A few days back, I wrote a post about the Occupy Nigeria movement. As with many of my posts, my main goal was to research the issue and get a better understanding of what was going on and what I thought about it. The post has generated a good deal of feedback, some of it quite confrontational, some skeptical, some helpful in helping me understand the situation better. I’m particularly grateful for the last two types of feedback, as I feel like I understand the situation better than when I wrote the first post.
In my first post, I argued that removing the fuel subsidy is ultimately the right thing for Nigeria to do, as it is riddled with corruption, offers massive benefits to a few companies fortunate enough to have been awarded import contracts, and dominates the government budget at the expense of critical infrastructure projects. What I hadn’t understood fully is that the protests aren’t against removal of the subsidy per se, but about a lack of trust in government. As Nicholas Ibekwe, one of the organizers of the Occupy Nigeria protests in London explains, “Most organizers of the protest believe that removal of subsidy is not a bad thing. And I share that sentiment as well. However, the removal of subsidy in Nigeria is not about economics, it is mostly about trust, corruption and timing. The Nigerian government has not given the ordinary Nigerian reason to trust it.”
Put more simply by Chude Jideonwo on YNaija, “This is good policy badly executed, not because of timing necessarily as because of trust.” In the long run, Nigeria needs to eliminate a fuel subsidy that buys imported fuel – it makes very little economic sense for a nation to produce raw petroleum, export it to countries that refine it and subsidize its reimportation. It would make much more sense for the Nigerian government to help rebuild the nation’s refineries so the oil could be processed locally.
The problem is that, as Ibekwe and Jideonwo both explain, people don’t trust the Jonathan government to repurpose the subsidy to build infrastructure. Many of the arguments against subsidy removal focus on overspending in the Nigerian government, particularly on salaries and benefits to elected officials. The assumption – not without some justification – is that any savings from the subsidy will line the pockets of politicians at the expense of ordinary Nigerians.
Based on the feedback I’ve gotten from Nigerian friends, there’s no doubt that the subsidy removal was implemented poorly. Removing the subsidy in one fell swoop may have been designed to minimize opportunities for dissent (as each step of a gradual increase might invite protest), but it maximizes harm to the ordinary Nigerians who are struggling to cope with cost increases. The removal of the subsidy during the Christmas season had the additional complication of stranding some Nigerians in their home villages without sufficient funds to pay for transport home. And, as the commentators I quote above have pointed out, the Jonathan government simply doesn’t enjoy enough popular support and trust to have implemented these changes so unilaterally.
Alex Thurston at Sahel Blog argues against two arguments he sees me making in the piece. The first argument he sees me making is that removal of the subsidy is a good thing. I don’t think that’s what my argument was, precisely – I think removing the subsidy, ultimately, is something Nigeria needs to do. But as I’ve conceded here, I agree the move was made badly, without sufficient consideration of the harms to ordinary Nigerians, and I hope it will be rolled back and implemented in a more careful, considered way.
The second argument Thurston disagrees with is my contention that a protest against the subsidy is reactionary. Here I think he and I genuinely disagree. Thurston suggests that removal of the subsidy favors the 1% over the 99%, and suggests that because the World Bank and IMF would like to see the subsidy removed, the interests of the powerful favor subsidy removal. I don’t think it’s especially fair to equate the oft-maligned IMF and World Bank with the globally rich and powerful. There are lots of smart economists – including Nigerian Finance Minister Ngozi Okonjo-Iweala, former Managing Director of the World Bank – who are looking for solutions to Nigeria’s long-term economic woes, and who see removing the subsidy as a step towards economic reform.
There’s no doubt that removal of the subsidy is hurting the 99% in the short term. But poor and middle-class Nigerians were experiencing a great deal of economic misery before removal of the subsidy. In the long term, one way or another, Nigeria needs a functioning infrastructure, a working power grid, better roads and rail, better health care and education. In the long term, some of these services need to come from the government… and the government will gain legitimacy by providing services that people want and need, beyond cheap fuel.
Thurston and the Occupy protesters seem to be arguing that the government can’t and won’t provide those services, and therefore we should focus on the short term: maintaining a large subsidy on the import of foreign petroleum products. That mistrust of government’s ability to provide any services sounds more like the Tea Party than the Occupy movement to me. I’m not saying that the protesters are wrong in their mistrust of Jonathan’s government. I am saying that a government taking steps towards modifying a budget to provide essential goods and services appears more progressive than supporting a massive subsidy.
In US terms, this argument sounds like a very typical right-wing argument: we can’t trust the bloated, lazy government to produce public goods, so we should have very low taxes and rely on the private sector for any goods and services. In practical terms, removal of a fuel subsidy is a tax increase. It’s a badly implemented tax increase and it affects people who are ill able to afford it. But the goal is a progressive one, so long as you accept the notion that Ngozi Okonjo-Iweala and Jonathan are genuinely trying to build infrastructure and help the economy recover. If you don’t trust their motives, obviously, you won’t see this move as anything other than an opportunity for more corruption.
Do I think the subsidy removal was a good idea? I think it’s an admirable goal in the long run, but was badly implemented and should be rolled back and implemented gradually in closer consultation with a variety of non-government groups. Do I support the Occupy Nigeria movement? Yes, inasmuch as I think it’s great to see organized, peaceful, popular opposition to corruption in Nigeria. But I am deeply worried that the movement is focused on rolling back a change that, in the long run, is intended to correct some of the major problems of the Nigerian economy. Do I still think the movement is reactionary? Yes, in the literal sense that protesters are trying to roll back a change made by government, and more figuratively, because the movement questions the ability of the government to create positive change for the people. I hope the movement will become a broader anti-corruption movement, which I would see as less reactionary, more progressive and more in line with global Occupy movements.
Do I expect that this post will reduce the amount of angry email I’ve recently received? Probably not. :-) As several correspondents have pointed out, passions are understandably running very high around these issues. It’s hard to both critique and support a movement, but I think the issues here are complicated enough that it’s worth trying to do both simultaneously.