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Umez Foundation (UF)

Addressing Nigerian African Issues Head-on

Leadership is action, not a position

An Open Letter to President Goodluck Jonathan: 
Reconsider Fuel Subsidy Withdrawal 

by Bedford N. Umez 


January 12, 2012
President Goodluck Jonathan
Office of the President
Aso Rock Villa, Asokoro District, Abuja Nigeria

Your Excellency,

The ongoing protests over the removal of fuel subsidy in Nigeria are presently hindering your genuine effort to deliver your promise of a “breath of fresh air” to Nigerians.

Presently, commerce in Nigeria is in jeopardy, and meaningful development in the country in peril. As such, Nigeria urgently needs a comprehensive solution to address the root causes of these protests.

Your Excellency, I must begin by stating, at the outset, my aim in this letter. As one witnessing the immediate impacts of this subsidy removal on the people of Nigeria, and as one whose works center on Nigerian African issues, my aim is to join fellow compatriots who are stretching and searching for a workable comprehensive solution that would help you bring that “fresh air” of progress and development to Nigeria.

Let us start with some rationale for fuel subsidy withdrawal.

Fuel Subsidy Removal: Some Justifications

One argument is that fuel subsidy system fuels corruption in the oil industry. In addition, the subsidy prolongs Nigeria’s dependence on fossil fuels, by hindering Nigerian efforts to establish and run crude oil refineries. By removing the subsidy, Nigeria will save “$8 billion” that would provide basic infrastructures in Nigeria1. Our Financial Minister, Dr. Ngozi Okonjo-Iweala, elaborates eloquently:

“This money [$8 billion] will be used to improve delivery of services for the people. Let us put the money into areas that will facilitate production, such as provision of power supply, providing state-of-the-art hospitals, especially to curb the maternal mortality rate. Government would invest heavily in refineries, which will be sustained by private investors, as well as hydro power projects. This, including others, would create more jobs for our people.” (http://www.tribune.com.ng/index.php/front-page-news/34158-state-govs-initiated-subsidy-removal-okonjo-iweala)2.

Your Excellency, while the above arguments make sound economic sense, withdrawal of fuel subsidy AT THIS TIME in Nigeria hurts Nigerian working class, and further poses far-reaching implications that are hurting your efforts to move Nigeria forward. Here are some implications.

Fuel Subsidy Removal: The Implications

Mr. President, it should be noted that before fuel subsidy was withdrawn on January 1, 2012, a liter of fuel in Nigeria was 65 Naira (35 cents of a Dollar). However, when the subsidy was withdrawn, a liter of fuel jumped to 150 Naira (93 cents) overnight. This sudden rise in fuel price spurred a sudden spike in prices of goods and services in Nigeria, and “in a country where most people live on less than $2 a day,3” and “70 percent of the population live below the poverty line,”4 such rise in prices of say food, and transportation adversely affects Nigerian working class. Nigeria needs a more comprehensive solution to address the root causes of the present economic crises in the nation.

Toward a more Comprehensive Solution

Your Excellency, kindly consider the following prescriptive measures as a part of your genuine efforts to bring “fresh air” to Nigerians.

1. Close Corruption Pipeline in the Oil Industry

Given that fuel subsidy feeds corruption in the oil industry, it goes without saying that the first cause of action by Nigerian government is to close that pipeline of corruption. Specifically, "since the cost of crime, corruption, and trade mispricing account for $130 billion in Nigeria between 2000 and 2009,”5 representing an estimate of $14 billion a year, which, in fact, exceeds the estimated “$8 billion” yield from subsidy withdrawal, the obvious logical answer RIGHT NOW lies squarely with ending corruption in the oil industry, not fuel subsidy.

