Thursday, January 12, 2012

Nigeria: The Fuel Subsidy Crisis and its Implications for the Fight Against Boko Haram

Source: ISS

The Fuel Subsidy Crisis and its Implications for the Fight Against Boko Haram in Nigeria

Martin A. Ewi, Senior Researcher, Transnational Threats and International Crime, Pretoria Office

As Nigerians take to the streets in what has been described as an ‘indefinite strike’ against the controversial removal of the fuel subsidy, many experts have warned that such a move will further compound the volatile security conditions in Africa’s most populous country. The abrupt termination of the fuel subsidy on New Year’s Day took Nigerians by surprise as they marked the beginning of 2012 - a year that many Nigerians hoped will be different from the previous one, dominated by Boko Haram’s atrocious activities. Indeed, 2011 may be considered one of the bloodiest years in Nigerian history since the end of the civil war in 1970. The terror unleashed by Boko Haram has produced similar conditions that plunged Nigerians into a vicious civil war some forty-five years ago. By the end of December 2011, nearly 120 major terrorist acts occurred in Nigeria, of which more than 100 of them were linked to Boko Haram, including a deadly suicide bombing at the United Nations headquarters in Abuja. These acts, most of which took place in Northern Nigeria, claimed more than 3 000 lives and left nearly 10 000 others injured.

Boko Haram, an Islamic sect that is fighting against Western style education, has called for the imposition and strict application of sharia-law throughout Nigeria. It has also requested all non-Muslims or Christians living in the North to vacate the region. The sect is believed to have re-emerged in 2009 and operates on a doctrine known as ‘maitasine,’ based on an extreme interpretation of the Holy Quran in which violence is an accepted means to deal with non-believers or ‘infidels.’ Since 2009, the group has sought to turn Nigeria into a Afghanistan, Iraq, Yemen or Somalia-style insurgency. Its incessant and almost daily attacks in Northern Nigeria, defying every security measure that has been put in place, including the Christmas day (2011) suicide attacks on churches, has deepened the age-old conflict between Muslims and Christians or between Northerners and Southerners in Nigeria. The situation has reached an alarming state – so much so that experts are predicting the impending implosion of Nigeria. In all this, the government of Dr Goodluck Jonathan that took power last May has not fared well as many Nigerians have increasingly blamed the government for being weak and incapable to deal with the Boko Haram conundrum.

Efforts to deal with Boko Haram have been hampered by a mystical aura that has developed around the sect. The lack of a formal organisational structure and leadership like al Qaeda and al Shabaab, has further contributed to the group’s elusive character. It is widely believed that Boko Haram members or fighters are present everywhere and could even be your own brother or sister. Even President Jonathan admitted recently that there are Boko Haram members in his cabinet or the executive branch, as well as in parliament and the judiciary, further confirming the complexity of the terror group and the depth of its tentacles. Despite this loose institutional structure, the group maintains coherency and carries out well coordinated and planned attacks, which means that they are holding regular meetings.

It is against this background that the removal of the fuel subsidy was introduced in Nigeria, at a time when trust and faith in the government were at their lowest. Most experts contend that even if the fuel subsidy removal is a fiscal necessity as presented by Jonathan’s government, its timing is wrong. But this is not the first time that the fuel subsidy removal has become a contentious national debate. Nigeria is sub-Saharan Africa’s biggest oil producer and the world’s eighth biggest exporter of oil, which represents 95% of Nigeria’s foreign earnings. As much as oil has been Nigeria’s fortune, it has also been the country’s curse. Since its discovery in 1953, oil has remained one of the most sensitive issues and a major source of conflict in Nigeria. The subsidy was introduced in 1973 to stabilize the price of fuel and insulate Nigerians from the wild fluctuation of the global market price, and for forty years, Nigerians have been paying almost half the global market price for petrol. Indeed, the subsidisation of fuel in order to lessen the burden on the people has been a popular policy among major oil producers and socialist or communist countries such as China, Cuba, Egypt, Iran, Libya, Syria, Venezuela, and Yemen.

Under the IMF structural adjustment programmes, successive Nigerian governments have had to tinker with the subsidy. In 1976, the then General Olusegun Obasanjo tried unsuccessfully; the oil crisis in 1981 resulted in a general strike and the expulsion of hundreds of thousands of foreigners; students revolted against former president Ibrahim Babangida​’s austerity measures that resulted in the reduction of fuel subsidies in 1988; in 2003, a general strike paralysed Nigeria, when President Obasanjo​ reduced the subsidy, a move that resulted in a price hike from 26 Naira/liter to 40 Naira/liter of petrol; and in 2007, Nigerians protested vehemently against a 15% increase in the price for petrol imposed by the outgoing administration of president Obasanjo. Since 2000, hikes in petrol prices have attracted massive protests by labour unions and each protest has ended in compromises brokered between the unions and the government.

The current subsidy removal bears a number of unique qualities, which have been the source of consternations among Nigerians. It is the first time in its nearly 40 years that the subsidy has been completely scrapped from the budget. Second, the effect of the subsidy removal has more than doubled the price of petrol from 65 Naira/liter to 141 Naira/liter, making it the highest price hike in Nigerian history. Third, many Nigerians are accusing president Jonathan for not being transparent and for unilaterally imposing the subsidy removal. Opponents of the subsidy removal also purport that it is one of the few benefits that ordinary Nigerians get from the petroleum resources and that its removal will only increase the wealth of corrupt officials.

The government, on the other hand, has defended the subsidy removal as an inevitable measure to uplift the economy by reinvesting the 7.5 billion Naira per year that government is spending on the subsidy. Supporters of the subsidy removal also argue that any negative effects on the people are only temporary, and that the subsidy had encouraged corruption and benefited mostly wealthy oil companies. To reduce the shocks on the subsidy removal, the government has put in place a number of measures including mass transit buses, and a 10 billion Naira revolving loan for transport companies.

One of the possible implications of the subsidy removal will be on the security of Nigeria. Its awkward timing, when Nigerians are divided along religious and ethnic lines, does not bode well for peace and security of the country. In the first instance, the low morale and the mass protests that followed the subsidy removal would provide conducive conditions for Boko Haram to carry out more attacks, recruit and radicalise more youths, particularly those that will be the direct victims of the subsidy removal. Secondly, it will stretch government resources and ability to fight Boko Haram on the one hand and protesters on the other. Thirdly, the subsidy removal has further isolated the government from the people and caused so much agitation and animosity in Nigeria that may in turn provide more support for Boko Haram, particularly by those seeking revenge or to hit back at the government. Such attacks could plunge Nigeria into a civil war that could end up with the permanent division of Nigeria as in the case of Sudan. Indeed, sensing this danger, the trilogy of Nigeria’s intellectual elite — Wole Soyinka​, Chinua Achebe and JP Bekederemo-Clark - have intervened to warn of retaliation against Boko Haram attacks and called on the government to reconsider the fuel subsidy removal. The danger does not only lie with Boko Haram. As we have seen in the past, particularly in the Niger delta region, this may result in increased attacks against oil companies and on pipelines by militants in order to steal oil.

It is therefore imperative that the government resolve the fuel subsidy removal crisis expeditiously in order to unite Nigerians against the threat posed by Boko Haram, which has continued its daily attacks in 2012, unperturbed by the state of emergency declared in parts of the North. The government must seek to win hearts and minds, not to lose and divide them, in its battle to build a united, peaceful and prosperous Nigeria.