One thing no one can dispute today is the crushing poverty level and socio-economic pain in Nigeria. So unbearable has the agony of the citizens been that one is always tempted to believe that the situation has reached a breaking point. The immediate trigger of the current spiralling inflation that has in the last two years severely reduced the purchasing power of Nigerians is removal of fuel subsidy and deregulation of the foreign exchange market leading to the devaluation of the naira.
Weeks before the Tinubu administration took over the mantle, commentators like Prof. Farooq Kperogi had cautioned him against making the mistake of removing fuel subsidy. Based on the Petroleum Industry Act of 2021, a watershed legislation aimed at overhauling the regulatory framework of the nation’s petroleum industry, fuel subsidy was to go by February, 2022. However, the Buhari administration did not trigger this provision of the law. In fact, it later announced that the implementation of this part of the PIA would only start on June 1, 2023 – three days after Buhari would have left office. This was a smart move by the President who must have been advised against compounding his administration’s infamy by adding the agony of fuel subsidy removal to the yoke of the already writhing Nigerians. For Tinubu, however, it was a historic trap which, against all advice from well-meaning public commentators, he readily fell into when he gleefully declared on the day of his inauguration, “fuel subsidy is gone.”
Tinubu’s action is not an isolated incident, rather it is a moment in a perennially continuing trend whereby our leaders prioritize policy paths that alienate from the state the responsibility of directly intervening in the welfare of the people. This approach to governance is evidently a departure from the very principles that informed the design of the nation’s socio-economic architecture from the beginning. In the colonial era and up till about four decades after independence, Nigeria was set up as a welfarist state where practices like public corporations held away, giving us non-profit public service entities like ECN (later NEPA) and P&T Department (later NIPOST and NITEL). Fuel subsidy was another child of state welfarism, just like the universal basic education (UBE) scheme which aim is to provide free and compulsory basic education. While the UBE scheme is still operational (irrespective of its obvious imperfections), the nation is yet to realize the even bolder welfarist provision in its constitution mandating the state to “as and when practicable” provide free education at the tertiary level (see section 18[3][c]).
Since the time of the infamous structural adjustment programme (SAP), the Nigerian state has been receding, gradually denouncing most of the welfarist principles that it had started with. The advent of democracy in 1999 saw this trajectory gain formidable momentum as President Obasanjo vigorously pushed his “reform agenda.” It was not just a policy push but also an ideological struggle as the state deployed all its discursive apparatuses to project its sale of public corporations and other neoliberal reforms as the only and inevitable path to national growth, while systematically de-legitimising welfarist ideas like fuel subsidy. The present quality of life among the citizenry is the latest stage in the unfolding of that systematic impoverishment in the name of reforms. Overall, it has been for Nigerians an endless journey of having to always look back to sadly acknowledge that yesterday was better than today.
Very unfortunate is the ascendancy of that atrocious falsehood that state-backed private sector capitalism is the only viable path to economic growth and collective happiness for Nigeria. This faulty narrative is being lent voice to by our economic experts and other intellectuals. While they point to western countries as an example, they conveniently overlook the alternative facts emerging from the likes of China where the state is heavily involved in provision of services like electricity and telecommunications. For example, the government-owned State Grid Corporation of China (the world’s largest utility company) and China Southern Power Grid dominate electricity generation, transmission, and distribution in the country, with the latter generating 350, 000 megawatts of power and is set to add another 100, 000 megawatts in the next five years! (Nigeria, with all the hypes that came with privatization of the power sector, currently still generates a pitiable 3, 500 megawatts from an installed capacity of 13, 500 megawatts).
Even so, Nigeria’s remorseless acceleration on the highway of state-sponsored capitalism is not exactly in sync with some of the policies upheld in many of the western countries it purports to copy. For instance, while fuel subsidy removal has been pursued by successive Nigerian governments with so much fervor as though it is a bloodsucking demon to be exorcised from our space, countries like the UK, the USA and others have been subsidising fuel to various extents. Besides, many European countries as well as Canada implement subsidised public-funded transport schemes which would ensure that common people are not completely exposed to the harsh realities of fuel pricing. In countries like Luxembourg, Estonia, and Malta, free public transport exists. Nigeria still lacks this sort of arrangement, yet our government insists that fuel should be bought at prices determined by the international market.
Also, while our successive governments have been systematically withdrawing existing welfarist policies, many of the western countries we are purporting to copy have been making their citizens comfortable and happy with laudable welfarist programmes. For example, Luxembourg, Switzerland, Denmark, Norway and Finland are very emphatic in implementing such policies as seen in their maintenance of strong social safety nets by way of universal health insurance, unemployment benefits, and old age support etc. Commendably, in some of the countries (including Norway and Denmark), university education is free at the undergraduate level. It is, therefore, not a coincidence that standard of living in these countries is much higher than you can get in much richer countries like the USA. Pointedly, these nations are where standard of living is highest in the world – with Luxembourg standing at number one.
When government fails to implement welfarist programmes, it would be hinging its development policy solely on the harsh (and amoral) dynamics of profit-driven investments by capitalists. This will result in building a large economy with plenty wealth but where structural dynamics ensures widespread inequalities that leave a lot of the populace deprived. For example, the USA, the world’s largest economy with a GDP of $27.36 trillion ranks quite lower than Luxembourg in standard of living, a much smaller economy with GDP of $85.76 billion. The reason is simply that Luxembourg’s welfarist economic strategies are ensuring greater equal distribution of resources, while in the USA, hyper-capitalism is engendering concentration of resources among few fortunate individuals. In the same vein, while Nigeria is the third largest economy in Africa with GDP of $363.85 billion, it boasts of a much poorer standard of living than Seychelles, a much smaller economy with GDP of $2.14 billion, but with a strong culture of safety nets including free medical care and free education up to tertiary level.
