Editor's Quote: "The test of democracy is freedom of criticism". D. Ben-Gurion
WEST AFRICA: The Spread of Subsidy Removals and Contrasting Reactions
Editor's Choice
Most...
Submitted by IQ4News on Fri, 13/01/2012 - 1:50pm
By Yemisi Akinbobola
Nigeria’s president, Goodluck Jonathan, pledged that the money the country would save by not paying the 1.2 trillion naira ($7.5 billion) subsidy will be used to develop much needed infrastructure like oil refineries.
While the IMF and economists support the subsidy removal, most Nigerians are not in favour of it due to the resulting increase in petrol prices from N65 to an average of N140. This in turn has resulted in an increase in transportation costs, and subsequently the cost of living. Some neighbouring countries like Cameroon and Benin, who depend heavy on fuel from Nigeria, have also seen an increase in fuel prices.
This has caused anger as the low fuel prices were seen by many as the only benefits left for the average Nigerian citizens who earn less than $1 a day.
“By removing the subsidy abruptly, instead of phasing it in with a price band, for example, and by failing to prepare popular opinion, Jonathan has introduced the right reform at the wrong time and in the wrong way,” Ashley Elliot, an Africa analyst told Bloomberg.
This lack of sufficient strategy by the Jonathan administration, has contributed greatly to the spread of nationwide strikes in the country since Monday.
In a poll conducted by IQ4News, out of 186 respondents, 86% of them said they felt the government would not manage the money it saves from the subsidy removal appropriately.
“I believe in the removal, I don't, however, believe in the Nigerian Government”, comments a respondent.
On Friday, trade union leaders announced the suspension of protests while it engages in talks with the government.
“We want to make sure that [on] Saturday and Sunday people - we - relax,” said Abdulwahed Omar, head of the Nigeria Labour Congress, in Abuja.
“But Monday morning, it is going to be the mother of all crowds,” he adds.
A few days before Nigeria, Ghana’s government had announced that it will be removing fuel subsidy.
“Subsidising fuel is not sustainable, and removing it is the right thing to do, so we can sustain our fiscal consolidation,” argues Ghana’s Finance Minister, Kwabena Duffour.
Ghanaians have however been relatively quiet in their response, despite the fact that the removal meant that fuel prices increased to an average of N175-185.
Trade unions in Ghana, though critical of the move, have also not called for strikes.
Many argue that the contrast in the reactions of citizens in Nigeria and Ghana, demonstrates the extent to which they trust their governments.
“The reasons for the contrasting reactions, I suspect revolves around the extent to which citizens of both countries trust their respective governments to make good use of the savings from subsidy removal and perhaps the management of the process itself,” writes a blogger on MyWeku.
“Whilst in Nigeria a litre of petrol jumped by 116% on the 2nd day of January 2012, a couple of days after the removal, in Ghana and elsewhere the pain and shock has been somewhat minimised”.
“Our governments in Africa should know that if the people lose trust in them, nothing can be achieved,” an analyst at the Centre for Policy Analysis in Ghana, Joe Abbey, tells Reuters.
The Ghana Statistical Service (GSS) argued that although the fuel prices increases will see an impact on the cost of living, “it should not significantly affect inflation in the months ahead”.
Since 2009, Ghana's Tema Oil Refinery has been idle due largely to debt and an inability to get lines of credit to purchase crude oil.
Ghana, which according to the IMF will be the fastest growing economy in the world in 2012, spent 450 million cedis ($276 million) on fuel subsidy in 2011.
Comments
#1 This is an interesting angle
Submitted by Anonymous (not verified) on Sat, 14/01/2012 - 12:53pm.
This is an interesting angle to this unfolding era in Nigeria and Ghana. Nigerians quite rightly do not trust their government, even though I and a lot of others do believe the subsidy removal was the right thing to do. Like your respondent, we just don't trust that they - the government- will use the money in the way they have promised. Why didn't GEJ do this over 3 phases? Why did they not make public any concrete strategy on how the money will be spent? Perhaps because they dont know themselves? Or because they don't want us to have a way to hold them accountable. I can't wait until the day our Nigerian governments learn a thing or two from Ghana.
Post new comment