Tuesday, January 3, 2012

Fuel protests in Nigeria

The Nigerian government ended the fuel subsidies on January 1. Prices were expected to rise from N65 to N140 per liter overnight. Protests have been ongoing since. Over dinner with friends, they were certain the money saved would just go to politicians. I asked them what the difference was between the money going to political fat cats and going to oil fat cats (and the fact is that there is less difference between the two than one might wish). To that there was less answer. I also overheard some weeks ago that this may in fact be part of reducing corruption as the oil companies have charged the government for importing their own oil.

From my vantage point in a housing compound removed from any main road in Yola, things have been very quiet. The rest of the country, not so much:

BBC's bullet points.

From Reuters, who puts the new price at N150:
Economists say the subsidy filled the fuel tanks of middle-class drivers at the expense of the poor, encouraged massive corruption and waste, and handed over billions of dollars of government cash to a cartel of wealthy fuel importers. ...
"Our struggle is not just against fuel subsidy, it is against bad governance. Jonathan has shown that he can't be trusted," Issa Aremu, vice president of the National Labour Congress, told demonstrators.
"He said he was engaging in dialogue and all of a sudden he went ahead and increased the price." ...
the funds are transferred to a special account in the central bank which would fund poverty alleviation programmes, Jonathan's statement said.
Nigeria's Daily Times has been keeping tallies on who is arrested and who released. 300 policemen have reportedly joined the protests. One person confirmed shot, another rumored.

Previous governments have also tried to end subsidies, but eventually backed down. I confess being divided. The "Economists" Reuterse cites and "The Economist" magazine make very good points. I'm rarely in favor of going cold turkey on policies of this magnitude, if the political process will allow it. It might provoke fewer riots to go more slowly, allowing the price of fuel to increase a certain percent every month for instance, but it puts up more and more opportunities for someone to block it and stop progress. UPDATE: Here is the World Bank arguing for phasing out fuel and utility subsidies in Angola.

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