setting in, if citizens lose all hope of survival. And while Nigerians have been asked to sacrifice, the political leadership of Nigeria is still behaving like a drunken sailor in a sinking ship as Tinubu has not made a firm commitment to cutting down the cost of government and tackling corruption decisively. But for how much longer can the people on board watch their drunken sailors sink their ship?