2. Nigeria should Refine its own Crude Oil

For Nigeria to claim the lion share of its own oil revenue, and for your administration to deliver your promise of “fresh air” with that revenue, Nigeria must refine at least 90% of its own crude oil – not just 30%. This golden advice from Hon. E. F. Arrundell, Ambassador of Venezuela to Nigeria, to Nigerian National Assembly in November, 2009 should not be lost:

“In Venezuela, since 1999, we’ve never had a raise in fuel price. We only pay $1.02 to fill the tank. What I pay for with N12,000 here (Nigeria), in Venezuela I’ll pay N400. What is happening is simple. Our President [Hugo Chavez] decided one day to control the industry, because it belongs to the Venezuelans. If you don’t control the industry, your development will be in the hands of the foreigners.”6

Your Excellency, it only makes sense. If we own the cow, we must milk the cow. By milking the cow, we rip all the benefits from the cow. Nigeria must build world class refineries, and refine its own crude oil as done in Saud Arabia, Venezuela, Kuwait, Iraq, to wit.

3. Toward an Effective Leadership

Your Excellency, your “breath of fresh air” promise to Nigerians underscores the obvious fact that Nigeria is in dire need of effective leadership. I am hopeful that Your Excellency will fulfill that promise before the end of your term. Indeed, leadership is parenthood; leadership is action, not a position. Just as parents nurture, support, and encourage their children, leaders must nurture, support and encourage their own people. In fact, countries we consider progressive, has gotten the message clearly. As such, leaders inKuwait, Saudi Arabia, America, Switzerland, Canada, Japan, Britain, among others, do NOT fly to Nigeria to open bank accounts, or buy houses. Similarly, they do not fly to Nigeria for medical checkup/treatments or send their children to Nigerian universities. They bank in their own countries, build and maintain superior hospitals, schools, and other infrastructures, knowing quite well that a rat does not labor for a squirrel. Effective leadership - “breath of fresh air” - is the key to move Nigeria forward. Stay the course.

Conclusion

Your Excellency, the ongoing protests in Nigeria today suggest that people do not wake up one morning and start protests – their anger, everyone knows, far predates your administration. Indeed, protests, as we know, usually follow some systematic subjugation of a people over some period of time, as seen in the US during sixties; South Africa during the years of Apartheid; and recently in Tunisia, Egypt, and Syria. Clearly, an estimated “70% of Nigerians, living below poverty line”7 for some years now, have reached a breaking point. At this time, they cannot tolerate additional increase in their cost of living, despite sound economic arguments for subsidy withdrawal. Accordingly, we ask Your Excellency to reinstate, AT THIS CRITICAL TIME, fuel subsidy that would return the pump price of petrol to N65 per liter, and GRADUALLY PHASE OUT the subsidy by embarking on a comprehensive solution adumbrated above.

Mr. President, thanks for your reconsideration, and thanks for seeking a more comprehensive solution to bring “fresh air” to Nigerians.

May God bless you, and the people of Nigeria, and help you deliver your promise of “fresh air” to Nigerians.

Sincerely,

Bedford Nwabueze Umez, PhD.


References

1.http://www.globalnews.ca/World/nigeria+lawmakers+move+against+president+over+
doubled+gasoline+prices+ahead+of+national+strike/6442555091/story.html

2. http://www.tribune.com.ng/index.php/front-page-news/34158-state-govs-initiated-subsidy-removal-okonjo-iweala

3.http://www.globalnews.ca/World/nigeria+lawmakers+move+against+president+over+
doubled+gasoline+prices+ahead+of+national+strike/6442555091/story.html

4. http://www.dailytrust.com.ng/index.php?option=com_content&view=article&id=10864:nigerias-high-poverty-level&catid=17:editorial&Itemid=9

5. http://todaygh.com/2011/01/24/ghana-22nd-in-illicit-financial-outflows-nigeria-leads-africa/

6. http://thenationonlineng.net/web2/articles/45743/1/How-Nigeria-can-overcome-socio-economic-crisis/Page1.html

7. http://www.dailytrust.com.ng/index.php?option=com_content&view=article&id=10864:nigerias-high-poverty-level&catid=17:editorial&Itemid=9


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