Looking at all this, there is no more justification for anyone to continue rationalizing Nigeria’s rapid shift from state welfarism to state-sponsored ulta-capitalism. This policy shift has been stifling Nigerians to death. Just as a capitalist businessman prioritises accumulating wealth and may see money spent on salaries and staff welfare as imprudent spending, a capitalist state prioritizes building a large economy through profit-motivated private-sector investments and considers resources spent on subsidy and other welfarist policies as imprudent spending.
However, talking about subsidy, it is not to be disputed that energy subsidy – electricity and fuel – is a critical economic need. Fuel and electricity prices affect all aspects of our life, as these energy sources are the engine that powers activities in all sectors. For instance, when University of Lagos increased its fees to a level never known of a federal tertiary school in the country, it cited rising electricity bills (i.e. N150m – N180m monthly) the university pays for getting services from a privatized electricity sector. Of course, the university must also be paying through its nose to fuel its generators amidst irregular electricity supply. (For a nation without a reliable electricity supply to remove subsidy on fuel, the only alternative energy source, shows complete insensitivity). Needless to say, the same effect which subsidy removal is having on school fees is being experienced in all other sectors – health, telecommunication, food supply etc.
As a way of justifying these policies, the government has endlessly stated that money saved from subsidy removal will be invested in other sectors of the economy – an argument that has been far from convincing in the face of what we have seen over the years. It is refusing to face the fact that once state institutions remain too weak to check corruption and misgovernance, monies saved from such policies will go the same way other public revenues have gone over the years – into private pockets. This is why I am strongly convinced that subsidy removal and other neoliberal policies of our successive governments have quite little chances of changing the fortune of our nation and her citizens. We cannot ignore the chief cause of our underdevelopment and poverty endemic corruption – to blame welfarist policies like subsidy removal.
Furthermore, government has ceaselessly sung into our ears the argument that our economy will collapse if policies like subsidy is continued. This line of reasoning is easily the most prominent among all the arguments deployed to delegitimise subsidy in favour of state-backed private-sector hyper-capitalism. However, raw figures at our disposal strongly contradict this claim. If there is anything that threatens to collapse the economy, it is billions stolen year in year out at all levels of government and public service. For example, the $2.4billion allegedly stolen by former Minister, Diezani Allison-Madueke, would have paid the school fees, and in some cases, hostel rent (at average of N200, 000 per session) of about 1.8 million undergraduates enrolled in Nigerian public universities for 10 years! The N75 billion spent purchasing SUVs for our legislators in 2023 is enough to build a standard health facility in each state of the federation (at the cost of over N2.08 billion) each. This is just a tip of the iceberg. When one imagines the chilling amounts of money going down the drain due to humongous remuneration of government officials as well as corrupt practices happening every second in almost all public offices in this country – from Aso Rock to the least office in the local government civil service – they will appreciate that contrary to government’s claims, we can achieve an excellent welfarist state and still maintain a viable economy.
Iran, which leads the world in terms of the amount paid in fuel subsidy, has made it possible for its citizens to buy petrol at $0.03 (approximating to N45) per litre! And despite the state paying this heavily to bring down the price of petrol, the economy has not collapsed even in the midst of years of relentless Western sanctions. Hence, the country is still able to continuously spend millions of dollars on scientific research – including nuclear technology, ballistic missiles, robotics, artificial intelligence, aerospace, nanotechnology, and biomedical technology among others. It still also has millions of dollars to continue funding its very expensive Arab nationalism programme that sees it train and equip militaries and militant groups in Palestine, Syria, Iraq, Lebanon, and Yemen.
The bottom line is this: If our government is indeed empathetic, willing and committed to bettering the lives of her suffering populace, it should begin to reconsider its romance with neoliberal ideology in favour state capitalism. Ours is a land where the middle class have become almost completely eliminated leaving behind a mass of deprived, hungry, and dying individuals. Ask anyone in Nigeria today for money – no matter how well placed you think they are in the middle class stratum – you will instantly discover they are struggling as you do – everyone is practically broke! So, burdening these same people further with the yoke of neoliberal reforms that withdraw government assistance to citizens is like applying the final deathblow to a dying person. While a nation like the USA with a vibrant middle class population can still sustain state capitalism, Nigeria and Africa cannot. So, as we copy other nations, let’s try and copy only what suits our own conditions.
As I have always argued, the way to go is welfarism – raise wages, implement energy and food subsidy, introduce subsidized transportation, and pursue low-cost public housing, subsidised/free education, universal health insurance etc. as a way of making state institutions a powerful instrument of equalization amidst the inequalities and deprivations wrought by modern capitalism. If scarcity of resources is the problem, tackle corruption and wastages head-on to conserve resources. Until our leaders harken to this call, the question remains: still any hope for the hungry, forgotten and broken Nigerian?
Henry Chigozie Duru, PhD, teaches journalism and mass communication at Nnamdi Azikiwe University, Awka, Nigeria.
“Any hope for a common man” that rhetorical question could echo umpteenth times while the audience stares blank fully. I have always maintained that removal of Petroleum subsidy would be the last straw that shattered the Camels hump. But this irresponsible government naively stairs the hornet’s nest and now Nigeria is doomed