Politics trumps economics as Nigeria sticks with subsidy

In a season when at least 30 state governors and those seeking to succeed President Muhammadu Buhari are already jostling for attention, the Nigerian government is seen prioritising petrol subsidy above economic growth or standard of living of the over 200 million Nigerian population.

Often trapped between sparking public anger, and using cheaper fuel to keep its approval ratings up, the Federal Government has repeatedly adopted the latter, and 2023 seems not to be different.

Most Nigerians are bewildered, that a country that had the highest number of global malaria cases (25 percent) can muster the strength to fund an opaque subsidy regime with N3 trillion yearly, according to government official figures, rather than fund health infrastructure around Nigeria’s 774 local governments.

Those in support of that policy say it helps lower the cost of living and supports millions of Nigerians who live below the poverty line. Still, critics such as the International Monetary Fund (IMF) say subsidies constitute an unsustainable drain on public resources needed for critical developmental projects.

This opaque exercise, according to most economists, is bad for the economy, but the lifeblood of politicians who sees petrol subsidy as a way of bolstering support among poor Nigerians ahead of the 2023 polls.

They argued that the implementation of the programme at such a critical time might influence the most uninformed members of society, especially as the targets of the programme are the poorest, unprivileged, and the uneducated.

“The decision to adjust the subsidy removal timetable is not because of the high inflation rate, but principally because it is a pre-election year,” the CEO of Cowry Assets Management Johnson Chukwu, in a monitored Broadcast on Arise Television.

“National elections are going to take place in February 2023, and you’re talking about removing subsidy in July. There is no political party anywhere in the world that would take such impactful decision, given the negative implications on the populace,” Chukwu added.

Between 2006 and 2018, Nigeria spent about N10 trillion on subsidies, a study supported by the British government estimated — more than the health, education, or defence budgets. The Nigerian National Petroleum Corporation (NNPC) said Nigeria has already spent over N1.1 trillion in the first seven months of this year in subsidising the cost of petrol.

“Politicians can use fuel subsidies to win popular support for their regimes—and sometimes those subsidies are crucial for their political survival,” said Victoria Bassetti and Kelsey Landau, analysts at Brookings Institution, an American research group founded in 1916.

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Political observers say perhaps the Buhari’s administration may not want to repeat the same mistake which the Goodluck Jonathan’s administration and People’s Democratic Party (PDP) did by allowing organised labour and civic society to carry out a series of protests across the country on the issue, which may adversely affect the popularity of the administration.

“It is a political decision by the Muhammadu Buhari’s administration, they want to deceive Nigerians. But for us at the coalition level, we know that it is intelligent management by the presidency,” Mark Adebayo, co-national spokesperson, Coalition of United Political Parties (CUPP) said.

Political analyst, Kunle Okunade, said based on the controversy that had trailed the issue in recent years, the removal of fuel subsidy would definitely have serious implications for the ruling party in the 2023 general elections because it would raise public interest.

“The removal of fuel subsidy in Nigeria has become a political policy that virtually all successive governments have deployed to their advantage.

“The fuel subsidy removal would continue to be politically motivated because those in the arena of policy decision will highly consider political implications of the policy and how it would affect the perception of the people towards the ruling party,” Okunade said.

Adelaja Adeoye, former national publicity secretary of the Action Democratic Party (ADP), said the government’s decision to backtrack on the fuel subsidy removal is a calculated political move that can be linked to the 2023 elections, which is meant to deceive Nigerians, wondering what had suddenly changed over the issue.

According to him, the fact is that the temporal halt on the removal is to deceive Nigerians because of the 2023 elections but Nigerians are aware of everything.