Subsidy Crisis Ignites Renewed Reform Debate in Nigeria

Subsidy protest, Falomo Bridge, Lagos, 12 January (FatCityAfrica02)

On 1 January, the Nigerian government announced an end to the longstanding fuel subsidy that had kept consumer gas prices below 40 cents a liter. Calling the $9 billion a year expense a “cancer,” President Goodluck Jonathan said ending the subsidy would make money available to fix the country’s infrastructure, improve education and strengthen and diversify the economy. But, in a more immediate reality, Nigerians found that gas prices had doubled.

For most Nigerians, the fuel subsidy was one of the few tangible benefits of the country’s immense oil wealth. The nation is the world’s 10th largest producer of petroleum and 8th largest exporter, yet more than 80 percent of its 160 million people live on less than $2 per day. Spurred by resentment over years of corruption and inequity, thousands of people took to the streets in cities across the country to protest the higher prices.

The outcry escalated into the largest protest in Nigeria’s history. Demonstrations, intensified by a simultaneous labor strike, interrupted oil production and paralyzed much of the country. After eight days of unrest, the government partially restored the subsidy, reducing petrol prices by 30 percent to 60 cents per liter.

High oil prices and increased production should have made 2010 and 2011 Nigeria’s most profitable years yet, but instead the economy worsened. The public is well aware of the mismanagement that keeps the country from building a strong, developed economy and a government fully accountable to its citizens.

Whether Nigeria’s leaders will take this opportunity to make meaningful reforms in the country’s governance remains to be seen. What is evident is that the Nigerian people want to reap the full benefits of the natural wealth beneath their feet.

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Carolyn Bielfeldt is Communications Coordinator at the Revenue Watch Institute.

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